<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 June 30, 1997 or

[ ]   Transition report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the transition period from ___ to ___.

                         Commission file number 0-26862

                              DEPOTECH CORPORATION
             (Exact name of Registrant as specified in its charter)

                 CALIFORNIA                                   33-0387911
        (State or Other Jurisdiction                       (I.R.S. Employer
            of Incorporation or                          Identification No.)
               Organization)


                           10450 SCIENCE CENTER DRIVE
                           SAN DIEGO, CALIFORNIA 92121
               (Address of principal executive offices, zip code)


                                 (619) 625-2424
                         (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  [ ]

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

        Common Stock: No par value, 13,165,136 shares as of July 31, 1997


<PAGE>   2
                              DEPOTECH CORPORATION

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>

PART I   FINANCIAL INFORMATION

<S>      <C>                                                                <C>  
         Item 1 Financial Statements

                Condensed Balance Sheets as of
                June 30, 1997 and December 31, 1996.......................    1

                Condensed Statements of Operations
                for the Three and Six Months ended
                June 30, 1997 and 1996....................................    2

                Condensed Statements of Cash Flows
                for the Six Months ended
                June 30, 1997 and 1996....................................    3

                Notes to Condensed Financial Statements...................    4

         Item 2 Management's Discussion and Analysis
                of Financial Condition and Results of Operations..........    6

PART II  OTHER INFORMATION

         Item 4 Submission of Matters to a Vote of Securities Holders.....   14

         Item 6 Exhibits and Reports on Form 8-K..........................   15

         Signatures.......................................................   16
</TABLE>


<PAGE>   3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS


                              DEPOTECH CORPORATION

                            CONDENSED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                         JUNE 30,         DECEMBER 31,
                                                                           1997               1996
                                                                       ------------       ------------
<S>                                                                    <C>                <C>         
                                                                       (Unaudited)           (Note)
                            ASSETS
Current assets:
    Cash and cash equivalents                                          $    602,547       $  1,966,626
    Short-term investments                                               24,736,972         16,231,471
    Accounts receivable from Chiron collaboration                         1,066,129            614,580
    Other current assets                                                    942,200          1,160,394
                                                                       ------------       ------------
Total current assets                                                     27,347,848         19,973,071
Property and equipment, net                                              22,179,563         16,851,574
Other assets                                                                863,082            783,760
                                                                       ------------       ------------
Total assets                                                           $ 50,390,493       $ 37,608,405
                                                                       ============       ============


            LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Accounts payable and other accrued liabilities                     $  4,601,956       $  2,573,087
    Current portion of obligations under capital leases and loans         2,091,043          2,040,578
    Current portion of notes payable                                      1,189,950            493,481
                                                                       ------------       ------------
Total current liabilities                                                 7,882,949          5,107,146
Deferred revenue                                                               --               54,839
Obligations under capital leases, less current portion                    3,073,044          4,129,750
Notes payable, less current portion                                       3,665,469          1,709,813
Deferred rent                                                             1,856,806          1,377,623

Shareholders' equity:
    Common stock, no par value; 30,000,000 shares authorized,
       13,155,279 and 11,543,816 shares issued and outstanding at
       June 30, 1997 and December 31, 1996, respectively                 87,165,087         67,797,617
    Deferred compensation  related to stock options                        (135,716)          (161,960)
    Unrealized gain(loss) on investments                                      4,996            (10,886)
    Accumulated deficit                                                 (53,122,142)       (42,395,537)
                                                                       ------------       ------------
Total shareholders' equity                                               33,912,225         25,229,234
                                                                       ------------       ------------
Total liabilities and shareholders' equity                             $ 50,390,493       $ 37,608,405
                                                                       ============       ============
</TABLE>


See accompanying notes to condensed financial statements.

Note:     The balance sheet at December 31, 1996 has been derived from the
          audited financial statements at that date, but does not include all of
          the disclosures required by generally accepted accounting principles.

<PAGE>   4
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS


                              DEPOTECH CORPORATION

                       CONDENSED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED                     SIX MONTHS ENDED
                                                     JUNE 30,                              JUNE 30,
                                             1997               1996               1997               1996
                                         ------------       ------------       ------------       ------------
<S>                                      <C>                <C>                <C>                <C>         
                                                   (Unaudited)                          (Unaudited)


Contract revenue                         $    760,149       $  1,464,301       $  1,931,959       $  2,664,955
Milestone payment                           1,000,000               --            1,000,000               --
                                         ------------       ------------       ------------       ------------

           Total revenue                    1,760,149          1,464,301          2,931,959          2,664,955

Costs and expenses:
     Research and development               5,698,303          4,449,094         10,081,206          7,720,498
     General and administrative             1,022,009            818,767          1,955,604          1,605,028
     Repurchase of marketing rights         2,000,000               --            2,000,000               --
                                         ------------       ------------       ------------       ------------

           Total costs and expenses         8,720,312          5,267,861         14,036,810          9,325,526
                                         ------------       ------------       ------------       ------------

Loss from operations                       (6,960,163)        (3,803,560)       (11,104,851)        (6,660,571)

Interest income                               390,718            424,412            844,511            935,771
Interest expense                             (246,316)          (177,743)          (466,265)          (322,326)
                                         ------------       ------------       ------------       ------------

Net loss                                 $ (6,815,761)      $ (3,556,891)      $(10,726,605)      $ (6,047,126)
                                         ============       ============       ============       ============


Net loss per share                       $      (0.52)      $      (0.31)      $      (0.82)      $      (0.53)
                                         ============       ============       ============       ============

Shares used in computing
     net loss per share                    13,116,053         11,456,702         13,074,428         11,388,639
                                         ============       ============       ============       ============
</TABLE>


See accompanying notes to condensed financial statements.


                                       2
<PAGE>   5
PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                              DEPOTECH CORPORATION

                       CONDENSED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                               SIX MONTHS ENDED
                                                                                    JUNE 30,
                                                                             1997              1996
                                                                        ------------       ------------
<S>                                                                     <C>                <C>          
                                                                                 (Unaudited)
OPERATING ACTIVITIES
Net cash used by operating activities                                   $ (7,638,495)      $ (6,382,413)
INVESTING ACTIVITIES

Purchases of short-term investments                                      (22,082,975)        (9,214,545)
Proceeds from sale of short-term investments                              13,593,356         17,597,998
Purchases of property and equipment                                       (6,212,200)        (2,336,019)
Restricted cash                                                              (37,119)              --
                                                                        ------------       ------------
Net cash provided (used) by investing activities                         (14,738,938)         6,047,434

FINANCING ACTIVITIES
Repayments on capital lease obligations                                   (1,006,241)          (842,955)
Reimbursement for assets refinanced as capital leases                           --                3,254
Repayments on notes payable                                                 (275,412)              --
Proceeds from notes payable                                                2,927,537            199,645
Proceeds from issuance of common stock, net                               19,367,470            349,159
                                                                        ------------       ------------
Net cash provided (used) by financing activities                          21,013,354           (290,897)
                                                                        ------------       ------------

Net decrease in cash and cash equivalents                                 (1,364,079)          (625,876)
Cash and cash equivalents at beginning of period                           1,966,626          5,883,911
                                                                        ------------       ------------
Cash and cash equivalents at end of period                                   602,547          5,258,035
Short-term investments at end of period                                   24,736,972         24,148,184
                                                                        ------------       ------------
Cash, cash equivalents and short-term investments at end of period      $ 25,339,519       $ 29,406,219
                                                                        ============       ============

SUPPLEMENTAL INFORMATION
Property and equipment acquired through capital leases                  $       --         $  3,337,461
                                                                        ============       ============
Interest paid                                                           $    466,265       $    322,327
                                                                        ============       ============
</TABLE>


See accompanying notes to condensed financial statements.


                                       3
<PAGE>   6
                              DEPOTECH CORPORATION

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

1.      Basis of Presentation and Significant Accounting Policies

        The interim unaudited condensed financial statements contained herein
have been prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. These interim unaudited condensed financial
statements should be read in conjunction with the Company's December 31, 1996
audited financial statements. In management's opinion, the unaudited information
includes all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the financial position, results of
operations and cash flows for the periods presented. Interim results are not
necessarily indicative of results to be expected for the full year. Certain
prior year amounts have been reclassified to conform with the current year
presentation.

2.      Net Loss Per Share

        Net loss per share is computed using the weighted average number of
common shares outstanding during the period. Common share equivalents have not
been included in the computation, since their effect would have been
anti-dilutive.

        In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, "Earnings Per Share", regarding the calculation of primary earnings per
share, which will be adopted in January 1998. The Company does not anticipate
that the adoption of this standard will have a material impact to the Company.

3.      Chiron Collaboration

        In March 1994, the Company entered into a collaborative agreement with
Chiron Corporation ("Chiron") to develop and commercialize sustained-release
formulations of DepoCyt(TM) and certain Chiron proprietary products using the
Company's drug delivery technology. Cumulative reimbursable costs for clinical
trials and process development incurred by the Company under this agreement
totaled $10.0 million through June 30, 1997 and $7.7 million through June 30,
1996.

        In June 1997, DepoTech reacquired rights to DepoCyt in Canada and Europe
from Chiron for aggregate cash payments of up to $13.7 million. Chiron will
retain exclusive marketing rights to DepoCyt in the U.S. A $2.0 million cash
payment is payable to Chiron by December 31, 1997 and has been expensed at June
30, 1997. If, prior to December 31, 1998, the U.S. Food and Drug Administration
("FDA") issues a letter or other notification to DepoTech indicating that
DepoCyt is approvable or approved, the remaining balance of $11.7 million shall
be payable no later than December 31, 1998. If no FDA notification is received
prior to December 31, 1998, the remaining amount shall


                                       4
<PAGE>   7
                              DEPOTECH CORPORATION

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

be payable no later than six months from the earlier of U.S. or European Union
regulatory notification that the application to market or sell DepoCyt is
approvable or approved. If all applications for regulatory approval to sell
DepoCyt in the U.S. and European Union are permanently withdrawn, DepoTech shall
be relieved of any obligation to pay the remaining $11.7 million. Therefore,
such amount will be recorded upon the receipt of the required notification.

4.      Subsequent Event

        In July 1997, DepoTech entered into a Marketing and Distribution
Agreement with Pharmacia & Upjohn S.p.A ("P&U"), an affiliate of Pharmacia &
Upjohn Inc., for rights to market and sell DepoCyt in countries outside the
United States. The Company will manufacture DepoCyt and receive a share of the
net sales of DepoCyt sold by P&U. The Company received a cash payment of $2.0
million upon execution of the agreement and will receive additional payments
upon achievement of certain regulatory milestones. The agreement also provides
for reimbursement of certain clinical trial expenses and regulatory fees
incurred by the Company. The initial cash payment of $2.0 million and future
milestone payments totaling up to the obligation to Chiron of $13.7 million will
be set aside in a restricted cash account for payment to Chiron for the
repurchase of DepoCyt rights.


                                       5
<PAGE>   8
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

OVERVIEW

        Since its inception in October 1989, DepoTech Corporation ("DepoTech" or
the "Company") has devoted substantially all of its resources to the development
of its potential products. To date, the Company has not received any revenues
from the sale of products. The Company has funded its development programs
primarily from equity-derived working capital, equipment lease financing and
through strategic alliances with other companies. The Company has been
unprofitable since its inception and expects to incur additional operating
losses over at least the next 18 months. As of June 30, 1997, the Company's
accumulated deficit was approximately $53.1 million.

        The following discussion is qualified in its entirety by the more
detailed information and the Condensed Financial Statements and Notes thereto
appearing elsewhere in this Quarterly Report, including the information under
"Risks and Uncertainties." This Quarterly Report may contain, in addition to
historical information, forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from the
results discussed in such forward-looking statements. Factors that could cause
or contribute to such differences include those discussed under "Risks and
Uncertainties."

RESULTS OF OPERATIONS

        The Company had total revenue of $1.8 million for the three months ended
June 30, 1997 compared to $1.5 million for the same period in 1996. Total
revenue for the six months ended June 30, 1997 increased to $2.9 million from
$2.7 million in 1996. Included in total revenue for the second quarter of 1997
is a milestone payment from Chiron Corporation ("Chiron") of $1 million paid to
DepoTech upon the filing of a New Drug Application for DepoCyt in the U.S. Total
revenue in 1997 and 1996 was derived primarily from reimbursement of 50% of the
U.S. clinical trial and manufacturing scale-up expenses for the Company's lead
product, DepoCyt, an anti-cancer drug, under a collaborative agreement with
Chiron. In addition, Chiron reimbursed DepoTech for 100% of pre-clinical
development costs and feasibility studies performed on Chiron proprietary
products. The decline in contract revenue in 1997 compared to 1996 was primarily
attributable to the completion of manufacturing scale-up for DepoCyt. Revenue
may fluctuate from period to period depending on the level of clinical and
process development activity for projects under collaborative agreements and the
achievement of future milestones.

        Research and development expenses for the second quarter ended June 30,
1997 increased to $5.7 million compared to $4.4 million for the same period in
1996. Research and development expenses for the six months ended June 30, 1997
increased to $10.1 million from $7.7 million in 1996. Factors contributing to
these increases include expanded efforts in clinical trials, manufacturing
scale-up, and preclinical development of potential DepoFoam(TM) products. The
Company is continuing Phase III clinical studies of DepoCyt in neoplastic
meningitis arising from leukemia and lymphoma, as well as a Phase IV


                                       6
<PAGE>   9
nonrandomized trial in solid tumor patients. Earlier this year, DepoTech began a
Phase I clinical trial of DepoCyt in pediatric patients and a Phase I study of
DepoMorphine(TM) sustained-release encapsulated morphine sulfate to treat acute
post-surgical pain. Manufacturing scale-up of DepoMorphine is underway. The
Company has completed a Phase I study of DepoAmikacin(TM) and is completing work
necessary to move into follow-on clinical studies. Additionally, the Company
completed certain preclinical and feasibility studies on various formulations of
DepoIGF-1 with partner, Chiron. Further, the Company is evaluating the
feasibility of developing several early stage compounds internally and for
corporate partners. Research and development expenses are expected to continue
to increase during 1997.

        General and administrative expenses for the second quarter of 1997
increased to $1.0 million from $0.8 million for the same period in 1996. General
and administrative expenses for the six months ended June 30, 1997 increased to
$2.0 million from $1.6 million for the comparable period in the prior year.
These increases were primarily due to expansion in administrative staffing and
higher facility expenses. Also, under the collaborative agreement with Chiron,
the Company is obligated to share equally in the funding of sales, marketing and
distribution expenses for DepoCyt. Included in general and administrative
expenses are 50% of these expenses incurred for DepoCyt prior to the onset of
any product revenue. General and administrative expenses are expected to
continue to increase during 1997.

        Chiron and DepoTech had been jointly developing DepoCyt in the U.S.,
Canada and Europe since March 1994. In June 1997, DepoTech acquired rights to
DepoCyt in Canada and Europe from Chiron. Chiron will retain exclusive marketing
rights to DepoCyt in the U.S. Included in operating expenses for the quarter
ended June 30, 1997 were expenses of $2 million associated with the repurchase
which will be payable to Chiron by December 31, 1997. In July 1997, DepoTech
entered into a Marketing and Distribution Agreement with Pharmacia & Upjohn
S.p.A ("P&U"), an affiliate of Pharmacia & Upjohn Inc., for rights to market and
sell DepoCyt in countries outside the United States.

        Interest income was $0.4 million and $0.8 million for the three and six
months ended June 30, 1997 compared to $0.4 million and $0.9 million for the
same periods in 1996. Interest expense was $0.2 million and $0.5 million for the
three and six months ended June 30, 1997 compared to $0.2 million and $0.3
million for the comparable periods in 1996. The increase in interest expense for
the six month period was due to higher balances outstanding for obligations
under capital leases and notes payable.

LIQUIDITY AND CAPITAL RESOURCES

        From its inception through June 30, 1997, DepoTech has financed its
operations primarily through public and private placements of equity securities,
which provided aggregate net proceeds of approximately $86.9 million, and
through capital equipment leases and notes payable. In October 1995, the Company
completed its initial public offering of common stock with net proceeds of $38.1
million. In January 1997, the 


                                       7
<PAGE>   10
Company completed the private placement of 1.5 million newly issued shares of
common stock raising net proceeds of $18.9 million.

        Chiron and DepoTech had been jointly developing DepoCyt in the U.S.,
Canada and Europe since March 1994. In June 1997, DepoTech acquired rights to
DepoCyt in Canada and Europe from Chiron for aggregate cash payments of up to
$13.7 million. Chiron will retain exclusive marketing rights to DepoCyt in the
U.S. A $2 million cash payment is payable to Chiron by December 31, 1997. If,
prior to December 31, 1998, the U.S. Food and Drug Administration ("FDA") issues
a letter or other notification to DepoTech indicating that DepoCyt is approvable
or approved, the remaining balance of $11.7 million shall be payable no later
than December 31, 1998. If no FDA notification is received prior to December 31,
1998, the remaining amount shall be payable no later than six months from the
earlier of U.S. or European Union regulatory notification that the application
to market or sell DepoCyt is approvable or approved. If all applications for
regulatory approval to sell DepoCyt in the U.S. and European Union are
permanently withdrawn, DepoTech shall be relieved of any obligation to pay the
remaining $11.7 million.

        In July 1997, DepoTech entered into a Marketing and Distribution
Agreement with P&U for rights to market and sell DepoCyt in countries outside
the United States. P&U will be responsible for submitting regulatory filings,
labeling, packaging, distribution, marketing and sales of DepoCyt in this
territory. The Company will manufacture DepoCyt and receive a share of the net
sales of DepoCyt sold by P&U. The Company received a cash payment of $2.0
million upon execution of the agreement and may receive additional payments of
up to $17.0 million upon achievement of certain regulatory milestones. The
agreement also provides for reimbursement of certain clinical trial expenses and
regulatory fees incurred by the Company. The initial cash payment of $2.0
million and future milestone payments totaling up to the obligation to Chiron of
$13.7 million will be set aside in a restricted cash account for payment to
Chiron for the repurchase of DepoCyt rights.

        As of June 30, 1997, the Company had cash, cash equivalents and
short-term investments of $25.3 million as compared to $18.2 million at December
31, 1996. The increase of $7.1 million in cash, cash equivalents and short-term
investments was due primarily to the $18.9 million net proceeds received from
the private placement which was partially offset by net cash used to fund
operations of $7.6 million and payments totaling $4.6 million for new capital
expenditures and repayment of capital lease obligations and notes payable. In
May 1996, the Company signed a bank credit facility for $9.0 million to finance
future capital equipment purchases, of which $5.1 million had been utilized
through June 30, 1997. Working capital increased to $19.5 million as of June 30,
1997 compared to $14.9 million as of December 31, 1996.

        For the six months ended June 30, 1997, the Company financed an
aggregate of $2.9 million for property and equipment through bank credit
facilities. The Company intends to continue to fund capital expenditures through
external financing supplemented by internal cash resources where appropriate.
The Company leases a built-to-suit facility housing most of its administrative,
research, clinical and manufacturing activities. The 


                                       8
<PAGE>   11
minimum rental commitment for this facility ranges from $2.4 million to $4.3
million per year over the next 19 years, based upon pre-established annual rent
increases. The Company is installing a manufacturing line in this facility to
support clinical and commercial production of products under development. The
cost of equipment and tenant improvement expenses are estimated to total
approximately $6.1 million in 1997 of which $3.6 million had been incurred
through June 30, 1997. DepoTech intends to finance such expenditures through new
and existing bank credit facilities. The Company has a right of first refusal
and right of first offer to purchase land located adjacent to its headquarters
which must be exercised on or before October 15, 1997. At present, the Company
is negotiating to extend the exercise period for an additional 18 months.

        The Company's operations to date have consumed substantial amounts of
cash, which is expected to continue over the foreseeable future. The amount of
net losses and the time required for the Company to achieve profitability are
highly uncertain. There can be no assurance that the Company will be able to
achieve profitability at all or on a sustained basis. It is the Company's
intention to fund product research, development, manufacturing, and sales and
marketing costs through additional collaborative relationships with suitable
corporate partners. There can be no assurance that the Company will enter into
collaborative arrangements with corporate partners or that any agreements
resulting from these discussions will successfully reduce the Company's funding
requirements. Additional equity or debt financing will be required, and there
can be no assurance that these funds will be available on terms favorable to the
Company, if at all. If adequate funds are not available, the Company may be
required to delay, scale back or eliminate one or more of its product
development programs or obtain funds through arrangements with collaborative
partners or others that may require the Company to relinquish rights to certain
of its technologies, product candidates or products that the Company would not
otherwise relinquish.

        DepoTech anticipates that its existing available cash, cash equivalents
and short-term investments, committed future contract revenue, projected funding
from equipment financing and interest income will be adequate to satisfy its
capital requirements and fund operating losses into 1998. The Company's future
capital requirements will depend on many factors, including continued scientific
progress on its products and process development programs, progress with
preclinical testing and clinical trials, the time and costs involved in
obtaining regulatory approvals, the costs involved in filing and maintaining
patents, competing technological and market developments, changes in existing
collaborative relationships, the ability of the Company to establish development
or additional collaborative arrangements, the cost of manufacturing scale-up,
and the establishment of effective sales and marketing arrangements.

RISKS AND UNCERTAINTIES

        This Quarterly Report may contain, in addition to historical
information, forward-looking statements that involve risk and uncertainties. The
Company's actual results could differ materially from the results discussed in
such forward-looking statements. Factors that could cause or contribute to such
differences include those discussed below as well as those discussed elsewhere
in this Quarterly Report.


                                       9
<PAGE>   12
        EARLY STAGE COMPANY. DepoTech's products are at an early stage of
development, and, to date, only three of the Company's DepoFoam formulations
have been subject to human clinical testing. The Company's potential products
will require extensive research, formulation, development, preclinical and
clinical testing, and may involve a lengthy regulatory approval process prior to
commercialization. There can be no assurance that DepoCyt, DepoMorphine,
DepoAmikacin, or any of the Company's other products or potential products will
prove safe and effective in clinical trials, meet applicable regulatory
standards, be capable of being produced in commercial quantities at acceptable
cost or be successfully commercialized. In addition, there can be no assurance
that preclinical or clinical testing will accurately predict safety or efficacy
in broader human use, or that delays in the regulatory approval process will not
arise, delaying approval longer than currently anticipated. Even if all of the
Company's products prove to be safe and effective and are approved for marketing
by the FDA and other regulatory authorities, there can be no assurance that
health care providers, payors and patients will accept the Company's products.
Any failure of the Company to achieve technical feasibility, demonstrate safety,
achieve clinical efficacy, obtain regulatory approval or, together with its
partners, successfully market products would have a material adverse effect on
the Company.

        In April 1997, the Company completed a New Drug Application for DepoCyt
for the treatment of neoplastic meningitis arising from solid tumors. As with
all drugs subject to the accelerated approval, the FDA requested that the
Company conduct a Phase IV clinical trial on DepoCyt which is in process. There
can be no assurance that the data from the DepoCyt Phase III clinical trials
will be sufficient to gain FDA approval for marketing for any indication, that
additional results from ongoing pivotal Phase III trials will be consistent with
earlier results or that the Phase IV and other clinical trials of DepoCyt will
generate positive results. Any of these occurrences would have a material
adverse effect on the Company.

        GOVERNMENT REGULATION; UNCERTAINTY OF OBTAINING REGULATORY APPROVAL.
DepoTech's research and development activities are, and its future business will
be, subject to significant regulation by governmental authorities in the United
States, primarily by the FDA, and internationally. The clinical testing and the
regulatory review process for new drugs or biologics requires substantial time,
effort and expense. There can be no assurance that any approval will be granted
to the Company's development products on a timely basis, if at all. The FDA or
its international equivalent may refuse to approve a drug or biological product
for commercial sale or shipment if applicable statutory and/or regulatory
criteria are not satisfied, or may require additional testing or information.
There can be no assurance that such additional testing or the provision of such
additional information, if required, will not have a material adverse effect on
the Company. Also, the regulatory process can be modified by legislatures, the
FDA or international regulators, in a manner that could have a material adverse
effect on the Company.

        LIMITED MANUFACTURING EXPERIENCE; RISK OF SCALE-UP; RELIANCE ON
MANUFACTURING PROCESS. The Company has no experience manufacturing products for


                                       10
<PAGE>   13
commercial purposes. The Company has scaled-up its manufacturing operations to
meet initial commercial requirements for DepoCyt but these operations will
require satisfactory resolution of inspectional observations from an initial
pre-approval inspection by the FDA, a necessary step in the regulatory approval
process to market this product. For all other products, the Company will need to
scale-up its current manufacturing operations. The Company will also need to
comply with current Good Manufacturing Practices ("cGMPs") and other regulations
prescribed by various regulatory agencies in the United States and other
countries to achieve the required levels of production of each of its products
and to obtain and retain marketing approval, if any. Failure by the Company to
successfully scale-up its manufacturing processes or to comply with cGMPs and
other regulations would have a material adverse effect on the Company, including
the loss of manufacturing rights to DepoCyt under the Chiron and P&U agreements.
To date, the Company has relied on a particular proprietary method of
manufacture. There can be no assurance that this method will be applicable to
all pharmaceuticals or biologics the Company desires to commercialize. Further,
the yield of product incorporated into the delivery system is likely to be
highly variable for different therapeutic agents. Finally, the Company will need
to successfully meet any manufacturing challenges associated with the specific
characteristics of the drug to be encapsulated.

        DEPENDENCE UPON PARTNERS FOR DEVELOPMENT AND COMMERCIALIZATION. The
Company does not currently possess all of the resources necessary to develop,
complete the FDA approval process for and commercialize all of its potential
therapeutic products. The Company hopes to enter into collaborative arrangements
with other companies to fund research, development and clinical trials, to
assist in obtaining regulatory approvals and to commercialize its products in
the United States and internationally. In addition, the Company's ability to
apply its drug delivery technology to a broad range of pharmaceuticals will
depend upon its ability to establish and maintain collaborative arrangements
because the rights to many of the pharmaceuticals most suited to the Company's
drug delivery technology are currently owned or controlled by third parties.
While the Company has entered into preliminary arrangements to test the
feasibility of its delivery technology with certain pharmaceuticals and has
entered into more extensive collaborations with Chiron and P&U, there can be no
assurance that the Company will be able to enter into additional collaborations
to develop commercial applications of its drug delivery technology. In addition,
there can be no assurance that the Company will be able to enter into or
maintain existing or future collaborations or that such collaborations will be
successful. The failure of the Company to enter into a collaboration with the
owner of rights to a particular formulation or pharmaceutical would preclude the
Company from developing its drug delivery technology with respect to such
formulation or pharmaceutical. The failure to enter into or maintain existing or
future collaborations would have a material adverse effect on the Company.

        LIMITED SALES AND MARKETING CAPABILITY. Commercialization of the
Company's products is expected to be expensive and time-consuming. To the extent
the Company relies on its collaborators for sales and marketing capability, the
Company will be dependent on the efforts of third parties and there can be no
assurance that any of these collaborators will successfully market or distribute
the Company's products.


                                       11
<PAGE>   14
        PATENTS AND PROPRIETARY TECHNOLOGY. DepoTech relies on a combination of
technical leadership, patents, trade secrets, copyright and trademark protection
and nondisclosure agreements to protect its proprietary rights. There can be no
assurance that any patents issued to the Company will provide significant
protection or will not be challenged or that, the Company will be issued any
additional patents. Even if such patents are enforceable, the Company
anticipates that any attempts to enforce its patents would be time consuming and
costly. Additionally, the coverage claimed in a patent application can be
significantly reduced before the patent is issued. Defense of any lawsuit or
failure to obtain a license to intellectual property rights of third parties
could have a material adverse affect on the Company.

        POSSIBLE VOLATILITY OF STOCK PRICE. Factors such as the announcements of
technological innovations or new products by the Company, its competitors and
other third parties, as well as variations in the Company's results of
operations, market conditions, analysts' estimates and the stock market in
general may cause the market price of the Company's common stock to fluctuate
significantly. Also, future sales of shares by existing shareholders pursuant to
Rule 144 of the Securities Act of 1933, as amended, or through the exercise of
outstanding registration rights, could have an adverse effect on the price of
the Company's common stock.


                                       12
<PAGE>   15
PART II - OTHER INFORMATION

Item 1         Legal Proceedings.  None

Item 2         Change in Securities.  None.

Item 3         Defaults Upon Senior Securities.  None


                                       13
<PAGE>   16
PART II OTHER INFORMATION

Item 4  Submission of Matters to a Vote of Security Holders

        The Company's 1997 Annual Meeting of Shareholders ("Annual Meeting") was
held on May 14, 1997. The matters voted on at the Annual Meeting were:

1.  To elect a Board of Directors.
2.  To approve amendments to the Company's 1995 stock option/issuance plan.
3.  To ratify the appointment of Ernst & Young LLP as the Company's independent
    auditors for the year ending December 31, 1997.

The results of the shareholders' vote on each matter set forth below:

1.  Elect a Board of Directors


<TABLE>
<CAPTION>
Nominees                                    For                    Withheld
--------                                    ---                    --------
<S>                                         <C>                    <C>    

Roger C. Davisson                           10,212,077             275,959
George W. Dunbar Jr.                        10,209,877             278,159
Edward L. Erickson                          10,211,677             276,359
Stephen B. Howell, M.D.,                    10,209,177             278,859
Fred A. Middleton                           10,211,677             276,359
Peter Preuss                                10,211,877             276,159
Pieter J. Strijkert, Ph.D.                   9,931,911             556,125
</TABLE>


2.  Approve amendments to stock option plan

<TABLE>
<CAPTION>
                                                Votes
                                                -----
<S>                                             <C>      
For                                             6,455,866
Against                                         2,882,646
Abstain                                             8,419
Broker Non-Votes                                1,141,105
</TABLE>

3.  Ratify auditors

<TABLE>
<CAPTION>
                                                Votes
                                                -----
<S>                                             <C>       
For                                             10,481,232
Against                                              2,075
Abstain                                              4,729
</TABLE>


                                       14
<PAGE>   17
Item 5 Other Information. None.

Item 6 Exhibits and Reports on Form 8-K

(a) Exhibits


<TABLE>
<CAPTION>
      Exhibit
      Number
      ------

<S>             <C>  
        10.1    David B. Thomas Employment Agreement dated June 30, 1997.


        10.2#   The Company's 1995 Stock Option /Stock Issuance Plan, as
                amended (Exhibit 99.1).

        10.3*   Amendment #2 to Collaboration Agreement, dated June 5, 1997
                between DepoTech Corporation and Chiron Corporation (Exhibit
                2.1).
 </TABLE>


(b) Reports on Form 8-K

                On June 20, 1997 the Company filed a Current Report on Form 8-K
                dated June 5, 1997 providing the required disclosures regarding
                its repurchase of certain rights to DepoCyt from Chiron
                Corporation.


#    Incorporated by reference to the same-numbered exhibit (except as otherwise
     indicated) to the Company's Registration Statement on Form S-8 ( No.
     333-28531).

*    Incorporated by reference to the same numbered exhibit (except as otherwise
     indicated) to the Company's Current Report on Form 8-K filed June 20, 1997.



                                       15
<PAGE>   18
                              DEPOTECH CORPORATION

                                   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.




                                    DEPOTECH CORPORATION


                                    /s/  Edward L. Erickson
                                    --------------------------------------------
Date:  August 13, 1997              Edward L. Erickson
                                    President and Chief Executive Officer
                                    (Principal Executive Officer)


                                    /s/  Dana S. McGowan
                                    --------------------------------------------
Date:  August 13, 1997              Dana S. McGowan
                                    Vice President, Finance
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)


                                       16