<PAGE>   1


                                    FORM 10-Q

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

[x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1999

[ ]  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 0-20713
                                                -------

                                 ENTREMED, INC.
                                 --------------
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                          <C>
           Delaware                                              58-1959440
           --------                                              ----------
(State or other jurisdiction of                      (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>

                            9640 Medical Center Drive
                               Rockville, Maryland
                               -------------------
                    (Address of principal executive offices)

                                      20850
                                      -----
                                   (Zip code)

                                 (301) 217-9858
                                 --------------
              (Registrant's telephone number, including area code)

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.

       Class                                Outstanding at November 10, 1999
----------------------------                --------------------------------
Common Stock $.01 Par Value                          14,706,133


<PAGE>   2


                                 ENTREMED, INC.


                                Table of Contents

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

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

Consolidated Balance Sheets
as of September 30, 1999 and December 31, 1998                                                        3

Consolidated Statements of
Operations for the Three Months Ended
September 30, 1999 and 1998, and the Nine Months
Ended September 30, 1999 and 1998                                                                     4

Consolidated Statements of Cash
Flows for the Nine Months Ended September 30, 1999
and 1998                                                                                              5

Notes to Consolidated Financial
Statements                                                                                            6

Item 2 --      Management's Discussion and Analysis
               of Financial Condition and Results of
               Operations                                                                             7

Part II.  OTHER INFORMATION

Item 1 --      Legal Proceedings                                                                     10

Item 2 --      Changes in Securities                                                                 10

Item 3 --      Defaults upon Senior Securities                                                       10

Item 4 --      Submission of Matters to Vote of
               Security Holders                                                                      10

Item 5 --      Other Information                                                                     10

Item 6 --      Exhibits and Reports on Form 8-K                                                      11

SIGNATURES                                                                                           12
</TABLE>



                                       2
<PAGE>   3


                                 ENTREMED, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                      September 30,           December 31,
                                                                                           1999                   1998
                                                                                      -------------          -------------
ASSETS                                                                                 (unaudited)
Current assets:
<S>                                                                                   <C>                    <C>
   Cash and cash equivalents                                                          $  39,898,939          $  30,818,689
   Short-term investments                                                                         -              4,352,371
   Interest receivable                                                                      141,698                186,927
   Accounts receivable                                                                      549,042                112,383
   Prepaid expenses and other                                                               170,379                170,877
                                                                                      -------------          -------------
Total current assets                                                                     40,760,058             35,641,247

Furniture and equipment, net                                                              3,971,723              2,979,237

Other assets                                                                                905,733                953,519
                                                                                      -------------          -------------
      Total assets                                                                    $  45,637,514          $  39,574,003
                                                                                      =============          =============


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                                   $   3,823,161          $   2,093,017
   Accrued liabilities                                                                    1,385,100              1,332,682
   Deferred revenue                                                                          75,000              2,945,833
                                                                                      -------------          -------------
Total current liabilities                                                                 5,283,261              6,371,532

Minority interest                                                                            20,090                 14,407

Stockholders' equity:
   Convertible preferred stock, $1.00 par and $1.50
     Liquidation value:
     5,000,000 shares authorized, none issued and
     outstanding at September 30, 1999 (unaudited)
     and December 31, 1998                                                                        -                      -
   Common stock, $.01 par value:
     35,000,000 shares authorized, 14,705,883 (unaudited) and 13,123,031 shares
     issued and outstanding at September 30, 1999 and
     December 31, 1998, respectively                                                        147,059                131,230
   Additional paid-in capital                                                           107,547,268             78,364,136
   Accumulated deficit                                                                  (67,360,164)           (45,307,302)
                                                                                      -------------          -------------
Total stockholders' equity                                                               40,334,163             33,188,064
                                                                                      -------------          -------------
      Total liabilities and stockholders' equity                                      $  45,637,514          $  39,574,003
                                                                                      =============          =============
</TABLE>



    The accompanying notes are an integral part of the financial statements.



                                       3
<PAGE>   4


                                 ENTREMED, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                        Three Months Ended                      Nine months ended
                                                           September 30,                           September 30,
                                                      1999                 1998               1999                1998
                                                  --------------------------------        --------------------------------

Revenues:
<S>                                               <C>                 <C>                 <C>                 <C>
     Collaborative research and development       $  1,014,166        $  1,042,500        $  3,099,166        $  3,127,500
     Licensing                                         303,333              50,000             403,333             150,000
     Grant revenues                                    128,897             241,262             287,716             376,718
     Royalty revenues                                  288,108                   -             716,319                   -
     Other revenues                                     51,813               9,675              52,853               9,675
                                                  ------------        ------------        ------------        ------------

Total revenues                                       1,786,317           1,343,437           4,559,387           3,663,893


Expenses:
     Research & development                          6,959,576           4,481,485          21,686,171          10,326,215
     General & administrative                        2,223,748           1,380,387           6,122,655           3,907,287
                                                  ------------        ------------        ------------        ------------
                                                     9,183,324           5,861,872          27,808,826          14,233,502

Investment income                                      501,290             559,126           1,196,577           1,685,543
                                                  ------------        ------------        ------------        ------------

Net loss                                          $ (6,895,717)       $ (3,959,309)       $(22,052,862)       $ (8,884,066)
                                                  ============        ============        ============        ============

Net loss per share (basic and diluted)            $      (0.48)       $      (0.31)       $      (1.63)       $      (0.71)
                                                  ============        ============        ============        ============
Weighted average number of shares
      outstanding (basic and diluted)               14,247,373          12,934,183          13,506,269          12,557,496
                                                  ============        ============        ============        ============
</TABLE>







    The accompanying notes are an integral part of the financial statements.


                                       4
<PAGE>   5


                                 ENTREMED, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                       Nine Months Ended
                                                                         September 30,
                                                                   1999                   1998
                                                               -----------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                             <C>                 <C>
Net loss                                                        $(22,052,862)       $ (8,884,066)
Adjustments to reconcile net loss to net cash
     used by operating activities:
     Depreciation                                                    675,331             559,760
     Loss on disposal of furniture & equipment                        65,674                   -
     Minority interest                                                 5,683               4,901
     Changes in assets and liabilities:
        Accounts receivable                                         (436,659)             17,177
        Interest receivable                                           45,229             228,800
        Prepaid expenses and other                                    48,284            (108,674)
        Accounts payable                                           1,730,144             409,093
        Accrued liabilities                                           52,418            (349,132)
        Deferred revenue                                          (2,870,833)         (1,367,499)
                                                                ------------        ------------
      Net cash used by operating activities                      (22,737,591)         (9,489,640)

CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of short-term investments                               4,352,371          42,757,660
Purchases of short-term investments                                        -         (19,579,726)
Other investments                                                          -            (250,000)
Purchases of furniture & equipment                                (1,733,491)           (667,203)
                                                                ------------        ------------
      Net cash provided by investing activities                    2,618,880          22,260,731

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from option, warrant exercises and sale of stock         29,198,961           3,348,340
                                                                ------------        ------------
      Net cash provided by financing activities                   29,198,961           3,348,340

Net increase in cash and cash equivalents                          9,080,250          16,119,431
Cash and cash equivalents at beginning of period                  30,818,689          18,232,491
                                                                ------------        ------------
Cash and cash equivalents at end of period                      $ 39,898,939        $ 34,351,922
                                                                ============        ============
</TABLE>





    The accompanying notes are an integral part of the financial statements.



                                       5
<PAGE>   6


                                 ENTREMED, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         SEPTEMBER 30, 1999 (UNAUDITED)



1.          BASIS OF PRESENTATION

            The accompanying unaudited consolidated financial information of
            EntreMed, Inc. (the "Company") includes the accounts of its 85%
            owned subsidiary, Cytokine Sciences, Inc. Cytokine Sciences was
            formed in June 1996 and was capitalized with $250,000 by EntreMed
            for the purpose of acquiring the assets of Innovative Therapeutics,
            Inc., which acquisition was completed in July 1996 in exchange for
            15% of the common stock of Cytokine Sciences, Inc.

            The accompanying unaudited consolidated financial statements have
            been prepared in accordance with generally accepted accounting
            principles for interim financial information and in accordance with
            the instructions to Form 10-Q and Article 10 of Regulation S-X.
            Accordingly, such consolidated financial statements do not include
            all of the information and disclosures required by generally
            accepted accounting principles for complete financial statements. In
            the opinion of management, all adjustments (consisting of normal
            recurring accruals) considered necessary for a fair presentation
            have been included. Operating results for the nine-month period
            ended September 30, 1999 are not necessarily indicative of the
            results that may be expected for the year ending December 31, 1999.
            For further information, refer to the Company's audited financial
            statements and footnotes thereto included in the Company's Form 10-K
            for the year ended December 31, 1998.


2.          CONTINGENCIES

            The Company is a defendant in a lawsuit initiated in August 1995 in
            the United States District Court for the Eastern District of
            Tennessee by Bolling, McCool & Twist ("BMT"), a consulting firm. In
            the suit, BMT asserts that the Company breached an agreement between
            BMT and the Company by failing to pay BMT certain fees it asserts
            are owed under the agreement. More specifically, BMT has asserted a
            claim for the payment of services rendered in the approximate amount
            of $50,000 and seeks a success fee in an unspecified amount in
            connection with the Bristol-Myers Squibb Company Collaboration ("BMS
            Collaboration"). The judge in the case bifurcated the proceeding
            into two phases: an adjudication of whether the Company breached its
            agreement with BMT and then a damage phase. After a trial on the
            merits the jury found in favor of BMT on the breach of contract
            claim. A trial to determine damages had been scheduled for April 14,
            1998. However, on April 6, 1998, the court issued an Order pursuant
            to which damages were limited to those arising during the term of
            the Agreement, which terminated on November 1, 1995. On May 6, 1999,
            the court confirmed its decision by granting the Company's motion
            for summary judgment and limiting the Company's damages to
            approximately $50,000 plus interest. Thus, this litigation at the
            trial level has been concluded. BMT has filed an appeal and the
            Company has cross-appealed. The Company cannot predict the outcome
            of such appeal. However, the Company intends to continue to contest
            any further action vigorously and believes that this proceeding will
            not have a material adverse effect on the Company or on its
            financial condition, although there can be no assurance that this
            will be the case.




                                       6
<PAGE>   7


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

GENERAL

               Since its inception in September 1991, the Company has devoted
substantially all of its efforts and resources to sponsoring and conducting
research and development on its own behalf and through collaborations with
corporate partners and academic research and clinical institutions, and
establishing its facilities and hiring personnel. Through September 30, 1999,
with the exception of license fees, research and development funding, royalty
payments, and certain research grants, the Company has not generated any revenue
from operations. The Company anticipates its primary revenue sources for the
next several years to include royalty payments, research grants and
collaboration payments from collaborators under arrangements entered into in the
future. The timing and amounts of such revenues, if any, will likely fluctuate
and depend upon the achievement of specified milestones, and results of
operations for any period may be unrelated to the results of operations for any
other period.

RESULTS OF OPERATIONS

Three and Nine Months Ended September 30, 1999 and September 30, 1998

               Revenues increased approximately 33% from approximately
$1,343,000 for the three months ended September 30, 1998 ("1998 Three Months")
to approximately $1,786,000 for the three months ended September 30, 1999 ("1999
Three Months"). For the nine months ended September 30, 1999 ("1999 Nine
Months"), revenues were approximately $4,559,000 as compared to $3,664,000 for
the nine months ended September 30, 1998 ("1998 Nine Months"), a 24% increase.
These increases are primarily due to royalty income received from Celgene on the
sale of thalidomide. In addition, in August 1999 EntreMed recognized the balance
of BMS collaborative research and development fees, license fees and related
deferred revenue due to the modification of the research agreement whereby the
Company assumed all responsibility for preclinical and clinical work on the
Angiostatin(R) protein. Deferred revenue from the collaborative research and
development fees related to the amortization over five years of a one-time
payment of $2,500,000 from Bristol-Myers Squibb Company ("BMS") received in
December 1995 and the amortization of semi-annual payments of $1,835,000 under
the BMS Collaboration agreement, both fully amortized in August 1999. The
license fee represented the amortization over five years of a one-time
$1,000,000 license fee received in December 1995 under the BMS Collaboration
agreement also fully amortized in August 1999.

               Research and development expenses increased by approximately 55%
from approximately $4,481,000 in the 1998 Three Months to approximately
$6,960,000 in the 1999 Three Months and by approximately 110% from approximately
$10,326,000 in the 1998 Nine Months to approximately $21,686,000 in the 1999
Nine Months. Research and development expenditures include sponsored research
payments to academic collaborators, including payments to Children's Hospital of
$1,700,000 in 1999 and $2,000,000 in 1998 and expenses related to the Company's
internal research programs. The increase in research and development costs
reflects increased efforts in the Company's internal and sponsored research and
product development programs related to its antiangiogenesis technologies.
Overall, research personnel increased from 42 as of September 30, 1998 to 52 as
of September 30, 1999. Research and development expenses are expected to
continue to increase as the Company continues to expand its research and
development efforts.

                                       7
<PAGE>   8

               General and administrative expenses increased approximately 61%
from approximately $1,380,000 in the 1998 Three Months to approximately
$2,224,000 in the 1999 Three Months. For the 1999 Nine Months, general and
administration expenses were approximately $6,123,000 as compared to
approximately $3,907,000 for the 1998 Nine Months, a 57% increase. The overall
increase in general and administrative expenses during the 1999 periods compared
to comparable periods of 1998 resulted primarily from the increase in
administrative costs associated with adding administrative staff to support the
Company's research efforts and external collaborations the Company is
conducting, investigating potential strategic relationships, and obtaining
professional services. Investment income decreased approximately 10% from
approximately $559,000 in the 1998 Three Months to approximately $501,000 in the
1999 Three Months and decreased approximately 29% from approximately $1,686,000
in the 1998 Nine Months to approximately $1,197,000 in the 1999 Nine Months.
This overall decrease in investment income during the 1999 periods compared to
comparable periods of 1998 is due to the reduction of the Company's cash and
short-term investments as such working capital components are used to fund the
Company's operations.

LIQUIDITY AND CAPITAL RESOURCES

               At September 30, 1999, the Company had cash and cash equivalents
of approximately $39,899,000 with working capital of approximately $35,477,000,
primarily representing the net proceeds of the Company's private placements of
equity securities and its initial public offering, payments from BMS which
include equity investments, royalties received from Celgene and various grants.

                On July 27, 1999, the Company completed an offering of 1,478,118
shares of its common stock, par value $.01 per share, Series 1 Warrants to
purchase a total of 739,059 shares of Common Stock at an exercise price of
$33.02 and Series 2 Warrants to purchase a total of 739,059 shares of Common
Stock at an exercise price of $25.45. The offering resulted in gross proceeds to
the Company, prior to the deduction of fees and commissions, of approximately
$30.1 million. The net proceeds from the offering will be used by the Company
for continued clinical development of the Company's products, working capital
and general corporate purposes, at the discretion of the Company's management.

               The Company's cash resources have been used to finance research
and development, including sponsored research, capital expenditures, including
leasehold improvements to the Company's new facility, and general and
administrative expenses. Over the next several years, the Company expects to
incur substantial additional research and development costs, including costs
related to early-stage research, preclinical and clinical trials, increased
administrative expenses to support its research and development operations and
increased capital expenditures for expanded research capacity, various equipment
needs and facility improvements.




                                       8
<PAGE>   9




               The Company is a party to sponsored research agreements requiring
the Company to fund an aggregate of approximately $3,832,000 through 2001
(including $2,900,000 to Children's Hospital), materials production costs of up
to $9,000,000 for clinical trials, and license agreements requiring future
milestone payments of up to $3,635,000 and additional payments upon attainment
of regulatory milestones.

            On February 9, 1999, the original BMS Collaboration was modified
such that the final payment of $611,667 under the agreement was paid on June 5,
1999. As amended, BMS has no further funding obligation to the Company after
August 9, 1999.


YEAR 2000 COMPLIANCE

               The Year 2000 Issue is the result of computer programs being
written using two digits rather than four to define the applicable year. As a
result, those computer programs having time-sensitive software would recognize a
date using "00" as the year 1900 rather than the year 2000.

               The Company has queried its significant supplier that does not
share information systems with the Company (external agent). To date, the
Company is not aware of any external agent with a Year 2000 issue that would
materially impact the Company's results of operations, liquidity, or capital
resources. However, the Company has no means of ensuring that external agents
will be Year 2000 ready. The inability of external agents to complete the Year
2000 resolution process in a timely fashion could materially impact the Company.
The effect of non-compliance by external agents is not determinable.

               The Company anticipates no other Year 2000 problems that are
reasonably likely to have a material adverse effect on the Company's operations.
There can be no assurance, however, that such problems will not arise.

               To date, the Company has not incurred significant costs in
connection with the implementation of its Year 2000 Plan and does not expect
future costs to be significant.

----------------------------------

               Statements herein that are not descriptions of historical facts
are forward-looking and subject to risk and uncertainties. Actual results could
differ materially from those currently anticipated due to a number of factors,
including those set forth in the Company's Securities and Exchange Commission
filings under "Risk Factors", including risks relating to the early stage of
products under development; uncertainties relating to clinical trials'
dependence on third parties' future capital needs; and risks relating to the
commercialization, if any, of the Company's proposed products (such as
marketing, safety, regulatory, patent, product liability, supply, competition
and other risks).




                                       9
<PAGE>   10



PART II.       OTHER INFORMATION

Item 1.        LEGAL PROCEEDINGS

               This information as set forth in Note 2 of "Notes to Consolidated
               Financial Statements" appearing in Item 1 of Part I of this
               report is incorporated herein by reference.

Item 2.        CHANGES IN SECURITIES

               On July 27, 1999, the Company completed a private placement of
               1,478,118 shares of its Common Stock, par value $.01 per share,
               Series 1 Warrants to purchase a total of 739,059 shares of Common
               Stock at an exercise price of $33.02 and Series 2 Warrants to
               purchase a total of 739,059 shares of Common Stock at an exercise
               price of $25.45, with purchasers qualifying as "accredited
               investors" under Rule 501(a) of Regulation D. The private
               placement resulted in gross proceeds to the Company, prior to the
               deduction of fees and commissions, of approximately $30.1
               million. The net proceeds from the placement will be used by the
               Company for continued clinical development of the Company's
               products, working capital and general corporate purposes, at the
               discretion of the Company's management. The offering was exempt
               from registration under the Securities Act of 1933, as amended,
               pursuant to the exemption set forth in Section 4(2) and
               Regulation D promulgated thereunder, as the securities were
               issued in private placements with accredited investors and did
               not involve any public offering.


Item 3.        DEFAULT UPON SENIOR SECURITIES

               Not applicable.

Item 4.        SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

               Not applicable.

Item 5.        OTHER INFORMATION

               Not applicable.




                                       10
<PAGE>   11




Item 6.        EXHIBITS AND REPORTS ON FORM 8-K

               (a)     The following exhibits are filed with this report:

               4.1*           Form of Series 1 Warrant

               4.2*           Form of Series 2 Warrant

               10.34+         Bioprocessing Services Agreement between Covance
                              Biotechnology Services, Inc. and EntreMed, Inc,
                              signed July 7, 1999 regarding
                              Angiostatin(R) protein

               10.35+         Letter of Intent between Covance Biotechnology
                              Services, Inc. and EntreMed, Inc, dated August 30,
                              1999 regarding Endostatin(TM) protein

               10.36*         Form of Securities Purchase Agreement, dated as of
                              July 22, 1999, by and among EntreMed, Inc. and the
                              purchasers in the offering

               10.37*         Form of Registration Rights Agreement, dated as of
                              July 27, 1999, by and among EntreMed, Inc. and the
                              purchasers in the offering

               27.1           Financial Data Schedule

-----------------

*              Incorporated by reference to the Company's current report on Form
               8-K dated July 27, 1999 previously filed with the Securities and
               Exchange Commission.

+              Portions of this Exhibit have been omitted pursuant to a
               Confidential Treatment Request, which the Company has filed
               separately with the Securities and Exchange Commission.

-----------------


               (b)   A current report on Form 8-K dated July 27, 1999 was filed
                     on August 10, 1999 under Item 5 thereto reporting that the
                     Company completed an offering of 1,478,118 shares of its
                     common stock, par value $.01 per share, Series 1 Warrants
                     to purchase a total of 739,059 shares of common stock and
                     Series 2 Warrants to purchase 739,059 shares of common
                     stock.




                                       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.



                                                       ENTREMED, INC.
                                                        (Registrant)


Date:  November 12, 1999                      /s/ John W. Holaday, Ph.D.
                                           -------------------------------
                                                  John W. Holaday, Ph.D.
                                          President and Chief Executive Officer




Date:  November 12, 1999                      /s/ R. Nelson Campbell
                                           -------------------------------
                                                R. Nelson Campbell
                                               Chief Financial Officer






                                       12