The previous movie ended with a cliffhanger. Specifically, the fact that Veronica Quaife was pregnant with Seth Brundle's child. The question haunting poor Veronica's mind throughout that movie was whether or not the baby was conceived before or after Seth's telepod accident.
The possibility of it having happened afterward weighed so heavily on Veronica's mind (she dreamed of giving birth to a baby-sized maggot!) that she went to get an abortion. She was thwarted however when the grotesquely mutated Seth broke into the clinic and kidnapped her.
Although Seth was eventually killed, the question of what Veronica was going to do with his baby remained. The movie ended with this plot thread unresolved.
The sequel picks up very nearly right where the first one left off. Whether or not Veronica intended to get an abortion isn't gone into. Instead it seems the enigmatic Bartok Science Industries who funded Seth's work have taken custody of both Veronica and her unborn child and are forcing her to carry it to term.
As the movie begins, Anton Bartok arrives to find Veronica violently in labor and also played by someone who isn't Geena Davis. He watches impassively as she screams and thrashes as something presumably yucky moves around inside of her hugely pregnant belly. The entire scene recalls Veronica's traumatic maggot-baby dream from the first film. Indeed, it seems as if that nightmare has come true, as, instead of a human baby, Veronica gives birth to a wiggling pupa-like mass of flesh.
The Fly II then follows the time-honored sequel tradition of killing off the first film's lead character almost immediately, as, upon seeing what it is she has just given birth to, Veronica promptly flatlines for no given reason and dies. Her body is barely cold before the doctors dissect the pupa thing and from it remove a seemingly normal human baby boy, which one of the doctors triumphantly holds up to the onlooking Bartok.
There is some speculation amongst fans of the movie that Veronica's death was neither natural nor accidental, and that one of the doctors overdosed her on something after Stathis Borans is forcibly made to leave. The idea is that once Veronica was no longer useful to him, Bartok had her killed, however nothing in the movie remotely suggests this (even though Bartok is capable of such a thing) and her death is never presented as anything over than being natural.