<PAGE>   1
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999


                           COMMISSION FILE NO. 0-24972



                       INKINE PHARMACEUTICAL COMPANY, INC.
             (Exact name of Registrant as specified in its charter)


            NEW YORK                                    13-3754005
(State or other jurisdiction of            (I.R.S. Employer Identification  No.)
 incorporation or organization)


                                SENTRY PARK EAST
                                1720 WALTON ROAD
                               BLUE BELL, PA 19422
                    (Address of principal executive offices)

                                  610-260-9350
                         (Registrant's telephone number)

         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 ___

At February 10, 2000, the registrant had outstanding 27,777,240 shares of common
                       stock, par value $.0001 per share.





<PAGE>   2
                       INKINE PHARMACEUTICAL COMPANY, INC.

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                            PAGE
PART I - FINANCIAL INFORMATION

         ITEM 1.  FINANCIAL STATEMENTS
<S>                                                                                                          <C>

                  BALANCE SHEETS - as of December 31, 1999 (unaudited)
                  and June 30, 1999............................................................................3

                  STATEMENTS OF OPERATIONS (unaudited) -- For the Three and Six Month
                  Periods Ended December 31, 1999 and 1998, and the Period from July 1, 1993
                  (Commencement of Operations) through December 31, 1999.......................................4

                  STATEMENTS OF CASH FLOWS (unaudited) -- For the Six Month Periods
                  Ended December 31, 1999 and 1998, and the Period from July 1, 1993
                  (Commencement of Operations) through December 31, 1999.......................................5

                  NOTES TO UNAUDITED FINANCIAL STATEMENTS......................................................6

         ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATION...........................................................7

PART II - OTHER INFORMATION....................................................................................10


SIGNATURES.....................................................................................................12
</TABLE>

<PAGE>   3
PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                       INKINE PHARMACEUTICAL COMPANY, INC.
                          (a development stage company)

                                 BALANCE SHEETS

                      (In thousands, except share amounts)


<TABLE>
<CAPTION>
                                                                               DECEMBER 31, 1999        JUNE 30, 1999
         ASSETS                                                                  (UNAUDITED)

Current assets:
<S>                                                                               <C>                    <C>
     Cash and cash equivalents....................................                $      1,870           $      1,968
     Short term investments.......................................                       4,171                  4,894
     Prepaid expenses and other current assets....................                           5                    100
                                                                                  ------------           ------------
         Total current assets.....................................                       6,046                  6,962

Fixed assets, net.................................................                         357                    200
                                                                                  ------------           ------------

         Total assets.............................................                $      6,403           $      7,162
                                                                                  ============           ============

         LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable and other accrued expenses..................                $        625           $      1,449
Line of credit....................................................                         900                    --
Shareholders' equity:
Common stock, $.0001 par value; authorized 50,000,000
     shares; issued 25,979,309 shares ............................                           3                      2
Less common stock held in treasury (16,515 shares)................                         (37)                   (37)
Additional paid-in capital........................................                      35,046                 31,427
Deferred compensation.............................................                      (1,033)                (2,560)
Other comprehensive income........................................                          (3)                    (4)

Deficit accumulated during the development stage..................                     (29,098)               (23,115)
                                                                                  -------------          -------------


         Total shareholders' equity...............................                       4,878                  5,713
                                                                                  ------------           ------------

         Total liabilities and shareholders' equity...............                $      6,403           $      7,162
                                                                                  ============           ============
</TABLE>



See accompanying notes to unaudited financial statements.



                                       3
<PAGE>   4

                      INKINE PHARMACEUTICAL COMPANY, INC.
                         (a development stage company)

                            STATEMENTS OF OPERATIONS
                                  (unaudited)

                    (In thousands, except per share amounts)




<TABLE>
<CAPTION>
                                                                                                                  PERIOD FROM
                                                                                                                  JULY 1, 1993
                                                                                                                 (COMMENCEMENT
                                                                                                                 OF OPERATIONS)
                                                                  THREE MONTHS ENDED        SIX MONTHS ENDED         THROUGH
                                                                      DECEMBER 31              DECEMBER 31         DECEMBER 31
                                                                   1999         1998         1999         1998         1999
                                                                 --------     --------     --------     --------     --------
Costs and Expenses:
<S>                                                              <C>          <C>          <C>          <C>          <C>
      Research and development ..............................    $  1,984     $  1,017     $  3,395     $  2,284     $ 14,138
      Purchased research and development ....................          --           --           --           --        3,952
      General and administrative ............................         982          974        1,897        1,828       11,703
      Separation agreement and accelerated vesting of options         835           --          835           --          835
      Write-off debt discount ...............................          --           --           --           --           75
                                                                 --------     --------     --------     --------     --------

Loss from operations ........................................      (3,801)      (1,991)      (6,127)      (4,112)     (30,703)
                                                                 --------     --------     --------     --------     --------

Interest income .............................................          81          145          144          315        1,612
Interest expense ............................................          --           --           --           --           (7)
                                                                 --------     --------     --------     --------     --------

Net loss ....................................................    $ (3,720)    $ (1,846)    $ (5,983)    $ (3,797)    $(29,098)
                                                                 ========     ========     ========     ========     ========

Basic and diluted net loss per share ........................    $  (0.14)    $  (0.08)    $  (0.24)    $  (0.17)

Weighted average shares outstanding .........................      25,809       22,703       24,678       22,703
</TABLE>





See accompanying notes to unaudited financial statements.





                                       4
<PAGE>   5

                       INKINE PHARMACEUTICAL COMPANY, INC.
                          (a development stage company)

                            STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                 (In thousands)


<TABLE>
<CAPTION>
                                                                                                                PERIOD FROM
                                                                                                                JULY 1, 1993
                                                                          SIX MONTHS ENDED                    (COMMENCEMENT OF
                                                                             DECEMBER 31,                    OPERATIONS) THROUGH
                                                                    1999                     1998             DECEMBER 31, 1999
                                                               ---------------         ---------------        -----------------
Cash flows from operating activities:
<S>                                                            <C>                     <C>                     <C>
 Net loss ...........................................         $        (5,983)        $        (3,797)        $       (29,098)
 Adjustments to reconcile net loss to
  net cash used in operating activities:
    Depreciation .....................................                      42                      26                     255
    Write-off of debt discount .......................                      --                      --                      7 5
    Value of services paid by options and warrants ...                      --                      --                      80
    Amortization of deferred compensation ............                   1,829                     985                   6,370
    Purchased research and development ...............                      --                      --                   2,742
    (Increase) decrease in prepaid expenses
      and other assets ...............................                      95                     150                      (5)
    Increase (decrease) in accounts payable
      and accrued expenses ...........................                    (824)                    125                     651
    Expenses paid by affiliate .......................                      --                      --                      97
    Increase in management fees payable ..............                      --                      --                     113
                                                               ---------------         ---------------         ---------------
  Net cash used in operating activities ..............                  (4,841)                 (2,511)                (18,720)

Cash flows from investing activities:
 Purchases of investments ............................                  (4,131)                 (5,908)                (37,542)
 Proceeds from maturities and sales of investments ...                   4,854                  10,205                  33,372
 Capital expenditures ................................                    (199)                     (5)                   (614)
                                                               ---------------         ---------------         ---------------
  Net cash provided by (used in) investing activities                     524                   4,292                  (4,784)

Cash flows from financing activities:
 Proceeds from sale of stock and exercise
  of options and warrants - net of expenses.. ........                   3,319                      --                  24,511
 Borrowings on line of credit ........................                     900                      --                     900
 Cost of shares - acquired ...........................                      --                      --                     (37)
                                                               ---------------         ---------------         ---------------
  Net cash provided by financing activities ..........                   4,219                      --                  25,374

Net increase (decrease) in cash and cash equivalents .                     (98)                  1,781                   1,870

Cash and cash equivalents - beginning of period ......                   1,968                   1,115                      --
                                                               ---------------         ---------------         ---------------

Cash and cash equivalents - end of period ............         $         1,870         $         2,896         $         1,870
                                                               ===============         ===============         ===============
</TABLE>



See accompanying notes to unaudited financial statements.



                                       5
<PAGE>   6
                       INKINE PHARMACEUTICAL COMPANY, INC.
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS
                                   (unaudited)

1.       BASIS OF PRESENTATION

         The accompanying financial statements are unaudited and have been
prepared by InKine Pharmaceutical Company, Inc. (the "Company") in accordance
with generally accepted accounting principles.

         Certain information and footnote disclosures normally included in the
Company's audited annual financial statements have been condensed or omitted in
the Company's interim financial statements. In the opinion of management, the
interim financial statements reflect all adjustments (consisting of normal
recurring adjustments) necessary for a fair representation of the results for
the interim periods presented.

         The results of operations for the interim periods may not necessarily
be indicative of the results of operations expected for the full year, although
the Company expects to incur a significant loss for the year ending June 30,
2000. These interim financial statements should be read in conjunction with the
audited financial statements for the year ended June 30, 1999, which are
contained in the Company's most recent Annual Report on Form 10-K.

2.       USE OF ESTIMATES

         The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date(s) of the financial
statements and the reported amounts of revenues and expenses during the
reporting period(s). Actual results could differ from those estimates.

3.       LINE OF CREDIT

         The Company secured a $2,000,000 line of credit with a financial
institution in December 1999. Under the terms of this arrangement, the Company
makes monthly interest-only payments at a variable per annum rate of 2.20%, plus
the 30-day Dealer Commercial Paper Rate, with principal due on January 31, 2001.
The Company maintains investments of approximately 100% of the amount
outstanding at the institution as collateral for the line of credit. At December
31, 1999, $900,000 was outstanding under this line of credit.

4.       SHAREHOLDERS EQUITY

         In September 1999, the Company completed a private placement of
2,307,691 shares of common stock, together with warrants to purchase an
aggregate of 761,538 shares of common stock. Net proceeds to the Company
were $2,750,000. The warrants are exercisable at $1.78 per share. The shares and
warrants are subject to certain provisions which may increase the issuable
shares and decrease the exercise price for the warrants, upon certain events
which may have a dilutive effect on the investors.

5.       SEPARATION AGREEMENT

         A one-time charge resulted from a separation agreement with the former
President and Chief Operating Officer due to his resignation from the Company in
November 1999. His employment contract provided for certain benefits upon
resignation prior to the completion of the terms of the contract. The contract
required the immediate vesting of all outstanding unvested options which
resulted in a non-cash charge of $535,000 and the continuation of his salary and
other benefits for a period of several months. This resulted in an additional
charge of approximately $300,000.




                                       6
<PAGE>   7
ITEM 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         This report contains, in addition to historical information, statements
by the Company with regard to its expectations as to financial results and other
aspects of its business that involve risks and uncertainties and may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements reflect management's current
views and are based on certain assumptions. Actual results could differ
materially from those currently anticipated as a result of a number of factors,
including, but not limited to, the risks and uncertainties discussed in this
report as well as those discussed under "Other Factors to be Considered" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" of the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1999 as filed with the Securities and Exchange Commission.

GENERAL

         The Company is a biopharmaceutical company engaged in the development
of technologies for the diagnosis and treatment of cancer and autoimmune
diseases. The Company pursues these objectives through a technology platform
consisting of the Fc Receptor Technology, the Thrombospondin Technology and
Diacol(TM). The Company acquired these technologies in 1997.

         Since commencing operations in 1993, the Company has not generated any
sales revenue. The Company has funded operations primarily from the proceeds of
public and private placements of securities. The Company has incurred net losses
in each year since its inception, and expects to incur additional losses for the
next several years. The Company expects that losses will fluctuate from quarter
to quarter, and that such fluctuations may be substantial. At December 31, 1999,
the Company's accumulated deficit was approximately $29,098,000.

RESULTS OF OPERATIONS

         The Company incurred losses of $3,720,000, or $(0.14) per share, and
$5,983,000, or $(0.24) per share, for the three and six month periods ended
December 31, 1999, respectively. The Company had net losses of $1,846,000, or
$(0.08) per share, and $3,797,000, or $(0.17) per share, for the same periods, a
year ago. Losses are expected to continue in the remainder of the fiscal year as
the Company develops Diacol(TM), the Thrombospondin Technology and Fc Receptor
Technology.

         Research and development expenses increased for the three and six month
periods ended December 31, 1999, as compared to the same periods a year ago, as
a result of increased manufacturing development costs associated with Diacol(TM)
and additional costs associated with the preparation and submission of an NDA to
the FDA for Diacol(TM). Research and development expenses are expected to
continue to increase in future quarters as the Company continues towards
commercialization of Diacol(TM).

         General and administrative expenses increased approximately $8,000 and
$69,000 in the three and six month periods ended December 31, 1999,
respectively, as compared to the same periods a year ago principally due to
costs associated with recruiting sales and marketing personnel. Included in
general and administrative expenses is amortization of options, previously
granted to certain executive officers of $318,000 and $722,000 for the three and
six months ended December 31, 1999, respectively. General and administrative
expenses will continue to increase with the addition of other administrative
personnel and an expanded scale of operations associated with the development of
multiple technologies.

         A one-time charge resulted from a separation agreement with the former
President and Chief Operating Officer due to his resignation from the Company in
November 1999. His employment contract provided for certain benefits upon
resignation prior to the completion of the terms of the contract. The contract
required the immediate vesting of all outstanding unvested options which
resulted in a non-cash charge of $535,000 and the continuation of his salary and
other benefits for a period of several months. This resulted in an additional
charge of approximately $300,000.

         Interest income amounted to $144,000 and $315,000 for the six months
ended December 31, 1999 and 1998, respectively. The decrease in interest income
reflects the earnings on a decreased investment balance. Fluctuation will
continue to occur quarter to quarter due to changes in the investment balance.


                                       7
<PAGE>   8
LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 1999, the Company had cash, cash equivalents and
investments of $6,041,000. The cash and investment balance at December 31, 1999
includes the effect of a private placement where the Company sold a total of
2,307,691 shares of common stock and warrants to purchase 761,538 shares of
common stock for an aggregate purchase price of $3,000,000. The cash balance
additionally includes the effect of a borrowing on the Company's line of credit
of $900,000.

         The Company believes that with its current cash position, and continued
warrant and option exercises, its financial resources are adequate for its
operations for at least the next 12 months. The Company's future capital
requirements will depend on numerous factors which cannot be quantified and many
of which the Company cannot control, including continued progress in its
research and development activities, commercialization costs of Diacol(TM),
progress with pre-clinical studies and clinical trials, prosecuting and
enforcing patent claims, technological and market developments, the ability of
the Company to establish product development arrangements, the cost of
manufacturing scaleup, effective marketing activities and arrangements, and
licensing or acquisition activity. The Company may seek to obtain additional
funds through equity or debt financing, collaborative or other arrangements with
corporate partners and others, and from other sources. No assurance can be given
that necessary additional financing will be available on terms acceptable to the
Company, if at all. If adequate additional funds are not available when
required, the Company may have to delay, scale back or eliminate certain of its
research, drug discovery or development activities or certain other aspects of
its operations and its business will be materially and adversely affected.

         The Company plans to invest significant resources in new personnel in
the next 12 months in connection with the expansion of its commercial activities
surrounding Diacol(TM). The Company anticipates incurring additional losses over
at least the next several years, and such losses are expected to increase as the
Company expands its commercialization activities relating to Diacol(TM) and
research and development activities relating to the Thrombospondin Technology
and Fc Receptor Technology. To achieve profitability, the Company, alone or with
others, must successfully develop and commercialize its technologies and
products, conduct pre-clinical studies and clinical trials, obtain required
regulatory approvals and successfully manufacture, introduce and market such
technologies and products. The time required to reach profitability is highly
uncertain, and there can be no assurance that the Company will be able to
achieve profitability on a sustained basis, if at all.

IMPACT OF YEAR 2000

         In response to concerns that computer software and/or hardware that was
designed to define the year with a two digit date field rather than a four digit
field might fail or miscalculate data in the year 2000, causing disruption to
the operations or business activities of the Company, the Company formed a
committee to research and assess the potential risk to the Company's internal
operations systems and to test its hardware and software systems for compliance.
The costs incurred by the Company relating to this project were immaterial. No
significant disruptions to the operations, business achieved, or computer
hardware and software systems were experienced, although problems could be
discovered in the future.

NEW ACCOUNTING PRONOUNCEMENTS

         On December 3, 1999, the Securities and Exchange Commission, or SEC,
issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements," or SAB No. 101. SAB No. 101 provides the SEC staff's views on the
recognition of revenue including nonrefundable technology access fees received
by biotechnology companies in connection with research collaborations with third
parties. SAB No. 101 states that in certain circumstances the SEC staff believes
that up-front fees, even if nonrefundable, should be deferred and recognized
systematically over the term of the research arrangement. SAB No. 101 requires
registrants to adopt the accounting guidance contained therein by no later than
the first fiscal quarter of the fiscal year beginning after December 15, 1999.
The Company is currently assessing the requirements of SAB No. 101 and has not
yet determined whether applying the accounting guidance of SAB No. 101 will have
a material effect on its financial position or results of operations.

         In April 1998, the Accounting Standards Executive Committee issued
Statement of Position 98-5, Reporting on the Costs of Start-Up Activities (the
"Statement"). The Statement requires costs of start-up activities, including
organizational costs, to be expensed as incurred. Start-up activities are
defined as those one-time activities related to opening a new facility,
introducing a new product or service, conducting businesses in a new territory,
conducting business with a new process in an existing facility, or

                                       8
<PAGE>   9
commencing a new operation. The Statement is effective for fiscal years
beginning after December 15, 1998. The adoption of this standard will not have a
material impact on InKine's earnings or financial position.

         In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities
("Statement 133"). Statement 133 establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. Statement 133 requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure the instrument at fair value. The
accounting changes in the fair value of a derivative depend on the intended use
of the derivative and the resulting designation. This Statement is effective for
all fiscal quarters beginning after June 15, 2000. The adoption of this standard
will not have a material impact on InKine's earnings or financial position.




                                       9
<PAGE>   10
PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         Not applicable.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

         Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         Not applicable.

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

         The Company's annual meeting of shareholders was held on November 8,
1999. At this meeting, shareholders of the Company:

         (i)      Approved the election of six (6) directors.

         The number of votes cast for, and withheld from, each nominee is set
forth below.

<TABLE>
<CAPTION>
                                                                                 For            Withheld
                                                                                 ---            --------
<S>                                                                           <C>                <C>
         Leonard S. Jacob, M.D., Ph.D.                                        15,955,854         35,875
         J.R. LeShufy                                                         15,922,654         69,075
         Steven B. Ratoff                                                     15,955,954         35,775
         Thomas P. Stagnaro                                                   15,955,854         35,875
         Robert A. Vukovich, Ph.D.                                            15,955,954         35,775
         Jerry A. Weisbach, Ph.D.                                             15,949,654         42,075
</TABLE>

         (ii)     Approved the adoption of the InKine Pharmaceutical Company,
         Inc. 1999 Equity Compensation Plan.

                          For               Against                     Abstain

                       14,946,157            740,470                    305,102

         (iii)    Ratified the election of KPMG, LLP as independent auditors of
         the Company

                          For               Against                     Abstain

                       15,941,858             32,246                     17,625

ITEM 5.  OTHER INFORMATION.

         On November 4, 1999 the Company announced the resignation of Dr. Taffy
Williams as President and Chief Operating Officer and as a member of the Board
of Directors. The Company also announced on November 4, 1999 that Leonard S.
Jacob, M.D., Ph.D., Chairman and Chief Executive Officer, had been awarded an
amended employment agreement with the Company, which included a provision
extending his employment agreement through November 6, 2002.




                                       10
<PAGE>   11
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits.

         10.18    Amendment to Employment Agreement, dated November 4, 1999,
                  between the Company and Leonard S. Jacob.

         10.19    Severance Agreement, dated November 3, 1999, between the
                  Company and Taffy J. Williams.

         27       Financial Data Schedule


         (b)      Reports on Form 8-K

         Not applicable.





                                       11
<PAGE>   12
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.





                                    INKINE PHARMACEUTICAL
                                    COMPANY, INC.



Date: February 11, 2000             By:  /s/ ROBERT F. APPLE
                                         ------------------------------
                                    Robert F. Apple
                                    Chief Financial Officer, (Authorized Officer
                                    and Principal Financial Officer)






                                       12
<PAGE>   13
                                 EXHIBIT INDEX





         10.18    Amendment to Employment Agreement, dated November 4, 1999,
                  between the Company and Leonard S. Jacob.

         10.19    Severance Agreement, dated November 3, 1999, between the
                  Company and Taffy J. Williams.

         27       Financial Data Schedule




                                       13