##### 



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20459

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

For the quarterly period ended March 31, 2003

[  ] 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)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 58-1959440                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)



9640 Medical Center DriveRockville, 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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

YES
X    NO

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the most recent practicable date.

|                            |  |                           
|--------------------------- |  | --------------------------
|Class                       |  | Outstanding at May 7, 2003
|Common Stock $.01 Par Value |  | 28,583,566                





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##### 



ENTREMED, INC.
Table of Contents

|                                                                                               |  |      |    | 
|---------------------------------------------------------------------------------------------- |  | ---- | -- | 
|PART I. FINANCIAL INFORMATION                                                                  |  | PAGE
|                                                                                               |  |      |   
|Item 1  Financial Statements                                                                  |  |      |    | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Consolidated Balance Sheets
as of March 31, 2003 and December 31, 2002                         |  |      | 3  | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Consolidated Statements of
Operations for the Three Months Ended
March 31, 2002 and 2002       |  |      | 4  | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Consolidated Statements of Cash
Flows for the Three Months Ended March 31, 2003
and 2002       |  |      | 5  | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Notes to Consolidated Financial
Statements                                                     |  |      | 6  | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Item 2  Managements Discussion and Analysis
of Financial Condition and Results of
Operations |  |      | 8  | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Item 3  Quantitative and Qualitative Disclosures
About Market Risk                            |  |      | 13 | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Item 4 - Disclosure Controls and Procedures                                                   |  |      | 14 | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Part II. OTHER INFORMATION                                                                     |  |      |    | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Item 1  Legal Proceedings                                                                     |  |      | 14 | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Item 2  Changes in Securities                                                                 |  |      | 14 | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Item 3  Defaults upon Senior Securities                                                       |  |      | 14 | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Item 4  Submission of Matters to Vote of
Security Holders                                     |  |      | 14 | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Item 5  Other Information                                                                     |  |      | 14 | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Item 6  Exhibits and Reports on Form 8-K                                                      |  |      | 14 | 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|SIGNATURES                                                                                     |  |      | 15 | 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains and incorporates by reference certain forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. These statements may be identified by forward-looking words
such as may, will, expect, anticipate or similar words. These
forward-looking statements include, among others, statements regarding the
timing of our clinical trials and the expected increases in our expenses.

Our forward-looking statements are based on information available to us today,
and we will not update these statements. Our actual results may differ
significantly from those discussed in our forward-looking statements due to,
among other factors, operating losses and anticipation of future losses; the
value of our common stock; uncertainties relating to our technological
approach; uncertainty of our product candidate development; our need for
additional capital and uncertainty of additional funding; our dependence on
collaborators and licensees; intense competition and rapid technological change
in the biopharmaceutical industry; uncertainties relating to our patent and
proprietary rights; uncertainties relating to clinical trials, government
regulation and uncertainties of obtaining regulatory approval on a timely basis
or at all; our dependence on key personnel, research collaborators and
scientific advisors; uncertainties relating to health care reform measures and
third-party reimbursement; risks associated with product liability; and other
factors discussed in our other filings with the Securities and Exchange
Commission.

2



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##### 



EntreMed, Inc.
Consolidated Balance Sheets

|                                           |                                                                                                                     |                                                                                                                                            |            |                |         |                   |            |              |         | 
|------------------------------------------ | ------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | ---------- | -------------- | ------- | ----------------- | ---------- | ------------ | ------- | 
|                                           |                                                                                                                     |                                                                                                                                            |            | March 31, 2003 |         | December 31, 2002
|                                           |                                                                                                                     |                                                                                                                                            |            |                |         |                  
|                                           |                                                                                                                     |                                                                                                                                            |            | (Unaudited)    |         |                  
|ASSETS                                     |                                                                                                                     |                                                                                                                                            |            |                |         |                   |            |             
|                                          
|                                          
|                                          
|                                          
|Current assets:                            |                                                                                                                     |                                                                                                                                            |            |                |         |                   |            |             
|                                          
|                                          
|                                          
|                                          
|                                           | Cash and cash equivalents                                                                                           |                                                                                                                                            | $          | 6,553,096      |         |                   | $          | 24,067,045   |        
|                                          
|                                          
|                                          
|                                          
|                                           | Short-term investment                                                                                               |                                                                                                                                            |            | 8,413,400      |         |                   |            |             |        
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts receivable                                                                                                 |                                                                                                                                            |            | 244,447        |         |                   |            | 309,292      |        
|                                          
|                                          
|                                          
|                                          
|                                           | Interest receivable                                                                                                 |                                                                                                                                            |            | 172,962        |         |                   |            | 95           |        
|                                          
|                                          
|                                          
|                                          
|                                           | Prepaid expenses and other                                                                                          |                                                                                                                                            |            | 711,296        |         |                   |            | 272,425      |        
|                                           |                                                                                                                     |                                                                                                                                            |            |                |         |                   |            |             
|Total current assets                       |                                                                                                                     |                                                                                                                                            | 16,095,201 |                |         |                   | 24,648,857 |             
|                                          
|                                          
|                                          
|                                          
|Furniture and equipment, net               |                                                                                                                     |                                                                                                                                            | 2,548,876  |                |         |                   | 3,152,072  |             
|                                          
|                                          
|                                          
|                                          
|Other assets                               |                                                                                                                     |                                                                                                                                            | 9,283      |                |         |                   | 9,283      |             
|                                           |                                                                                                                     |                                                                                                                                            |            |                |         |                   |            |             
|Total assets                               |                                                                                                                     | $                                                                                                                                          | 18,653,360 |                |         | $                 | 27,810,212 |             
|                                           |                                                                                                                     |                                                                                                                                            |            |                |         |                   |            |             
|LIABILITIES AND STOCKHOLDERS EQUITY       |                                                                                                                     |                                                                                                                                            |            |                |         |                   |            |             
|                                          
|                                          
|                                          
|                                          
|Current liabilities:                       |                                                                                                                     |                                                                                                                                            |            |                |         |                   |            |             
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts payable                                                                                                    |                                                                                                                                            | $          | 5,053,382      |         |                   | $          | 10,065,163   |        
|                                          
|                                          
|                                          
|                                          
|                                           | Accrued liabilities                                                                                                 |                                                                                                                                            |            | 613,522        |         |                   |            | 1,891,931    |        
|                                          
|                                          
|                                          
|                                          
|                                           | Current portion of deferred revenue                                                                                 |                                                                                                                                            |            | 95,496         |         |                   |            | 110,809      |        
|                                          
|                                          
|                                          
|                                          
|                                           | Current portion of notes payable                                                                                    |                                                                                                                                            |            | 73,108         |         |                   |            | 4,864,952    |        
|                                          
|                                          
|                                          
|                                          
|                                           | Common stock repurchase liability                                                                                   |                                                                                                                                            |            |               |         |                   |            |             |        
|                                           |                                                                                                                     |                                                                                                                                            |            |                |         |                   |            |             
|Total current liabilities                  |                                                                                                                     |                                                                                                                                            | 5,835,508  |                |         |                   | 16,932,855 |             
|                                          
|                                          
|                                          
|                                          
|Deferred revenue, less current portion     |                                                                                                                     |                                                                                                                                            | 262,614    |                |         |                   | 286,488    |             
|                                          
|                                          
|                                          
|                                          
|Other long-term liabilities                |                                                                                                                     |                                                                                                                                            |           |                |         |                   | 80,000     |             
|                                          
|                                          
|                                          
|                                          
|Minority interest                          |                                                                                                                     |                                                                                                                                            | 17,164     |                |         |                   | 17,223     |             
|                                          
|                                          
|                                          
|                                          
|Stockholders equity:                      |                                                                                                                     |                                                                                                                                            |            |                |         |                   |            |             
|                                          
|                                          
|                                          
|                                          
|                                           | Convertible preferred stock, $1.00 par and $1.50
liquidation value:                                                 |                                                                                                                                            |            |                |         |                   |            |              |        
|                                          
|                                          
|                                          
|                                          
|                                           | 5,000,000 shares authorized, 3,350,000 issued and
outstanding at March 31, 2003 and December 31, 2002,
respectively |                                                                                                                                            |            | 3,350,000      |         |                   |            | 3,350,000    |        
|                                          
|                                          
|                                          
|                                          
|                                           | Common stock, $.01 par value:                                                                                       |                                                                                                                                            |            |                |         |                   |            |              |        
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                                                     | 90,000,000 shares authorized, 24,418,566 and
24,145,700 shares issued and outstanding at March 31, 2003
and December 31 2002, respectively |            |                | 252,936 |                   |            |              | 241,457 | 
|                                          
|                                          
|                                          
|                                          
|                                           | Additional paid-in capital                                                                                          |                                                                                                                                            |            | 233,978,617    |         |                   |            | 228,316,897  |        
|                                          
|                                          
|                                          
|                                          
|                                           | Treasury stock, at cost: 874,999 shares held at March 31,
2003 and December 31, 2002, respectively                  |                                                                                                                                            |            | (8,034,244     | )       |                   |            | (8,034,244   | )      
|                                          
|                                          
|                                          
|                                          
|                                           | Deferred stock compensation                                                                                         |                                                                                                                                            |            |               |         |                   |            | (61,846      | )      
|                                          
|                                          
|                                          
|                                          
|                                           | Accumulated deficit                                                                                                 |                                                                                                                                            |            | (217,009,235   | )       |                   |            | (213,318,618 | )      
|                                           |                                                                                                                     |                                                                                                                                            |            |                |         |                   |            |             
|Total stockholders equity                 |                                                                                                                     |                                                                                                                                            | 12,538,074 |                |         |                   | 10,493,646 |             
|                                           |                                                                                                                     |                                                                                                                                            |            |                |         |                   |            |             
|Total liabilities and stockholders equity |                                                                                                                     | $                                                                                                                                          | 18,653,360 |                |         | $                 | 27,810,212 |             
|                                           |                                                                                                                     |                                                                                                                                            |            |                |         |                   |            |             

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

3



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##### 



EntreMed, Inc.
Consolidated Statements of Operations
(Unaudited)

|                                                                  |                                        |   |                    |           |                |   |             |            | 
|----------------------------------------------------------------- | -------------------------------------- | - | ------------------ | --------- | -------------- | - | ----------- | ---------- | 
|                                                                  |                                        |   | Three Months Ended
|                                                                  |                                        |   | March 31, 2003     |           | March 31, 2002
|                                                                  |                                        |   |                    |           |               
|Revenues:                                                         |                                        |   |                    |           |                |   |             |           
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Collaborative research and development |   | $                  | 188,000   |                |   | $           |           | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Licensing                              |   |                    | 23,874    |                |   |             | 23,874     | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Grants                                 |   |                    | 300,000   |                |   |             | 34,263     | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Royalties                              |   |                    | 1,673     |                |   |             | 1,793      | 
|                                                                  |                                        |   |                    |           |                |   |             |           
|                                                                  |                                        |   | 513,547            |           |                |   | 59,930      |           
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Costs and expenses:                                               |                                        |   |                    |           |                |   |             |           
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Research and development               |   |                    | 2,630,606 |                |   |             | 10,858,672 | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | General and administrative             |   |                    | 1,627,204 |                |   |             | 3,791,012  | 
|                                                                  |                                        |   |                    |           |                |   |             |           
|                                                                  |                                        |   | 4,257,810          |           |                |   | 14,649,684  |           
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Interest expense                                                  |                                        |   |                   |           |                |   | (95,376     | )         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Investment income                                                 |                                        |   | 53,647             |           |                |   | 170,651     |           
|                                                                  |                                        |   |                    |           |                |   |             |           
|Net loss                                                          |                                        | $ | (3,690,616         | )         |                | $ | (14,514,479 | )         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Dividends on Series A convertible preferred stock                 |                                        |   | (251,250           | )         |                |   |            |           
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Net loss attributable to common shareholders                      |                                        | $ | (3,941,866         | )         |                | $ | (14,514,479 | )         
|                                                                  |                                        |   |                    |           |                |   |             |           
|Net loss per share (basic and diluted)                            |                                        | $ | (0.16              | )         |                | $ | (0.67       | )         
|                                                                  |                                        |   |                    |           |                |   |             |           
|Weighted average number of shares outstanding
(basic and diluted) |                                        |   | 24,405,812         |           |                |   | 21,777,087  |           
|                                                                  |                                        |   |                    |           |                |   |             |           

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

4



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##### 



EntreMed, Inc.
Consolidated Statements of Cash Flows
(Unaudited)

|                                                                |             |                                              |                            |   |                          |            |             |   |         |            |  
|--------------------------------------------------------------- | ----------- | -------------------------------------------- | -------------------------- | - | ------------------------ | ---------- | ----------- | - | ------- | ---------- | -
|                                                                |             |                                              |                            |   | THREE MONTH PERIOD ENDED
|                                                                |             |                                              |                            |   | MARCH 31,               
|                                                                |             |                                              |                            |   | 2003                     |            | 2002       
|                                                                |             |                                              |                            |   |                          |            |            
|CASH FLOWS FROM OPERATING ACTIVITIES                            |             |                                              |                            |   |                          |            |             |  
|                                                               
|                                                               
|                                                               
|                                                               
|Net loss                                                        |             | $                                            | (3,690,616                 | ) |                          | $          | (14,514,479 | )
|                                                               
|                                                               
|                                                               
|                                                               
|Adjustments to reconcile net loss to net cash used by
operating |             |                                              |                            |   |                          |            |             |  
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Activities: |                                              |                            |   |                          |            |             |   |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |             | Depreciation and amortization                |                            |   | 355,025                  |            |             |   | 366,795 |           
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |             | Recognition of non-cash stock compensation   |                            |   | 33,000                   |            |             |   | 23,727  |           
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |             | Non-cash interest expenses                   |                            |   |                         |            |             |   | 72,369  |           
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |             | Common stock repurchase liability            |                            |   |                         |            |             |   | 247,916 |           
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |             | Minority interest                            |                            |   | (60                      | )          |             |   | (234    | )         
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |             | Changes in operating assets and liabilities: |                            |   |                          |            |             |   |         |           
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |             |                                              | Accounts receivable        |   |                          | (25,161    | )           |   |         | 109,378    |  
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |             |                                              | Interest receivable        |   |                          | (172,867   | )           |   |         | (23,703    | )
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |             |                                              | Prepaid expenses and other |   |                          | (438,871   | )           |   |         | 27,782     |  
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |             |                                              | Accounts payable           |   |                          | (4,543,501 | )           |   |         | (6,135,235 | )
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |             |                                              | Accrued liabilities        |   |                          | (1,212,901 | )           |   |         | (1,132,241 | )
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |             |                                              | Contingent grant           |   |                          |           |             |   |         | 80,000     |  
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |             |                                              | Deferred revenue           |   |                          | (23,874    | )           |   |         | 453,606    |  
|                                                                |             |                                              |                            |   |                          |            |             |  
|Net cash used in operating activities                           |             |                                              | (9,719,826                 | ) |                          |            | (20,424,319 | )
|                                                               
|                                                               
|                                                               
|                                                               
|CASH FLOWS FROM INVESTING ACTIVITIES                            |             |                                              |                            |   |                          |            |             |  
|                                                               
|                                                               
|                                                               
|                                                               
|Purchases of short term financial instruments                   |             |                                              | (8,413,400                 | ) |                          |            |            |  
|                                                               
|                                                               
|                                                               
|                                                               
|Reduction
in ownership of MaxCytes cash                        |             |                                              | (418,108                   | ) |                          |            |            |  
|                                                               
|                                                               
|                                                               
|                                                               
|Purchases of furniture and equipment                            |             |                                              | (4,650                     | ) |                          |            | (206,864    | )
|                                                                |             |                                              |                            |   |                          |            |             |  
|Net cash used in investing activities                           |             |                                              | (8,836,158                 | ) |                          |            | (206,864    | )
|                                                               
|                                                               
|                                                               
|                                                               
|CASH FLOWS FROM FINANCING ACTIVITIES                            |             |                                              |                            |   |                          |            |             |  
|                                                               
|                                                               
|                                                               
|                                                               
|Net proceeds from sale of common stock                          |             |                                              | 1,060,770                  |   |                          |            | 4,940,409   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Proceeds from sale of warrants                                  |             |                                              |                           |   |                          |            | 322,520     |  
|                                                               
|                                                               
|                                                               
|                                                               
|Payment of principle on note payable                            |             |                                              | (18,735                    | ) |                          |            | (265,223    | )
|                                                               
|                                                               
|                                                               
|                                                               
|Proceeds from issuance of long-term debt                        |             |                                              |                           |   |                          |            | 550,000     |  
|                                                                |             |                                              |                            |   |                          |            |             |  
|Net cash provided by financing activities                       |             |                                              | 1,042,035                  |   |                          |            | 5,547,706   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Net decrease in cash and cash equivalents                       |             |                                              | (17,513,949                | ) |                          |            | (15,083,477 | )
|                                                               
|                                                               
|                                                               
|                                                               
|Cash and cash equivalents at beginning of year                  |             |                                              | 24,067,045                 |   |                          |            | 41,386,300  |  
|                                                                |             |                                              |                            |   |                          |            |             |  
|Cash and cash equivalents at end of year                        |             | $                                            | 6,553,096                  |   |                          | $          | 26,302,823  |  
|                                                                |             |                                              |                            |   |                          |            |             |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                |             |                                              |                            |   |                          |            |             |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest paid                                                   |             | $                                            |                           |   |                          | $          | 23,007      |  
|                                                                |             |                                              |                            |   |                          |            |             |  

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

5



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##### 



ENTREMED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003 (unaudited)

1. Basis of Presentation

Our accompanying 2003 unaudited consolidated financial information
includes the accounts of our 85% owned subsidiary, Cytokine Sciences, Inc.
versus the 2002 information which reflects both Cytokine and our previously
consolidated subsidiary MaxCyte, Inc. MaxCyte was formed in July 1998 as a
wholly owned subsidiary and on April 1, 2000 was capitalized with $40,000 in
cash including $1,000 from a MaxCyte officer. All intercompany balances and
transactions have been eliminated in consolidation.

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 our management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended March 31,
2003 are not necessarily indicative of the results that may be expected for the
year ending December 31, 2003. For further information, refer to our audited
consolidated financial statements and footnotes thereto included in our Form
10-K for the year ended December 31, 2002.

2. Recent Accounting Pronouncement

In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46, Consolidation of Variable Interest Entities(FIN 46).
FIN 46 clarifies the application of Accounting Research Bulletin No. 51,
Consolidated Financial Statements, to certain entities in which equity
investors do not have the characteristics of a controlling financial interest
or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other
parties. FIN 46 applies immediately to variable interest entities created after
January 31, 2003. The Company is currently in the process of evaluating what
impact, if any, FIN 46 will have on its financial condition, results of
operations or liquidity.

3. Change in Basis of MaxCyte

The Board of Directors of both EntreMed and MaxCyte
adopted a plan to recapitalize MaxCyte. As a result of the recapitalization,
the Company no longer controls and will no longer consolidate MaxCyte effective
the first quarter of 2003. As a result of the recapitalization,
EntreMed now owns 45% of MaxCyte. The investment in MaxCyte is accounted for
using the equity method. The reduction of EntreMeds ownership in MaxCyte
resulted in a change in EntreMeds basis in MaxCyte. The change from fully
consolidating MaxCyte to reflecting the investment in MaxCyte on the equity
method, resulted in a $4.6 million credit to additional paid-in capital.

4. Short-term investments

Short-term investments consist of corporate debt securities, all of which
mature within on year. We classify these investments as available for sales.
Such securities are stated at market value. The unrealized gains and losses are
nominal as of March 31, 2003. Realized gains and losses

6



---



##### 



and declines in value
judged to be other than temporary on securities available for sale, if any, are
included in operations. The cost of securities sold is calculated using the
specific identification method. As of March 31, 2003, the cost of the
investment was $8,460,566. Realized gains have been insignificant.

5. Stock-Based Compensation

In accordance with Statement of Financial Accounting Standards (SFAS)
No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure
(SFAS 148), the effect on net loss and net loss per share if the Company had
applied the fair value recognition provisions of SFAS No. 123, Accounting for
Stock-Based Compensation(SFAS No. 123) to stock-based employee compensation
is as follows:

|                                                                                                                                            |  |                              |            |      |  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ---------- | ---- |  | - | ----------- | -
|                                                                                                                                            |  | Three months ended March 31,
|                                                                                                                                            |  | 2003                         |            | 2002
|                                                                                                                                            |  |                             
|Net income (loss), as reported                                                                                                              |  | $                            | (3,690,616 | )    |  | $ | (14,514,479 | )
|Deduct: Total stock-based
employee compensation expense
determined under fair value
based method for all awards, net
of related tax effects |  |                              | (2,309,130 | )    |  |   | (3,522,215  | )
|Add: Stock-based non-employee
compensation included in net
income (loss)                                                                    |  |                              | 33,000     |      |  |   | 23,727      |  
|Dividend on Series A convertible
stock preferred stock                                                                                      |  |                              | (251,250   | )    |  |   |            |  
|Pro forma net (loss)
attributable to common
shareholders                                                                                    |  | $                            | (6,250,996 | )    |  | $ | (18,092,967 | )
|Net income (loss) per share:                                                                                                                |  |                              |            |      |  |   |             |  
|Basic and diluted  as reported                                                                                                             |  | $                            | (0.16      | )    |  | $ | (0.67       | )
|Basic and diluted  pro forma                                                                                                               |  | $                            | (0.26      | )    |  | $ | (0.83       | )



The effect of applying SFAS No. 123 on the three month periods ended March
31, 2003 and 2002 pro forma net loss and net loss per share as stated above is
not necessarily representative of the effects on reported net loss for future
years, due to, among other things, (1) the vesting period of the stock options
and (2) the fair value of additional stock options in future years.

6. Contingencies

With respect to a previously-reported outstanding liability for
manufacturing costs, Chiron Corporation filed a complaint against the Company
on April 11, 2003 in Alameda County (California) Superior Court, seeking to
recover $2,862,388.59 for manufacturing services related to our product
candidates pursuant to the Additional Manufacturing Services Agreement between
Chiron and the Company dated June 5, 2002. The Company has settled dispute
with Chiron and the complaint will be dismissed.

7. Subsequent event

On April 28, 2003, we completed the sale 4.1 million shares of common
stock to institutional investors for approximately $10.25 million in gross
proceeds. In connection with the sale, we issued warrants to purchase an
additional 1.025 million shares at an exercise price of $3.375 per share. The
shares and warrants were offered through a prospectus supplement to our
effective shelf registration statement.

7



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##### 



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

OVERVIEW

Since our inception in September 1991, we have devoted substantially all
of our efforts and resources to sponsoring and conducting research and
development on our own behalf and through collaborations. Through
March 31,
2003, all of our revenues have been generated from license fees, research and
development funding, royalty payments, the sale of royalty rights, the sale of
our interest in a licensing agreement and certain research grants; we have not
generated any revenue from direct product sales. We anticipate our primary
revenue sources for the next few years to include research grants and
collaboration payments under current or future arrangements. The timing and
amounts of such revenues, if any, will likely fluctuate and depend upon the
achievement of specified research and development milestones. Results of
operations for any period may be unrelated to the results of operations for any
other period.

CRITICAL ACCOUNTING POLICIES AND THE USE OF ESTIMATES

The preparation of our financial statements in conformity with accounting
principles generally accepted in the U.S. requires management to make estimates
and assumptions that affect the amounts reported in our financial statements
and accompanying notes. Actual results could differ materially from those
estimates. The items in our financial statements requiring significant
estimates and judgments are as follows:



| |  |  | Grant Revenue  The Company has received government grants for the
development of potential malaria vaccines. We have also received a
government grant to support financially our Phase II Endostatin clinical
trial in patients with neuroendocrine tumors. Grants are funded in
specific amounts based on funding requests submitted to the grantor.
Grant revenues are recognized and realized at the time that research and
development activities are performed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Research and development expenses consist primarily of compensation
and other expenses related to research and development personnel,
research collaborations, costs associated with pre-clinical testing and
clinical trials of our product candidates, including the costs of
manufacturing the product candidates, and facilities expenses. Research
and development costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  | We have stock option plans under which options to purchase shares of
our common stock may be granted to employees, consultants and directors
at a price no less that the fair market value on the date of grant. We
account for our stock-based compensation in accordance with the
provisions of APB No. 25, Accounting for Stock Issued to Employees(APB
No. 25). Under APB No. 25, compensation expense is based on the
difference, if any, on the date of the grant between the fair value of
the Companys stock and the exercise price of the option and is
recognized ratably over the vesting period of the option. But, because
our options must be granted at fair market value, we recognize no
compensation expense in accordance with APB No. 25. If we were to adopt
SFAS No. 123, Accounting for Stock-Based Compensation(SFAS No. 123),
we would recognize compensation expense based upon the fair value at the
grant date for awards under the plans using the fair value method. We
account for equity instruments issued to nonemployees in accordance with
SFAS No. 123 and EITF 96-18, Accounting for Equity Instruments that are
issued to other than employees for acquiring, or in conjunction with
selling goods or services.

8



---



##### 



RESULTS OF OPERATIONS

For the Three Months Ended March 31, 2002 and March 31, 2003.

Revenues.Revenues increased 757% in the three month period ending March
31, 2003 to $514,000 from $60,000 in the comparable 2002 period. The increase
results primarily from a grant received to support our Endostatin Phase II
clinical trial in patients with neuroendocrine tumors and contract revenues
resulting from performance as a subcontractor under an NIH sponsored Malaria
Vaccine program.

Research and
Development Expenses. From inception through March 31, 2003
we have incurred research and development expenses of $210,631,000. Included in
this amount are the expenses related to our three product candidates, Panzem®,
Endostatin and Angiostatin. At March 31, 2003 the accumulated expenses for each
of these development projects are $18,310,000, $70,583,000 and $34,890,000
respectively. Project expenses for Panzem® of $496,000, Endostatin of $391,000
and Angiostatin of $294,000 are reflected in our 2003 R&D expenses for the
three month period ending March 31, 2003 of $2,631,000. Research and
Development expenses for the comparable 2002 period were $10,859,000. The
decrease in 2003 reflects the refocus and elimination of some research and
development programs and the associated shift in emphasis from the protein
product candidates towards our small molecule programs, including Panzem®.
Project costs for Panzem®, Endostatin and Angiostatin were $956,000, $3,048,000
and $1,831,000 respectively for the three month period ending March 31, 2002.
In addition to the accumulated expenses attributable to our three product
candidates, we have sponsored several research programs at Childrens Hospital,
Boston in an aggregate of $18,050,000, and we have recorded $5,931,000 in
research and development costs incurred by MaxCyte. Reflected in our research
and development expenses are sponsored research payments to Childrens Hospital
of $1,000,000 in the period ended March 31, 2002. We did not make any
sponsored research payments to Childrens Hospital in the three month period
ending March 31, 2003 and have no obligation to make future sponsored research
payments to Childrens Hospital. MaxCytes research and development costs for
the three month period ending March 31, 2002 were $562,000. The balance of our
accumulated research and development expenses are attributable to discovery
research and preclinical development of additional product candidates and costs
associated with the management of research and development operations and
facilities.

The amounts of expenditures that will be necessary to execute our business
plan are subject to numerous uncertainties, which may adversely affect our
liquidity and capital resources. As of March 31, 2003, three of our proprietary
product candidates, Panzem®, Endostatin and Angiostatin, were in the Phase II
stage of clinical trials. Completion of clinical trials may take several years
or more, but the length of time generally varies substantially according to the
type, complexity, novelty and intended use of a product candidate.

9



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##### 



We estimate that clinical trials of the type we generally conduct are
typically completed over the following timelines:

|               |  |            |  | 
|-------------- |  | ---------- |  | 
|               |  | ESTIMATED 
|               |  | COMPLETION
|CLINICAL PHASE |  | PERIOD    
|               |  |           
|Phase I        |  | 1 Year    
|              
|              
|              
|              
|Phase II       |  | 1-2 Years 
|              
|              
|              
|              
|Phase III      |  | 2-4 Years 

The duration and the cost of clinical trials may vary significantly over
the life of a project as a result of differences arising during the clinical
trial protocol, including, among others, the following:



| |  |  | the number of patients that ultimately participate in the trial;                
| | - |  | --------------------------------------------------------------------------------
|
| |  |  | the duration of patient follow-up that seems appropriate in view
of the results;
|
| |  |  | the number of clinical sites included in the trials; and                        
|
| |  |  | the length of time required to enroll suitable patient subjects.                

We test our potential product candidates in numerous pre-clinical studies
to identify indications for which they may be product candidates. We may
conduct multiple clinical trials to cover a variety of indications for each
product candidate. As we obtain results from trials, we may elect to
discontinue clinical trials for certain product candidates or for certain
indications in order to focus our resources on more promising product
candidates or indications.

An important element of our business strategy is to pursue the research
and development of a range of product candidates for a variety of oncology and
non-oncology indications. This allows us to diversify the risks associated with
our research and development expenditures. As a result, we believe our future
capital requirements and our future financial success are not substantially
dependent on any one product candidate. To the extent we are unable to maintain
a broad range of product candidates, our dependence on the success of one or a
few product candidates would increase.

Our proprietary product candidates have not yet achieved FDA regulatory
approval, which is required before we can market them as therapeutic products.
In order to proceed to subsequent clinical trial stages and to ultimately
achieve regulatory approval, the FDA must conclude that our clinical data
establish safety and efficacy. Historically, the results from pre-clinical
testing and early clinical trials have often not been predictive of results
obtained in later clinical trials. A number of new drugs and biologics have
shown promising results in clinical trials, but subsequently failed to
establish sufficient safety and efficacy data to obtain necessary regulatory
approvals.

Furthermore, our business strategy includes the option of entering into
collaborative arrangements with third parties to complete the development and
commercialization of our products. In the event that third parties take over
the clinical trial process for one of our product candidates, the estimated
completion date would largely be under the control of that third party rather
than us. We cannot forecast with any degree of certainty which proprietary
products or indications, if any, will be subject to future collaborative
arrangements, in whole or in part, and how such arrangements would affect our
capital requirements.

10



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##### 



As a result of the uncertainties discussed above, among others, we are
unable to estimate the duration and completion costs of our research and
development projects. Our inability to complete our research and development
projects in a timely manner or our failure to enter into collaborative
agreements, when appropriate, could significantly increase our capital
requirements and could adversely impact our liquidity. These uncertainties
could force us to seek additional, external sources of financing from time to
time in order to continue with our business strategy. Our inability to raise
additional capital, or to do so on terms reasonably acceptable to us, would
jeopardize the future success of our business.

Research and development expenses consist primarily of compensation and
other expenses related to research and development personnel, research
collaborations, costs associated with pre-clinical testing and clinical trials
of our product candidates, including the costs of manufacturing the product
candidates, and facilities expenses. Research and development expenses
decreased to $2,631,000 in 2003 from $10,859,000 for the comparable period in
2002. The decrease in overall research and development costs reflects the shift
in emphasis from the protein product candidates towards our small molecule
programs including Panzem®. Components of the decrease are broad based
including the elimination of some programs and are associated with the
following:



| |  |  | Decreased personnelPersonnel costs decreased to $820,000 for the
three month period ended March 31, 2003 from $2,228,000 in 2002.
Staffing levels have been reduced by over 60% in 2003 from 2002. The
decrease results from the refocus and elimination of some research and
development programs and the associated staff reductions.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Collaborative Research Agreements We have made payments to our
collaborators of $67,000 and $1,605,000 for the three months ending
March 31, 2003 and 2002 respectively. Sponsored research payments to
academic collaborators include payments to Childrens Hospital, Boston
of $1,000,000 in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  | Clinical Trial CostsClinical costs decreased to $489,000 in the
three months ending March 31, 2003 from $774,000 in the period ending
March 31, 2002. The decrease reflects less clinical activity as result
of our decision to focus on small molecule candidates led by Panzem®
while we maintain the open trials for Endostatin and Angiostatin. Costs
of such trials include the clinical investigator site fees, monitoring
costs and data management costs. Contracted regulatory support costs
decreased in 2003 to $16,000 from $137,000 in 2002. In addition, we
contribute clinical trial product material under our CRADA with the NCI
who is conducting trials collaboratively with EntreMed on Endostatin and
Panzem®.                                                      
|
| |  |  | Contract Manufacturing Costs The costs of manufacturing the
material used in clinical trials for our product candidates is reflected
in contract manufacturing. These costs include bulk manufacturing,
storage, encapsulation and fill finish services and product release
costs. Contract manufacturing costs for the three months ending March 31
decreased to $156,000 in 2003 from $3,158,000 in 2002. The decrease
reflects the Companys decision to stockpile clinical material in 2001
and 2002. The 2003 costs result primarily from Panzem® encapsulation and
bulk protein storage costs. We expect that manufacturing costs will
increase in future reporting periods as we manufacture additional bulk
Panzem® to support ongoing clinical trials and reformulation efforts.

11



---



##### 



General and
administrative expense. General and administrative expenses decreased to $1,627,000 in the three
month period ending March 31, 2003 from $3,791,000 in the comparable 2002
period. The 2003 period decrease reflects our reduced head count and
significantly lower legal expenses as a result of the settlement of the Abbott
and BMT litigations in 2002. In 2002 we also recorded costs associated with
our Bristol Myers-Squibb stock repurchase obligation.

Interest
expense. In December 2002 we made the final payment on a
promissory note secured by the majority of our equipment and therefore we did
not record any interest expense during the three month period ending March 31,
2003. For the three month period ending March 31, 2002 interest expense totaled
approximately $95,000; the majority of this amount reflects the accrual of
interest relating to MaxCytes issuance of convertible promissory notes in 2001
and 2002.

Investment
income. Investment income decreased by 68% in 2003 to $54,000
from $171,000 as a result of continued low investment yields and lower balances
in interest bearing cash accounts during the three month period ending March
31, 2003 versus the comparable period in 2002.

LIQUIDITY AND CAPITAL RESOURCES

To date, we have been engaged primarily in research and development
activities. As a result we have incurred and expect to continue to incur
operating losses for 2003 and the foreseeable future before we commercialize
any products. In addition, under the terms of certain licensing agreements, we
must be diligent in bringing potential products to market and may be required
to make future milestone payments of up to $2,685,000. If we fail to comply
with the milestones or fail to make any required milestone payment, we could
face the termination of the relevant license agreement.

To accomplish our business plans, we will be required to continue to
conduct substantial development activities for all of our proposed products.
Expenditures on these activities are expected to approximate $14,000,000 in
2003. In addition, our results of operations will also reflect additional
restructuring charges of approximately $1,000,000 relating to other
organizational changes as we complete our transition to small molecule
programs.

We intend to continue to pursue strategic relationships to provide
resources for the further development of our product candidates. There can be
no assurance, however, that these discussions will result in relationships or
additional funding. In addition, we will continue to seek capital through the
public or private sale of securities. If we are successful in raising
additional funds through the issuance of equity securities, stockholders likely
will experience substantial dilution, or the equity securities may have rights,
preferences or privileges senior to those of the holders of our common stock.
If we raise funds through the issuance of debt securities, those securities
would have rights, preferences and privileges senior to those of our common
stock.

Based on our assessment of the availability of capital and the above
described actions, in the absence of new financing, we believe we will have
adequate resources to fund operations into 2004. At March 31, 2003, we had cash
and short term investments of approximately $14,966,000 with working capital of
approximately $10,260,000. In addition we received gross proceeds of
$10,250,000 in April 2003 from the sale of our common stock and warrants. As
we become more financially stable we may consider other uses of our capital
including acquisition of additional intellectual property and other investments
in technology and technology companies.

12



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##### 



The table below sets forth our contractual obligations at March 31, 2003.

|                                 |  |                        |           |        |  |             |           |             |               |  |           |  |  |  |           |  |  |  |           | 
|-------------------------------- |  | ---------------------- | --------- | ------ |  | ----------- | --------- | ----------- | ------------- |  | --------- |  |  |  | --------- |  |  |  | --------- | 
|CONTRACTUAL OBLIGATIONS          |  | PAYMENTS DUE BY PERIOD |           |        |  |            
|                                
|                                 |  |                        |           |        |  | Next twelve |           |             |               |  |           |  |  |  |           |  |  | 
|                                 |  | Total                  |           | months |  | 1-3 years   |           | 4 - 5 years | After 5 years | 
|                                
|Debt                             |  | $                      | 73,000    |        |  |             | 73,000    |             |               |  |           |  |  |  |           |  |  |  |           | 
|                                
|                                
|                                
|                                
|Operating Leases                 |  |                        | 6,046,000 |        |  |             | 994,000   |             |               |  | 1,906,000 |  |  |  | 1,954,000 |  |  |  | 1,192,000 | 
|                                
|                                
|                                
|                                
|Clinical Trial Contracts         |  |                        | 814,000   |        |  |             | 814,000   |             |               |  |           |  |  |  |           |  |  |  |           | 
|                                
|                                
|                                
|                                
|Collaborative Research
Contracts |  |                        | 75,000    |        |  |             | 75,000    |             |               |  |           |  |  |  |           |  |  |  |           | 
|                                
|                                
|                                
|                                
|Contract Manufacturing           |  |                        | 2,490,000 |        |  |             | 2,490,000 |             |               |  |           |  |  |  |           |  |  |  |           | 
|                                
|Total Contractual
Obligations    |  | $                      | 9,498,000 |        |  |             | 4,446,000 |             |               |  | 1,906,000 |  |  |  | 1,954,000 |  |  |  | 1,192,000 | 
|                                

On October 31, 2002 we were notified by the Nasdaq Listing Qualifications
Department that EntreMeds common stock was subject to delisting from the
Nasdaq National Market because it was not in compliance with Marketplace Rule
4450(b)(1)(A), which requires that our common stock have a market value of
listed securities of $50 million. We subsequently requested an appeal hearing
before a Nasdaq Listing Qualifications Panel. At the hearing, held in December
2002, we presented a plan for EntreMed to return to compliance and remain in
compliance with the continued listing standards for the Nasdaq National Market.

In February 2003 we received a determination from the Nasdaq Listing
Qualifications Panel to continue the listing of EntreMeds securities on the
Nasdaq National Market. As part of the determination, EntreMed was required to
file the Form 10-K for the fiscal year ended December 31, 2002 and must file
the Form 10-Q for the quarter ended March 31, 2003 with the SEC and Nasdaq
evidencing shareholders equity of at least $10,000,000 on or before March 31,
2003 and May 15, 2003, respectively. As of March 31, 2003, our consolidated
balance sheet reflects shareholders equity of $12,538,000.

In order to fully comply with the Nasdaq Panels continued listing
determination, EntreMed must be able to demonstrate compliance with all
requirements for continued listing on the Nasdaq National Market and to notify
Nasdaq of any significant events that occur until the Form 10-Q is filed. The
Nasdaq Panel reserves the right to modify or terminate this exception upon
review of the Companys reported financial results and to reconsider the terms
of this exception, if there is a material change in EntreMeds financial or
operational character. In the letter notifying us of its decision, the Nasdaq
Panel observed that we had presented a definitive plan that will enable us to
evidence compliance with all requirements for continued listing on the Nasdaq
National Market within a reasonable period of time and to sustain compliance
with those requirements over the long term.

INFLATION AND INTEREST RATE CHANGES

Management does not believe that our working capital needs are sensitive
to inflation and changes in interest rates.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary objective of our investment activities is to preserve our
capital until it is required to fund operations while at the same time
maximizing the income we receive from our investments without incurring
investment market volatility risk. Our investment income is sensitive to

13



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##### 



the general level of U.S. interest rates. In this regard, changes in the U.S.
interest rates affect the interest earned our cash and cash equivalents. Due
to the short term nature of our cash and cash equivalent holdings, a 10%
movement in market interest rates would not materially impact on the total fair
market value of our portfolio as of March 31, 2003.

ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of the Companys
President and Chief Operating Officer and Chief Financial Officer (its
principal executive officer and principal financial officer), management has
evaluated the effectiveness of the design and operation of the Companys
disclosure controls and procedures within 90 days of the filing date of this
quarterly report. Based on that evaluation, the President and Chief Operating
Officer and Chief Financial Officer have concluded that these disclosure
controls and procedures are effective. There were no significant changes in
our internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation.

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 AND USE OF PROCEEDS                                                                                                                                
|       
|       
|       
|       
|        |  |                                                                                                                                                                          

| |  |  | Recent Sales of Unregistered Securities                                                                                                                                                                                                                                                                                                                                                                                    
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | In December 2002 and January 2003, we issued 2,753,872 shares of our common
stock and 675,000 warrants to purchase shares of our common stock to certain of
our creditors in partial satisfaction of certain outstanding obligations owed
to such creditors. In the aggregate, these securities were issued in
satisfaction of approximately $4,968,000 in outstanding indebtedness.                                       
|
| |  |  | As previously reported, in December 2002 we sold our assets, properties and
rights relating to the Companys thalidomide analog programs. As part of the
transaction, we terminated our Analog Agreements and License Agreement with
Childrens Medical Center Corporation. In conjunction with such cancellation,
we issued Childrens Medical Center Corporation warrants to purchase 900,000
shares of our common stock.
|
| |  |  | In May 2003 we issued to Ferghana Securities Inc. a warrant to purchase 37,273
shares of our common stock for services as financial advisor.                                                                                                                                                                                                                                                                               
|
| |  |  | The securities were sold pursuant to Section 4(2) of the Securities Exchange
Act of 1934 as a transaction not involving a public offering.                                                                                                                                                                                                                                                                                 

|        |  |                                                                                                               
|------- |  | --------------------------------------------------------------------------------------------------------------
|       
|       
|       
|       
|Item 3. |  | DEFAULTS UPON SENIOR SECURITIES                                                                               
|       
|       
|       
|       
|        |  |                                                                                                               
|       
|       
|       
|       
|        |  | Not applicable.                                                                                               
|       
|       
|       
|       
|        |  |                                                                                                               
|       
|       
|       
|       
|Item 4. |  | SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS                                                             
|       
|       
|       
|       
|        |  |                                                                                                               
|       
|       
|       
|       
|        |  | Not applicable.                                                                                               
|       
|       
|       
|       
|        |  |                                                                                                               
|       
|       
|       
|       
|Item 5. |  | OTHER INFORMATION                                                                                             
|       
|       
|       
|       
|        |  |                                                                                                               
|       
|       
|       
|       
|        |  | Not applicable.                                                                                               
|       
|       
|       
|       
|        |  |                                                                                                               
|       
|       
|       
|       
|Item 6. |  | EXHIBITS AND REPORTS ON FORM 8-K                                                                              
|       
|       
|       
|       
|        |  |                                                                                                               
|       
|       
|       
|       
|        |  | (a) Exhibits                                                                                                  
|       
|       
|       
|       
|        |  |                                                                                                               
|       
|       
|       
|       
|        |  | 10.49  
Employment Agreement between EntreMed and Neil J. Campbell dated
April 30, 2003                       
|       
|       
|       
|       
|        |  | 99.1    Certification of Chief Executive Officer                                                              
|       
|       
|       
|       
|        |  | 99.2    Certification of Controller                                                                           
|       
|       
|       
|       
|        |  |                                                                                                               
|       
|       
|       
|       
|        |  | (b) Reports on Form 8-K                                                                                       
|       
|       
|       
|       
|        |  |                                                                                                               
|       
|       
|       
|       
|        |  | Form 8k filed 4/25/03 to announce sale of common stock and warrants
to certain institutional investors.       
|       
|       
|       
|       
|        |  |                                                                                                               
|       
|       
|       
|       
|        |  | Form 8k filed 1/15/03 to announce the sale of preferred stock and
warrants to Celgene Corporation on 12/31/02.

14



---



##### 



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: March 15, 2003 |  | /s/ Neil J. Campbell                                  
|                     |  |                                                       
|                     |  | Neil J. Campbell
President and Chief Operating Officer
|                    
|                    
|                    
|                    
|                    
|Date: March 15, 2003 |  | /s/ Dane R. Saglio                                    
|                     |  |                                                       
|                     |  | Dane R. Saglio
Chief Financial Officer                

15



---



##### 



CERTIFICATIONS

I, Neil J. Campbell, certify that:



|1. |  | I have reviewed this annual report on Form 10-Q of EntreMed, Inc.                                                                                                                                                                                                                                                       
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 15, 2003

/s/ Neil J. Campbell
Neil J. Campbell
President

16



---



##### 



CERTIFICATIONS

I, Dane R. Saglio, certify that:



|1. |  | I have reviewed this annual report on Form 10-Q of EntreMed, Inc.                                                                                                                                                                                                                                                       
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 15, 2003

/s/ Dane R. Saglio
Dane R. Saglio
Principal Financial Officer

17