UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549





FORM
10-Q





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





For the
quarterly period ended September 30, 2010





 ̈           TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d)  OF THE SECURITIES EXCHANGE
ACT OF 1934





For the
transition period from ___________ to _____________.





Commission
file number0-20713





ENTREMED,
INC.


(Exact
name of registrant as specified in its charter)





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


9640
Medical Center Drive


Rockville,
Maryland


(Address
of principal executive offices)





20850


(Zip
code)





(240)
864-2600


(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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).





YES      ̈     
   NO     ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):





Large
      accelerated filer o
            
            Accelerated
      filer o
            
            Non-accelerated
      filer þ
            
            Smaller
      reporting company o





Indicate
by checkmark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).





YES     ̈       
 NO    x





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 November 10,
      2010Common
      Stock $0.01 Par Value
            
            11,517,566





ENTREMED,
INC.


Table of
Contents





PAGEPART
      I. FINANCIAL INFORMATIONItem
      1 — Consolidated Financial StatementsConsolidated
      Balance Sheets as of September 30, 2010 (unaudited) and December 31,
      2009
                  
                  
                  3Consolidated
      Statements of Operations for the Nine Months Ended September 30, 2010 and
      2009 (unaudited)
                  
                  
                  4Consolidated
      Statements of Cash Flows for the Nine Months Ended September 30, 2010 and
      2009 (unaudited)
                  
                  
                  5Notes
      to Consolidated Financial Statements (unaudited)
                  
                  
                  6Item
      2 — Management’s Discussion and Analysis of Financial Condition and
      Results of Operations
                  
                  
                  16Item
      3 — Quantitative and Qualitative Disclosures About Market
    Risk
                  
                  
                  26Item
      4 — Controls and Procedures
                  
                  
                  26Part
      II.  OTHER INFORMATIONItem
      1 — Legal Proceedings
                  
                  
                  27Item
      1A – Risk Factors
                  
                  
                  27Item
      2 — Unregistered Sales of Equity Securities and Use of
      Proceeds
                  
                  
                  27Item
      3 — Defaults upon Senior Securities
                  
                  
                  27Item
      4 — Removed and Reserved
                  
                  
                  27Item
      5 — Other Information
                  
                  
                  27Item
      6 — Exhibits
                  
                  
                  27SIGNATURES
                  
                  
                  28





SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS





This
report contains certain forward-looking statements within the meaning of Section
27A of the Securities Exchange Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended.  Forward-looking
statements also may be included in other statements that we make.  All
statements that are not descriptions of historical facts are forward-looking
statements.  These statements can generally be identified by the use
of forward-looking terminology such as “believes,” “expects,” “intends,” “may,”
“will,” “should,” or “anticipates” or similar terminology.  These
forward-looking statements include, among others, statements regarding the
timing of our clinical trials, our cash position and future expenses, and our
future revenues.





Our
forward-looking statements are based on information available to us today, and
we will not update these statements.





Actual
results could differ materially from those currently anticipated due to a number
of factors, including  the risk that we may be unable to continue as a
going concern as a result of our inability to raise sufficient capital for our
operational needs; the possibility that we may be delisted from trading on the
Nasdaq Capital Market; the volatility of our common stock; risks relating to the
need for additional capital and the uncertainty of securing additional funding
on favorable terms; the failure to consummate a transaction to monetize our
Thalomid® royalty
stream for any reason, including our inability to obtain the required
third-party consents; declines in actual sales of Thalomid®
resulting in reduced royalty payments; risks associated with our product
candidates; the early-stage products under development; results in preclinical
models are not necessarily indicative of clinical results; uncertainties
relating to preclinical and clinical trials, including delays to the
commencement of such trials; success in the clinical development of any
products; dependence on third parties; and risks relating to the
commercialization, if any, of our  proposed products (such as
marketing, safety, regulatory, patent, product liability, supply, competition
and other risks).  Additional information about the factors and risks
that could affect our business, financial condition and results of operations,
are contained in our filings with the U.S. Securities and Exchange Commission
(SEC), which are available at www.sec.gov.




2


PART
I.  FINANCIAL INFORMATION




ITEM
1.  CONSOLIDATED FINANCIAL STATEMENTS




EntreMed,
Inc.


Consolidated
Balance Sheets


(Unaudited)





September 30, 2010
                            
                            
                            December 31, 2009(Unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                            
                            $
                            8,387,862
                            
                            
                            $
                            6,312,182Short-term
      investments
                            
                            
                            44,841
                            
                            
                            
                            54,071Accounts
      receivable, net of allowance for doubtful accounts of $72,145 at September
      30, 2010 and December 31, 2009
                            
                            
                            -
                            
                            
                            
                            3,286,858Prepaid
      expenses and other
                            
                            
                            314,393
                            
                            
                            
                            220,925Total
      current assets
                            
                            
                            8,747,096
                            
                            
                            
                            9,874,036Property
      and equipment, net
                            
                            
                            119,644
                            
                            
                            
                            171,498Other
      assets
                            
                            
                            5,918
                            
                            
                            
                            21,494Total
      assets
                            
                            $
                            8,872,658
                            
                            
                            $
                            10,067,028LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)Current
      liabilities:Accounts
      payable
                            
                            $
                            1,350,502
                            
                            
                            $
                            1,968,607Accrued
      liabilities
                            
                            
                            283,178
                            
                            
                            
                            745,183Current
      portion of loan payable
                            
                            
                            2,978,028
                            
                            
                            
                            8,555,404Total
      current liabilities
                            
                            
                            4,611,708
                            
                            
                            
                            11,269,194Loan
      payable, less current portion
                            
                            
                            -
                            
                            
                            
                            723,814Total
      liabilities
                            
                            
                            4,611,708
                            
                            
                            
                            11,993,008Commitments
      and contingencies
                            
                            
                            -
                            
                            
                            
                            -Stockholders'
      equity (deficit):Convertible
      preferred stock, $1.00 par value;5,000,000
      shares authorized and 3,350,000 shares issued and outstanding at September
      30, 2010 and December 31, 2009 (liquidation value - $33,500,000 at
      September 30, 2010 and December 31, 2009)
                            
                            
                            3,350,000
                            
                            
                            
                            3,350,000Common
      stock, $.01 par value:170,000,000
      shares authorized at September 30, 2010 and December 31, 2009: 11,517,938
      and 8,061,040 shares issued and outstanding at September 30, 2010 and
      December 31, 2009, respectively
                            
                            
                            115,179
                            
                            
                            
                            80,610Additional
      paid-in capital
                            
                            
                            384,122,469
                            
                            
                            
                            368,804,067Treasury
      stock, at cost: 79,545 shares held at September 30, 2010and December 31,
      2009
                            
                            
                            (8,034,244
                            )
                            
                            
                            (8,034,244
                            )Accumulated
      deficit
                            
                            
                            (375,292,454
                            )
                            
                            
                            (366,126,413
                            )Total
      stockholders' equity (deficit)
                            
                            
                            4,260,950
                            
                            
                            
                            (1,925,980
                            )Total
      liabilities and stockholders' equity (deficit)
                            
                            $
                            8,872,658
                            
                            
                            $
                            10,067,028





See
accompanying notes.


3


EntreMed,
Inc.


Consolidated
Statements of Operations


(Unaudited)





Three
      Months Ended
                
                
                Nine
      Months EndedSeptember 30,
                
                
                September 30,
                
                
                September 30,
                
                
                September 30,2010
                
                
                2009
                
                
                2010
                
                
                2009Revenues:Royalties
                
                $
                -
                
                
                $
                3,300,000
                
                
                $
                -
                
                
                $
                3,300,000Other
                
                
                -
                
                
                
                368,333
                
                
                
                -
                
                
                
                368,333$
                -
                
                
                $
                3,668,333
                
                
                $
                -
                
                
                $
                3,668,333Costs
      and expenses:Research
      and development
                
                
                1,291,721
                
                
                
                2,326,969
                
                
                
                3,146,802
                
                
                
                5,939,903General
      and administrative
                
                
                691,623
                
                
                
                911,816
                
                
                
                2,513,527
                
                
                
                3,082,270Acquired
      In-Process R&D
                
                
                -
                
                
                
                -
                
                
                
                3,000,000
                
                
                
                -1,983,344
                
                
                
                3,238,785
                
                
                
                8,660,329
                
                
                
                9,022,173Investment
      income
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                68,931Interest
      expense
                
                
                (106,784
                )
                
                
                (344,634
                )
                
                
                (496,482
                )
                
                
                (1,198,125
                )Other
      income (expense)
                
                
                (5,183
                )
                
                
                -
                
                
                
                (9,230
                )
                
                
                -Net
      Income (Loss)
                
                
                (2,095,311
                )
                
                
                84,914
                
                
                
                (9,166,041
                )
                
                
                (6,483,034
                )Dividends
      on Series A convertible preferred stock
                
                
                (251,250
                )
                
                
                (251,250
                )
                
                
                (753,750
                )
                
                
                (753,750
                )Net
      loss attributable to common shareholders
                
                $
                (2,346,561
                )
                
                $
                (166,336
                )
                
                $
                (9,919,791
                )
                
                $
                (7,236,784
                )Net
      loss per share (basic and diluted)
                
                $
                (0.24
                )
                
                $
                (0.02
                )
                
                $
                (1.09
                )
                
                $
                (0.91
                )Weighted
      average number of common shares outstanding (basic and
      diluted)
                
                
                9,714,788
                
                
                
                7,979,839
                
                
                
                9,098,380
                
                
                
                7,977,197





See
accompanying notes.


4


EntreM,ed,
Inc.


Consolidated
Statements of Cash Flows


(Unaudited)





NINE
      MONTH PERIOD ENDEDSEPTEMBER
      30,2010
                
                
                2009CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                
                $
                (9,166,041
                )
                
                $
                (6,483,034
                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
                
                
                55,449
                
                
                
                75,553Write-off
      of in-process R&D
                
                
                3,000,000
                
                
                
                -Amortization
      of discount on short-term investments
                
                
                -
                
                
                
                (21,124
                )Stock-based
      compensation expense
                
                
                250,311
                
                
                
                280,153Non-cash
      interest
                
                
                45,095
                
                
                
                107,358Investment
      impairment loss
                
                
                9,230
                
                
                
                -Changes
      in operating assets and liabilities:Accounts
      receivable
                
                
                3,286,858
                
                
                
                580,225Prepaid
      expenses and other
                
                
                (93,468
                )
                
                
                119,799Deferred
      rent
                
                
                -
                
                
                
                (20,763
                )Accounts
      payable
                
                
                (618,105
                )
                
                
                (1,266,637
                )Accrued
      liabilities
                
                
                (462,005
                )
                
                
                (1,928,385
                )Net
      cash used in operating activities
                
                
                (3,692,676
                )
                
                
                (8,556,855
                )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchases
      of short term investments
                
                
                -
                
                
                
                (7,992,859
                )Maturities
      of short term investments
                
                
                -
                
                
                
                14,500,000Unrealized
      loss on short term investments
                
                
                
                
                
                
                (4,436
                )Purchases
      of furniture and equipment
                
                
                (3,595
                )
                
                
                -Net
      cash (used in) provided by investing activities
                
                
                (3,595
                )
                
                
                6,502,705CASH
      FLOWS FROM FINANCING ACTIVITIESStock
      issuance costs
                
                
                -
                
                
                
                (10,450
                )Repayment
      of loan
                
                
                (6,330,709
                )
                
                
                (5,705,013
                )Net
      proceeds from sale of common stock
                
                
                12,102,660
                
                
                
                -Net
      cash provided by (used in) financing activities
                
                
                5,771,951
                
                
                
                (5,715,463
                )Net
      increase (decrease) in cash and cash equivalents
                
                
                2,075,680
                
                
                
                (7,769,613
                )Cash
      and cash equivalents at beginning of period
                
                
                6,312,182
                
                
                
                16,743,129Cash
      and cash equivalents at end of period
                
                $
                8,387,862
                
                
                $
                8,973,516Supplemental
      disclosure of cash flow information:Cash
      paid during the period for interest
                
                $
                451,388
                
                
                $
                1,090,678Non-cash
      investing activity:Stock
      issued in connection with milestone payment related to acquisition of
      Miikana$
                3,000,000
                
                
                $
                -





See
accompanying notes.




5


ENTREMED,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


September
30, 2010 (unaudited)





1.           Basis
of Presentation





The
accompanying consolidated financial statements include the accounts of EntreMed,
Inc. (the Company or EntreMed) and its wholly-owned subsidiary, Miikana
Therapeutics, Inc. (Miikana).  All inter-company balances and
transactions have been eliminated in consolidation.  The Company
refers to EntreMed and its consolidated subsidiary.





The
accompanying unaudited consolidated financial statements have been prepared in
accordance with U. S. 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 U. S. generally accepted accounting principles for complete
consolidated financial statements.  In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and
nine-month periods ended September 30, 2010 are not necessarily indicative of
the results that may be expected for the year ending December 31, 2010. 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,
2009.





On July
1, 2010, the Company affected a 1-for-11 reverse split of its common stock,
which was authorized by its Board of Directors on June 9, 2010. The primary
objective in affecting the reverse split was to better enable the Company to
maintain the listing of its common stock on the NASDAQ Capital
Market.  As a result of the reverse stock split, each eleven shares of
the common stock that was issued and outstanding or held in treasury on July 1,
2010 at 8:00 am. Eastern time were automatically combined into one
share.   The reverse stock split reduced the number of issued and
outstanding shares of common stock as of July 1, 2010 from approximately
105.9 million shares to approximately 9.6 million shares. No
fractional shares were issued in connection with the reverse stock split.
Stockholders who were entitled to fractional shares instead became entitled to
receive a cash payment in lieu of receiving fractional shares equal to the
fractional share interest multiplied by $0.40 (the per share closing price of
the Company’s common stock as last reported on the NASDAQ Stock Market on June
30, 2010).  The reverse stock split affected all of the holders of
common stock uniformly. Shares of common stock underlying outstanding options
and warrants were proportionately reduced and the exercise price of outstanding
options and warrants was proportionately increased in accordance with the terms
of the agreements governing such securities.  All common stock share
and per share information in the unaudited interim condensed consolidated
financial statements and notes thereto included in this report have been
restated to reflect retrospective application of the reverse stock split, except
for par value per share and the number of authorized shares, which were not
affected by the reverse stock split.





Material
subsequent events have been considered for disclosure and recognition through
the filing date of these consolidated financial statements.


6





Liquidity
Risks





The
accompanying unaudited consolidated financial statements have been prepared on a
going-concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business.  During
the period ended September 30, 2010, the Company raised $12.1 million from the
sale of its common stock.  Based on current plans, the Company expects
its current available cash and cash equivalents, along with the receipt of
anticipated royalty payments in fiscal 2010 and 2011, will be sufficient to meet
its cash requirements through fiscal 2011.In the event the
royalty payments are received in amounts significantly less than expected, the
Company will continue to pursue opportunities to raise additional capital to
fund its operating needs.  Since inception, the Company has incurred
significant losses from operations and has incurred an accumulated deficit of
$375 million.  The Company expects to continue to incur expenses,
resulting in operating losses, for the foreseeable future due to, among other
factors, its continuing clinical trials, planned future clinical trials, and
other anticipated research and development activities.





The
Company’s ability to continue as a going concern is dependent on its success at
raising additional capital sufficient to meet its obligations on a timely basis,
the ongoing receipt of royalty payments and its ability to ultimately attain
profitability.  As the amount of the royalty payments to be received
cannot be reasonably estimated, there is no assurance that the Company will not
be required to raise additional capital sufficient to enable the Company to
continue its operations for the next twelve months and through fiscal
2011.  If additional funds are raised by issuing equity securities,
dilution to existing shareholders may result.  There can be no
assurance that adequate additional financing will be available to the Company on
terms that it deems acceptable, if at all.  In the event the Company
does not have sufficient cash to support the ENMD-2076 development program, and
additional financing is not obtained, the Company will reduce expenses as
appropriate.





These
factors could significantly limit the Company’s ability to continue as a going
concern.  The consolidated financial statements do not include any
adjustments relating to recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue in existence.





2.           Revenue
Recognition





Revenue
is recognized when all of the following criteria are met:  1)
persuasive evidence of an arrangement exists, 2) delivery has occurred or
services have been rendered, 3) the price to the buyer is fixed and determinable
and 4) collectibility is reasonably assured.  Royalty revenue is not
recognized until it is realized.





3.           Restructuring





In
connection with the Company’s business plan to become a clinically-focused
operation, accelerating the clinical development of ENMD-2076, with the
objective to lower operating costs and preserve capital, the Company experienced
workforce reductions in December 2008 and in December 2009 which in the
aggregate resulted in the elimination of approximately seventy percent of the
Company’s total positions across all areas of business.  The Company
incurred charges for severance and related benefits totaling $228,754 and
$1,783,773 during the fourth quarters of 2009 and 2008,
respectively.  At December 31, 2009, $228,754 is included in accrued
liabilities.  There were no additional charges during
2010.  The Company has accounted for this restructuring as prescribed
by authoritative guidance.


7




A summary
of changes in the accrued liabilities during the nine months ended September 30,
2010, is as follows:




R&D
                
                
                G&AExpenses
                
                
                ExpensesBalance
      at December 31, 2009
                
                
                
                
                
                
                
                $
                228,754Cash
      payments
                
                $
                (184,359
                )
                
                $
                (44,395
                )
                
                
                (228,754
                )Balance
      at September 30, 2010
                
                
                
                
                
                
                
                
                
                $
                -




Cumulative
costs incurred with respect to the restructuring are $2,013,000, of which,
approximately $1,067,000 have been expensed as general and administrative costs
and $946,000 have been expensed as research and development
costs.  The Company did not incur additional costs during the nine
months ended September 30, 2010 and does not expect to incur additional costs in
connection with these terminations.





4.           Recently
Adopted Accounting Pronouncements





In
January 2010, the Financial Accounting Standards Board (FASB) issued new
authoritative guidance related to fair value disclosures.  The
provisions of the guidance require an entity to: (i) disclose separately the
amounts of significant transfers in and out of Level 1 and Level 2 fair value
measurements and describe the reasons for the transfers and (ii) present
separate information for Level 3 activity pertaining to gross purchases, sales,
issuances, and settlements. The new guidance is effective for interim and annual
reporting periods beginning after December 15, 2009, except for the gross
basis reconciliation for the Level 3 fair value measurements, which is effective
for fiscal years beginning after December 15, 2010.  The adoption did
not have a material impact on the Company’s financial position and results of
operations, as it does not have any transfers between Level 1 and Level 2 fair
value measurements.




In
February 2010, the FASB issued an amendment to existing authoritative guidance
which requires an entity that is an SEC filer to evaluate subsequent events
through the date that the financial statements are issued and removes the
requirement for an SEC filer to disclose a date, in both issued and revised
financial statements, through which the filer had evaluated subsequent events.
The adoption did not have an impact on the Company’s financial position and
results of operations.





5.
            Short-Term
      Investments





Short-term
investments at September 30, 2010 consist of equity securities.  The
Company has classified these investments as available for sale.  Such
securities are carried at fair market value. The cost of securities sold is
calculated using the specific identification method.  Realized gains
and losses and declines in value judged to be other than temporary on securities
available for sale, if any, are included in operations. As a result of a
decrease in value during the three months ended September 30, 2010, realized
losses of $5,183 were recorded for the three months ended September 30,
2010.  An overall decline in value during the nine months ended
September 30, 2010, that is considered to be other than temporary, resulted in
net realized losses of $9,230 for the nine months ended September 30,
2010.  There were no realized gains or losses for the nine months
ended September 30, 2009.  Net unrealized losses of $12,413 were
recorded for the nine months ended September 30, 2009.  Short-term
investments are principally uninsured and subject to normal credit
risk.




8




The
following is a summary of available-for-sale securities at September 30,
2010:




Available-for-Sale
      SecuritiesAmortized
                          
                          
                          Gross
                            Realized
                          
                          
                          Gross
                            Realized
                          
                          
                          Estimated
      Fair
                            Value
      (Net
                            CarryingCost
                          
                          
                          Gains
                          
                          
                          Losses
                          
                          
                          Amount)Equity
      Securities
                          
                          $
                          125,000
                          
                          
                          $
                          5,954
                          
                          
                          $
                          (86,113
                          )
                          
                          $
                          44,841Total
                          
                          $
                          125,000
                          
                          
                          $
                          5,954
                          
                          
                          $
                          (86,113
                          )
                          
                          $
                          44,841


The
following is a summary of available-for-sale securities at December 31,
2009:




Available-for-Sale
      SecuritiesAmortized
                            
                            
                            Gross
                              Realized
                            
                            
                            Gross
                              Realized
                            
                            
                            Estimated
      Fair
                              Value
      (Net
                              CarryingCost
                            
                            
                            Gains
                            
                            
                            Losses
                            
                            
                            Amount)Equity
      Securities
                            
                            $
                            125,000
                            
                            
                            $
                            -
                            
                            
                            $
                            (70,929
                            )
                            
                            $
                            54,071Total
                            
                            $
                            125,000
                            
                            
                            $
                            -
                            
                            
                            $
                            (70,929
                            )
                            
                            $
                            54,071





6.           Loan
Payable




On
September 12, 2007, EntreMed, Inc. and Miikana Therapeutics, Inc. (“Miikana”),
its wholly-owned subsidiary, entered into a Loan and Security Agreement (“Loan
Agreement”) with General Electric Capital Corporation (“GECC”), as agent,
Merrill Lynch Capital and Oxford Finance Corporation (collectively, “the
Lenders”).  The Loan Agreement provides for (i) a term loan (“Term
Loan”) issued by the Lenders to the Company in the aggregate amount of
$20,000,000 and (ii) the issuance and sale to the Lenders of stock purchase
warrants evidencing the Lenders’ right to acquire their respective pro rata share of 250,000
shares of common stock of the Company (“Warrants”).





The Term
Loan expires on the earlier of (i) January 1, 2011 or (ii) the date the Term
Loan otherwise becomes due and payable under the Loan Agreement, whether by
acceleration of the obligations under the Term Loan or otherwise.  The
Company will make its final repayment of approximately $761,000 to GECC on
January 1, 2011.





The Term
Loan will accrue interest in arrears at a fixed annual interest rate of 10.47%
until the Term Loan is fully repaid.  The Company paid interest of
$97,240 and $313,703 during the three months ended September 30, 2010 and 2009,
respectively.   The Company paid interest of $451,388 and
$1,090,678 during the nine months ended September 30, 2010 and 2009,
respectively.





The
Company has the right to voluntarily prepay the Term Loan, in full or in part,
upon five business days’ written notice to GECC.  Under certain
circumstances, the prepayment of the aggregate amount outstanding under the Term
Loan triggers a prepayment penalty equal to 1% on such prepayment amount if such
prepayment is made after the two year anniversary of the closing date but on or
before the Term Loan maturity date.  The Loan Agreement contains
customary events of default that permits GECC to accelerate the Company’s
outstanding obligations if an event of default occurs and it is not cured within
the applicable grace periods.  The Loan Agreement also provides for
automatic acceleration upon bankruptcy and other insolvency
events.


9




The Term
Loan was used for general corporate purposes and is secured by the personal
property owned by the Company, except for any intellectual property owned by the
Company.  Notwithstanding the foregoing, the collateral for the Term
Loan includes (i) all cash, royalty fees and other proceeds that consist of
rights of payment or proceeds from the sale, licensing or other disposition of
all or any part of, or rights in, the intellectual property and the Thalidomide
Royalty Agreement and (ii) the Company’s rights under the Thalidomide Royalty
Agreement.





The Loan
Agreement contains customary affirmative and negative covenants.  The
Company was in compliance with such covenants as of September 30,
2010.





The
Warrants are exercisable by the Lenders until September 12, 2012 at an exercise
price of $22.00 per share (as adjusted to reflect the one-for-eleven reverse
stock split, as further described in Note 12 to these Notes to the Consolidated
Financial Statements).  The fair value of the Warrants issued was
$190,000, calculated using a Black-Scholes-Merton value of $.76 with an expected
and contractual life of 5 years, an assumed volatility of 98%, and a risk-free
interest rate of 4.11%.  The value of the Warrants, and an upfront
underwriting fee of $100,000 paid to one of the Lenders, are recorded as a
discount on the loan and are amortized as interest expense over the life of the
loan.  The Company also incurred certain debt issuance costs that were
deferred and are included in other assets in the Company’s balance sheet as of
September 30, 2010 and December 31, 2009.  Amortization of these fees
and the discount results in an effective interest rate of
11.40%.  Non-cash interest expense related to the amortization of debt
issuance costs and debt discount was $9,545 and $30,842 for the three months
ended September 30, 2010 and 2009, respectively.  Non-cash interest
expense related to the amortization of debt issuance costs and debt discount was
$45,095 and $107,357 for the nine months ended September 30, 2010 and 2009,
respectively.





The
carrying value and estimated fair value of debt, before discount, were
approximately $2,981,000 and $2,998,000 respectively, at September 30,
2010.  The fair value was estimated based on the quoted market
price.





7.           Fair
Value Measurement





Fair
value is defined as the price that would be received to sell an asset or paid to
transfer a liability (“the exit price”) in an orderly transaction between market
participants at the measurement date.  The authoritative guidance
outlines a valuation framework and creates a fair value hierarchy in order to
increase the consistency and comparability of fair value measurements and the
related disclosures.  In determining fair value, EntreMed primarily
uses prices and other relevant information generated by market transactions
involving identical or comparable assets (“market approach”).  The
Company has determined that the fair value measurements are in accordance with
the guidance.





The
guidance established a three-level hierarchy for fair value measurements that
distinguishes between market participant assumptions developed based on market
data obtained from sources independent of the reporting entity (“observable
inputs”) and the reporting entity’s own assumptions about market participant
assumptions developed based on the best information available in the
circumstances (“unobservable inputs”).  EntreMed currently does not
have non-financial assets and non-financial liabilities that are required to be
measured at fair value on a recurring basis.


10





There
have been no transfers of assets or liabilities between the fair value
measurement classifications.





The
Company’s financial assets and liabilities are measured using inputs from the
three levels of the fair value hierarchy, defined as follows:





·
            Level
      1 – Inputs are unadjusted quoted prices in active markets for identical
      assets or liabilities that we have the ability to access at the
      measurement date.





·
            Level
      2 – Inputs are quoted prices for similar assets and liabilities in active
      markets, quoted prices for identical or similar assets or liabilities in
      markets that are not active, inputs other than quoted pries that are
      observable for the asset or liability (i.e., interest rates, yield curves,
      etc.), and inputs that are derived principally from or corroborated by
      observable market data by correlation or other means (market corroborated
      inputs).





·
            Level
      3 – Unobservable inputs that reflect our own assumptions, based on the
      best information available, including our own
  data.





In
accordance with the fair value hierarchy described above, the following table
shows the fair value of the Company’s financial assets and liabilities that are
required to be measured at fair value as of September 30, 2010:





Fair
      Value Measurements at September 30, 2010Total
      Carrying Value
                              at
                            
                            
                            Quoted
      prices in
                              active
      markets
                            
                            
                            Significant
      other
                              observable inputs
                            
                            
                            Significant
                              unobservable
                              inputsSeptember
      30, 2010
                            
                            
                            (Level
      1)
                            
                            
                            (Level
      2)
                            
                            
                            (Level
      3)Cash
      equivalents
                            
                            $
                            2,105,868
                            
                            
                            $
                            2,105,868
                            
                            
                            $
                            —
                            
                            
                            $
                            —Available
      for sale securities*
                            
                            
                            44,841
                            
                            
                            
                            44,841
                            
                            
                            
                            —
                            
                            
                            
                            —


*   Realized
losses related to available for sale securities are included in operations, as
disclosed in Note 5.




Fair
      Value Measurements at December 31, 2009Total
      Carrying
                        Value
      at
                      
                      
                      Quoted
      prices in
                        active
      markets
                      
                      
                      Significant
      other
                        observable inputs
                      
                      
                      Significant
                        unobservable
                        inputsDecember
      31, 2009
                      
                      
                      (Level
      1)
                      
                      
                      (Level
      2)
                      
                      
                      (Level
      3)Cash
      equivalents
                      
                      $
                      4,105,868
                      
                      
                      $
                      4,105,868
                      
                      
                      $
                      —
                      
                      
                      $
                      —Available
      for sale securities*
                      
                      
                      54,051
                      
                      
                      
                      54,051
                      
                      
                      
                      —
                      
                      
                      
                      —


*  Realized
losses related to available for sale securities are included in operations, as
disclosed in Note 5.





The
Company’s Level 1 assets include money market instruments and equity securities
with quoted prices in active markets.


11





8.           Stockholders’
Equity





On
January 11, 2010, the Company consummated the issuance and sale of 284,090
shares of its common stock, par value $0.01 per share, to an institutional
investor for an aggregate purchase price of $2,500,000.  The offering
was made pursuant to a stock purchase agreement dated as of January 8, 2010
between the Company and the investor.





On
February 3, 2010, the Company consummated the issuance and sale of 349,650
shares of its common stock, par value $0.01 per share, to an institutional
investor for an aggregate purchase price of $2,500,000.  The offering
was made pursuant to a stock purchase agreement dated as of February 3, 2010
between the Company and the investor.





On April
16, 2010, the Company consummated the issuance and sale of 526,500 shares of its
common stock, par value $0.01 per share, to an institutional investor for an
aggregate purchase price of $3,000,000.  The offering was made
pursuant to a stock purchase agreement dated as of April 16, 2010 between the
Company and the investor.





On
September 7, 2010, the Company consummated the issuance and sale of 1,886,662
shares of its common stock, par value $0.01 per share, and warrants to purchase
up to an aggregate of 377,327 shares of common stock, to a group of investors
for an aggregate purchase price of $5,094,000.  The offering was made
pursuant to a securities purchase agreement effective as of September 7, 2010
between the Company and such investors.  The warrants shall be
exercisable on or after March 9, 2011 and are exercisable until September 9,
2013 at an exercise price of $2.825 per share.  The fair value of the
warrants issued was $660,322, calculated using the Black-Scholes-Merton
valuation model value of $1.75 with an expected and contractual life of 3 years,
an assumed volatility of 99%, and a risk-free interest rate of
1.57%.





All
common stock share and per share information discussed above have been restated
to reflect retrospective application of the July 1, 2010 reverse stock split,
except for par value per share which was not affected by the reverse stock
split.





9.           Share-Based
Compensation





The
Company has adopted incentive and nonqualified stock option plans for executive,
scientific and administrative personnel of the Company as well as outside
directors and consultants, of which 314,120 shares remain available for grant
under the Company’s 2001 Long-Term Incentive Plan as of September 30,
2010.  There are 606,138 shares issuable under options previously
granted under the plans and currently outstanding, with exercise prices ranging
from $1.76 to $522.50.  Options granted under the plans vest over
periods varying from immediately to three years, are not transferable and
generally expire ten years from the date of grant.





The
Company records compensation expense associated with stock options and other
equity-based compensation in accordance with provisions of authoritative
guidance.  Compensation costs are recognized based on a straight-line
method over the requisite service period, which is generally the option vesting
term of three years.


12


The
Company’s net loss for the nine months ended September 30, 2010 and September
30, 2009 includes compensation expense of $250,311 and $280,153, respectively,
related to the Company’s share-based compensation awards.  The
compensation expense related to the Company’s share-based compensation
arrangements is recorded as components of general and administrative expense and
research and development expense, as follows:




NINE MONTHS ENDED
                        SEPTEMBER 30,2010
                      
                      
                      2009Research
      and development
                      
                      $
                      28,993
                      
                      
                      $
                      94,505General
      and administrative
                      
                      
                      221,318
                      
                      
                      
                      185,648Share-based
      compensation expense
                      
                      $
                      250,311
                      
                      
                      $
                      280,153Net
      share-based compensation expense, per common share:Basic
      and diluted
                      
                      $
                      0.028
                      
                      
                      $
                      0.035




The
Company uses the Black-Scholes-Merton valuation model to estimate the fair value
of stock options granted to employees. Option valuation models, including
Black-Scholes-Merton, require the input of highly subjective assumptions, and
changes in the assumptions used can materially affect the grant date fair value
of an award.




Following
are the weighted-average assumptions used in valuing the stock options granted
to employees during the nine-month periods ended September 30, 2010 and
2009:





NINE MONTH PERIOD ENDED
                        SEPTEMBER 30,2010
                      
                      
                      2009Expected
      volatility
                      
                      
                      97.50
                      %
                      
                      
                      78.02
                      %Risk-free
      interest rate
                      
                      
                      2.38
                      %
                      
                      
                      2.08
                      %Expected
      term of option
                      
                      5
      years
                      
                      
                      5
      yearsForfeiture
      rate*
                      
                      
                      5.00
                      %
                      
                      
                      5.00
                      %Expected
      dividend yield
                      
                      
                      0.00
                      %
                      
                      
                      0.00
                      %




* -
Authoritative guidance requires forfeitures to be estimated at the time of grant
and revised, if necessary, in subsequent periods if actual forfeitures differ
from those estimates.  During the nine-month periods ended September
30, 2010 and 2009, forfeitures were estimated at 5%.




The
weighted average fair value of stock options granted during the nine-month
periods ended September 30, 2010 and 2009 was $5.50 and $01.10,
respectively.


13


A summary
of the Company’s stock option plans and of changes in options outstanding under
the plans for the six months ended September 30, 2010, is as
follows:




Number of
                                          Options
                                        
                                        
                                        Weighted
                                          Average
                                          Exercise
                                          PriceOutstanding
      at January 1, 2010
                                        
                                        
                                        634,797
                                        
                                        
                                        $
                                        60.49Granted
                                        
                                        
                                        36,816
                                        
                                        
                                        $
                                        7.37Exercised
                                        
                                        
                                        (7,010
                                        )
                                        
                                        $
                                        1.76Expired
                                        
                                        
                                        (55,885
                                        )
                                        
                                        $
                                        223.12Forfeited
                                        
                                        
                                        (2,580
                                        )
                                        
                                        $
                                        4.38Outstanding
      at September 30, 2010
                                        
                                        
                                        606,138
                                        
                                        
                                        $
                                        43.19Vested
      and expected to vest at September 30, 2010
                                        
                                        
                                        603,901
                                        
                                        
                                        $
                                        43.32Exercisable
      at September 30, 2010
                                        
                                        
                                        561,402
                                        
                                        
                                        $
                                        46.37




Cash
received from option exercises under all share-based payment arrangements for
the three and nine months ended September 30, 2010 was $2,000 and $12,340,
respectively.  Cash received from option exercises for the three and
nine months ended September 30, 2009 was $700 and $10,700.




10.
            Acquired
      In-Process R&D




In
January 2006, the Company acquired Miikana, a private biotechnology
company.  Pursuant to the merger agreement, based on the success of
the acquired preclinical programs, the Company may pay up to an additional $18
million upon the achievement of certain clinical and regulatory
milestones.  Such additional payments will be made in cash or shares
of stock at our option.  The lead molecule in the Aurora Kinase
Program, ENMD-2076, advanced into clinical development in
2008.  ENMD-2076 is a selective kinase inhibitor with activity against
Aurora A and angiogenic kinases linked to promoting cancer and inflammatory
diseases.  Dosing of the first patient in 2008 triggered a purchase
price adjustment milestone of $2 million.  Dosing of the first patient
in a Phase 2 trial in April 2010 triggered an additional purchase price
adjustment milestone of $3 million.  The Company paid each of the
milestone payments in shares of its common stock.  In June 2008,
233,100 shares of common stock were issued and in June 2010, 403,550 shares of
common stock were issued as consideration for the satisfaction of the two
milestone payments.  The additional payments of $2 million in 2008 and
$3 million in 2010 were recorded to expense as in-process research and
development since the research and development project related to the Aurora
Kinase Program had not reached technical feasibility and has no future
alternative use.  As of September 30, 2010, a $4 million potential
milestone payment remains, payable in cash or shares of stock at our option,
related to the ENMD-2076 program.  In addition, there are $9 million
in milestone payments that pertain to a preclinical program that we are no
longer pursuing.  In the event that we reinitiate the program and
certain clinical and regulatory milestones are satisfied, payments will be made
in either cash or shares of stock, at our discretion.




11.           Income
Taxes




At
December 31, 2009, the Company has a $2.96 million unrecognized tax benefit for
which a full valuation allowance has been recorded.


14





During
the nine months ended September 30, 2010, there were no material changes to the
measurement of unrecognized tax benefits in various taxing
jurisdictions.  The Company recognizes interest and penalties related
to uncertain tax positions as a component of income tax expense.





The tax
returns for all years in the Company’s major tax jurisdictions are not settled
as of January 1, 2010; no changes in settled tax years have occurred through
September 30, 2010.  Due to the existence of tax attribute
carryforwards (which are currently offset by a full valuation allowance), the
Company treats all years’ tax positions as unsettled due to the taxing
authorities’ ability to modify these attributes.





12.
            Subsequent
      Events





As
previously announced, on August 17, 2010, the Company received a letter from the
Listing Qualifications Department of the NASDAQ Stock Market indicating that
the  Company was not in compliance with the minimum $35 million
minimum market value of listed securities (“MVLS”) requirement for continued
listing on The NASDAQ Capital Market under Rule 5550(b)(2).





As of
October 13, 2010, the Company had maintained a minimum MVLS of $35 million for
at least 10 consecutive trading days and subsequently received a letter from the
NASDAQ Stock Market stating that the Company has regained compliance with the
requirement for continued listing on the NASDAQ Capital Market as set forth in
NASDAQ Marketplace Rule 5550(b)(2).





On
October 29, 2010, the Company received notification from the Internal Revenue
Service that it had been approved to receive Qualifying Therapeutic Discovery
Project Grant funds in the amount of $244,479 for ENMD-2076 under section 48D of
the Internal Revenue Code.





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





OVERVIEW





We are a
clinical-stage pharmaceutical company focused on developing ENMD-2076, an Aurora
A and angiogenic kinase inhibitor for the treatment of
cancer.  ENMD-2076 is currently in a Phase 2 study in ovarian cancer
and Phase 1 studies in advanced cancers, multiple myeloma and
leukemia.  ENMD-2076 is a novel orally-active, Aurora A/angiogenic
kinase inhibitor with potent activity against Aurora A and multiple tyrosine
kinases linked to cancer and inflammatory diseases.  ENMD-2076 is
relatively selective for the Aurora A isoform in comparison to Aurora
B.  Aurora kinases are key regulators of the process of mitosis, or
cell division, and are often over-expressed in human cancers. ENMD-2076 exerts
its effects through multiple mechanisms of action, including antiproliferative
activity and the inhibition of angiogenesis. ENMD-2076 has demonstrated
significant, dose-dependent preclinical activity as a single agent, including
tumor regression, in multiple xenograft models (e.g. breast, colon, leukemia),
as well as activity towards ex vivo-treated human leukemia patient
cells.





ENMD-2076
has received orphan drug designation for the treatment of ovarian cancer,
multiple myeloma and acute myeloid leukemia (“AML”).


15





ENMD-2076
is our only program currently under active clinical evaluation.  This
prioritization allows us to direct the majority of our resources to the clinical
development of ENMD-2076.  However, we also own intellectual property
for our other therapeutic candidates.  So that we can continue to
accelerate the development of ENMD-2076, we do not intend to initiate additional
new studies for these programs unless additional significant financing becomes
available to us.  Our other therapeutic candidates include MKC-1, an
oral cell-cycle inhibitor with activity against the mTOR pathway that has
completed multiple Phase 2 clinical trials for cancer, and ENMD-1198, a novel
antimitotic agent that has completed a Phase 1 study in advanced
cancers.  We also have an approved Investigational New Drug
Application (IND) for the use of Panzem® in
rheumatoid arthritis (RA) treatment.  All of our candidates are
multi-mechanism drugs that target disease cells and the blood vessels that
nourish them, which we believe can be developed to be safe and convenient, and
provide the potential for improved patient outcomes.





We have
incurred substantial operating losses since our inception due in large part to
expenditures for our research and development activities. At September 30, 2010,
we had an accumulated deficit of $375 million. We expect to continue to
incur expenses, resulting in operating losses, for the foreseeable future due
to, among other factors, our continuing clinical trials, planned future clinical
trials, and other anticipated research and development activities. We have
successfully completed four financings since December 31, 2009, increasing our
net cash by approximately $12,100,000.  Based on current plans, we
expect our current available cash and cash equivalents, along with the receipt
of expected royalty payments during 2010 and 2011, to be sufficient to meet our
cash requirements through fiscal 2011.  We will continue efforts to
augment our cash and cash equivalent balances as of September 30, 2010 by
pursuing opportunities to raise capital.  These activities may include
strategic alliances or collaborative development opportunities with
organizations that have capabilities and/or products that complement our efforts
for continued development of our potential product candidate, which we intend to
pursue to commercialization. However, there can be no assurance that adequate
additional financing under such arrangements will be available to us on terms
that we deem acceptable, if at all.





On
January 11, 2010, we sold 284,090 shares of our common stock, par value $0.01
per share, to an institutional investor for an aggregate purchase price of
$2,500,000.  On February 3, 2010, we sold 349,650 shares of our common
stock to the same institutional investor for an aggregate purchase price of
$2,500,000.  On April 16, 2010, we sold 526,500 shares of our common
stock to the same institutional investor for an aggregate purchase price of
$3,000,000.





On
September 8, 2010, we consummated the issuance and sale of an aggregate
of 1,886,622 shares of our common stock and issued warrants to purchase up
to an aggregate of 377,327 shares of common stock to certain
investors.  The warrants have a three year term from the date of
issuance and are exercisable at any time 181 days after the date of
issuance.   We received aggregate gross proceeds of $5.1 million,
or $2.70 per share, which price per share of common stock represents the
consolidated closing bid price of our common stock on September 7, 2010, as
reported by the NASDAQ Stock Market.   The exercise price of the
warrant is $2.825 per share.   Concurrent with the issuance and
sale of the common stock and warrants, we entered into a rights agreement with
Selected Value Therapeutics I, LLC, a Delaware limited liability
company (“SVT”) and an entity in which the investors have an interest, pursuant
to which SVT has an option to exercise, on behalf of the investors, certain
license, development and commercialization rights for ENMD-2076 in
China.  If the option is exercised, we will be entitled to receive
development milestone payments and royalties on future product sales within the
geographic market.   The option is exercisable at any time until
December 31, 2011.


16




Our net
proceeds from these four offerings were approximately $12.1
million.  Additional funds raised by issuing equity securities may
result in dilution to existing shareholders.  If we fail to obtain
additional capital when needed, we may be required to delay, scale back, or
eliminate our clinical program.





On July
1, 2010, we affected a 1-for-11 reverse split of our common stock, which was
authorized by our stockholders at the Annual Meeting of Stockholders held in
June 2010.  The primary objective in affecting the reverse split was
to better enable us to maintain the listing of our common stock on the NASDAQ
Capital Market.  The reverse stock split reduced the number of our
issued and outstanding shares of common stock as of July 1, 2010 from
approximately 105.9 million shares to approximately 9.6 million
shares. The par value per share and the number of authorized shares of our
common stock were not affected by the reverse stock split. All share and
per-share information for our common stock included in this report, other than
par value and number of authorized shares, have been restated to reflect
retrospective application of the reverse stock split.





As of
July 15, 2010, our stock had maintained a minimum closing bid price of $1.00 or
more for at least 10 consecutive trading days and, subsequently, we received a
letter from the NASDAQ Stock Market stating that we had regained compliance with
NASDAQ’s $1.00 minimum closing bid price requirement.





In
addition to the $1.00 minimum closing bid price, NASDAQ’s Rule 5550(b) requires
that the companies listed on The NASDAQ Capital Market maintain a minimum
stockholders' equity of $2.5 million or a Market Value of Listed Securities
(“MVLS”) of $35 million.





On August
17, 2010, we received a Staff Determination Letter from NASDAQ indicating that
we were not in compliance with the minimum MVLS requirement for continued
listing on the NASDAQ Capital Market as set forth in NASDAQ Marketplace Rule
5550(b)(2), which requires us to have a minimum MVLS of $35 million for at least
30 consecutive business days.  We were given 180 calendar days, or
until February 14, 2011, to regain compliance with the rule.  In order
to regain compliance our MVLS must close at $35 million or more for a minimum of
10 consecutive trading days.





On
October 13, 2010, we received a letter from the NASDAQ Stock Market indicating
that we regained compliance with the requirement for continued listing on the
NASDAQ Capital Market as set forth in NASDAQ Marketplace Rule 5550(b)(2) by
sustaining a minimum market value of listed securities of $35 million for a
minimum of 10 consecutive trading days.





At
September 30, 2010, our consolidated stockholders’ equity was approximately
$4,261,000 and the market value of our listed securities was approximately $43.4
million.  The NASDAQ Listing Rules require that we either maintain a
$35 million MVLS or stockholders’ equity of at least $2.5
million.  There can be no assurance that we will continue to meet
these standards for continued listing in the future.




17





CRITICAL
ACCOUNTING POLICIES AND THE USE OF ESTIMATES





The
preparation of our consolidated 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 consolidated
financial statements and accompanying notes. Actual results could differ
materially from those estimates.  Our critical accounting policies,
including the items in our consolidated financial statements requiring
significant estimates and judgments, are as follows:





-
            Going
      Concern - A fundamental principle of the preparation of financial
      statements in accordance with GAAP is the assumption that an entity will
      continue in existence as a going concern, which contemplates continuity of
      operations and the realization of assets and settlement of liabilities
      occurring in the ordinary course of business.  This principle is
      applicable to all entities except for entities in liquidation or entities
      for which liquidation appears imminent.  In accordance with this
      requirement, our policy is to prepare our consolidated financial
      statements on a going concern basis unless we intend to liquidate or have
      no other alternative but to liquidate.  Based on current plans,
      we expect our current available cash and cash equivalents, along with the
      receipt of royalty payments during 2010 and 2011, to be sufficient to meet
      our cash requirements through fiscal 2011.  We have prepared our
      consolidated financial statements on a going concern basis.  Our
      consolidated financial statements included in this Quarterly Report on
      Form 10-Q do not reflect any adjustments that might specifically result
      from the outcome of this
uncertainty.





-
            Revenue
      Recognition - We recognize revenue in accordance with the provisions of
      authoritative guidance issued, whereby revenue is not recognized until it
      is realized.  Revenue is recognized when all of the following
      criteria are met:  1) persuasive evidence of an arrangement
      exists, 2) delivery has occurred or services have been rendered, 3) the
      price to the buyer is fixed and determinable and 4) collectibility is
      reasonably assured.





-
            Royalty
      Revenue – Royalties from licenses are based on third-party sales and
      recorded as earned in accordance with contract terms, when third-party
      results are reliably measured and collectibility is reasonably assured. We
      expect that the majority of our 2010 revenues will be from royalties on
      the sale of Thalomid®,
      which we will recognize when we receive the royalty payment.  In
      2004, certain provisions of a purchase agreement dated June 14, 2001 by
      and between Bioventure Investments kft (“Bioventure”) and the Company were
      satisfied and, as a result, beginning in 2005 we became entitled to share
      in the royalty payments received by Royalty Pharma Finance Trust,
      successor to Bioventure, on annual Thalomid®
      sales above a certain threshold.  Based on the licensing
      agreement royalty formula, annual royalty sharing commences with
      Thalomid®
      annual sales of approximately $225
million.





-
            We
      are also eligible to receive royalties from Oxford Biomedica, PLC based on
      a portion of the net sales of products developed for the treatment of
      ophthalmic (eye) diseases based in part on Endostatin.  Under
      our original Endostatin license agreement with Children’s Medical Center
      Corporation, a portion of the royalties we receive from Oxford Biomedica
      are payable to CMCC.





-
            In
      the future, royalty payments, if any, will be recorded as revenue when
      received and/or when collectibility is reasonably
  assured.


18




-
            Research
      and Development - Research and development expenses consist primarily of
      compensation and other expenses related to research and development
      personnel, research collaborations, costs associated with preclinical
      testing and clinical trials of our product candidates, including the costs
      of manufacturing drug substance and drug product, regulatory maintenance
      costs, and facilities expenses.  Research and development costs
      are expensed as incurred.





-
            Expenses
      for Clinical Trials – Expenses for clinical trials are incurred from
      planning through patient enrollment to reporting of the
      data.  We estimate expenses incurred for clinical trials that
      are in process based on patient enrollment and based on clinical data
      collection and management.  Costs that are associated with
      patient enrollment are recognized as each patient in the clinical trial
      completes the enrollment process.  Estimated clinical trial
      costs related to enrollment can vary based on numerous factors, including
      expected number of patients in trials, the number of patients that do not
      complete participation in a trial, and when a patient drops out of a
      trial.  Costs that are based on clinical data collection and
      management are recognized in the reporting period in which services are
      provided.  In the event of early termination of a clinical
      trial, we would accrue an amount based on estimates of the remaining
      non-cancelable obligations associated with winding down the clinical
      trial.





-
            Stock-Based
      Compensation – All share-based payment transactions are recognized in the
      consolidated financial statements at their fair values.  Using
      the straight-line expense attribution method over the requisite service
      period, which is generally the option vesting term of three years,
      share-based compensation expense recognized in the three and nine months
      ended September 30, 2010 totaled $18,981 and $250,311,
      respectively.  Share-based compensation expense recognized in
      the comparable periods in 2009 totaled $39,703 and $280,153,
      respectively.





The
determination of fair value of stock-based payment awards on the date of grant
using the Black-Scholes-Merton model is affected by our stock price, as well as
the input of other subjective assumptions.  These assumptions include,
but are not limited to, the expected forfeiture rate and expected term of stock
options and our expected stock price volatility over the term of the
awards.  Changes in the assumptions can materially affect the fair
value estimates.





Any
future changes to our share-based compensation strategy or programs would likely
affect the amount of compensation expense recognized.





RESULTS
OF OPERATIONS





For
the Three and Nine Months Ended September 30, 2010 and September 30,
2009.





Revenues.There
were no revenues recorded in the three and nine-month periods ended September
30, 2010.  For the three and nine-month periods ended September 30,
2009, we recorded estimated royalty revenues of $3,300,000 and other revenues of
$368,000.  We do not expect to record revenue in 2010 until the fourth
quarter.  Our 2010 revenues, if any, will result from Celgene’s sale
of Thalomid®.  We
earn royalties once sales of Thalomid exceed approximately $225 million
annually, pursuant to a 2001 agreement with Royalty Pharma, as noted
above.  Thalomid® is
distributed and sold by Celgene Corporation and/or its affiliates, and thus, we
have no control over sales of Thalomid® or the
amount, if any, of royalty payments we will receive.


19




Research and Development
Expenses.  Our research and development expenses for the three
and six months ended September 30, 2010 totaled $1,292,000 and $3,147,000,
respectively.  Research and development expenses for the corresponding
2009 periods were $2,327,000 and $5,940,000, respectively.





Reflected
in our R&D expenses totaling $1,292,000 for the three-month period ended
September 30, 2010 are direct project costs of $1,045,000 for ENMD-2076, $24,000
for Panzem®
oncology,$22,000
for ENMD-1198 and $13,000 for MKC-1.   The 2009 research and
development expenses for the comparable period included $1,798,000 for
ENMD-2076, $34,000 for ENMD-1198 and $75,000 for MKC-1. Research and development
expenses totaling $3,147,000 for the nine-month period ended September 30, 2010
include direct project costs of $2,570,000 related to ENMD-2076, $74,000 related
to Panzem®
oncology, $56,000 related to ENMD-1198 and $247,000 for MKC-1. The 2009 research
and development expenses for the comparable period included $3,704,000 for
ENMD-2076, $118,000 for Panzem®,$413,000
for MKC-1, and $128,000 for ENMD-1198.The decrease in research
and development costs in the three and nine-month periods ended September 30,
2010, as compared to same periods in 2009, reflects our continued focus on the
clinical development of ENMD-2076 as we ceased clinical and manufacturing
activities in our discontinued programs.





At
September 30, 2010, accumulated direct project expenses for Panzem® oncology
were $54,319,000; direct ENMD-1198 project expenses totaled $13,199,000; and,
since acquired, accumulated direct project expenses for ENMD-2076 totaled
$16,728,000 and for MKC-1, accumulated project expenses totaled
$10,158,000.  Our research and development expenses also include
non-cash stock-based compensation totaling $10,000 and $29,000, respectively,
for the three and nine months ended September 30, 2010 and $14,000 and $95,000
for the respective corresponding 2009 periods.  The decrease in
stock-based compensation expense is related to fewer stock options granted in
the nine months ending September 30, 2010.  The balance of our
research and development expenditures includes facility costs and other
departmental overhead, and expenditures related to the non-clinical support of
our programs.





The
initiation of our multi-center Phase 2 study with ENMD-2076 in patients with
ovarian cancer resulted in an increase in our research and development expenses
in the three months ended September 30, 2010.  Six sites are
participating in the study and are currently enrolling patients.  We
expect our research and development expenses to be similar in the fourth quarter
of 2010.  We will continue to conduct research on ENMD-2076 in order
to comply with stipulations made by the FDA, as well as to increase
understanding of the mechanism of action and toxicity parameters of ENMD-2076
and its metabolites.  Completion of clinical development 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.





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


20




CLINICAL
      PHASE
                
                ESTIMATED
                  COMPLETION
                  PERIODPhase
      I
                
                1
      YearPhase
      II
                
                1-2
      YearsPhase
      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 participation in the study and 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 preclinical 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.





Our
proprietary drug candidates have also 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 preclinical 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.





We will
be opportunistic about collaborative arrangements with third parties to complete
the development and commercialization of our products.  In the event
that third parties take over the development 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.





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. There can be
no assurance that we will be able to successfully access external sources of
financing in the future.  Our inability to raise additional capital,
or to do so on terms reasonably acceptable to us, would jeopardize the future
success of our business.


21





Research
and development expenses consist primarily of compensation and other expenses
related to research and development personnel and costs associated with internal
and contract preclinical testing and clinical trials of our product candidates,
including the costs of manufacturing drug substance and drug product, regulatory
maintenance costs, and facilities expenses.  Expenditures during the
three and nine months ended September 30, 2010 were specifically impacted by the
following:





-
            Outside Services – In the
      three-month period ended September 30, 2010, we expended $29,000 on
      outside service activities versus $80,000 in the same 2009
      period.  For the nine-month period ended September 30, 2010
      outside services are $40,000 compared to $401,000 for the same 2009
      period.  The decrease in 2010 as compared to 2009 continues to
      reflect the absence of utilizing outsourced services to conduct
      development of products from discontinued
  programs.





-
            Clinical
      Trial Costs – Clinical trial costs, which include clinical site fees,
      monitoring costs and data management costs, decreased to $665,000 in the
      three months ended September 30, 2010 from $992,000 in the three-month
      period ended September 30, 2009.  Clinical trial costs for the
      nine-month period ended September 30, 2010 decreased to $1,131,000 from
      $2,000,000 for the comparable 2009 period.  The decrease relates
      primarily to our focus on the clinical development of ENMD-2076, reducing
      patient costs for cycles of treatment that were not completed in trials
      that have wound down in discontinued
programs.





-
            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, encapsulation and
      fill and finish services, product release costs and storage fees. Contract
      manufacturing costs for the three months ended September 30, 2010
      decreased by $325,000 to $39,000 from $364,000 during the same period in
      2009.  For the nine-month period ended September 30, 2010,
      manufacturing costs decreased to $189,000 from $586,000 for the comparable
      2009 period.  The decrease reflects the absence of encapsulation
      costs for ENMD-2076 that were incurred in 2009, plus a credit received in
      2010 reflecting a reduction in the scope of previously contracted
      compatibility, formulation development and GMP manufacture of
      ENMD-2076.





-
            Personnel
      Costs – Personnel costs decreased to $297,000 in the three-month period
      ended September 30, 2010 from $494,000 in the corresponding 2009 period.
      For the nine-month period, personnel costs decreased in 2010 to $957,000
      from $1,626,000 for the corresponding 2009 period.  The decrease
      is attributed to the elimination of three management positions in December
      2009.




-
            Also reflected in our 2010
      research and development expenses for the three-month period ended
      September 30, 2010 are patent costs of $133,000 and facility and related
      expenses of $50,000.  In the corresponding 2009 period, these
      expenses totaled $117,000 and $117,000, respectively.  For the
      nine-month period ended September 30, 2010, patent costs were $331,000 and
      facility and related expenses were $158,000.  In the
      corresponding 2009 period, these expenses totaled $372,000 and $492,000,
      respectively.




22




General and Administrative
Expenses.  General and administrative expenses include
compensation and other expenses related to finance, business development and
administrative personnel, professional services and facilities.




General
and administrative expenses decreased to $692,000 in the three-month period
ended September 30, 2010 from $912,000 in the corresponding 2009
period.  For the nine-month period, general and administrative
expenses decreased in 2010 to $2,514,000 from $3,082,000 for the corresponding
2009 period.    This decrease was primarily a result of
fewer fees paid to directors with the resignation of one director from our
Board, and also a decrease in the cost of professional services, including
accounting and legal fees.





Interest
Expense.  Interest expense, which relates to a financing
transaction with General Electric Capital Corporation (GECC) in September 2007,
decreased to approximately $107,000 (including $9,545 of non-cash interest) in
the three-month period ended September 30, 2010 from approximately $345,000
(including $30,842 of non-cash interest) in the corresponding 2009
period.  For the nine-month period, interest expense decreased in 2010
to approximately $496,000 (including $45,095 of non-cash interest) from
approximately $1,198,000 (including $107,357 of non-cash interest) for the
corresponding 2009 period.





Investment
Income.  Due to the absence of invested cash during the three
and nine-month periods ended September 30, 2010, we earned no investment
income.  We also earned no investment income in the three-month period
ended September 30, 2009.  Investment income in the nine-month period
ended September 30, 2009 was $69,000.





Dividends on Series A Convertible
Preferred Stock.  The Consolidated Statements of Operations for
the three and nine-month periods ended September 30, 2010 and 2009 reflect a
dividend of $251,250 and $753,750, respectively, relating to Series A
Convertible Preferred Stock held by Celgene pursuant to a Securities Purchase
Agreement dated December 31, 2002. The holders of Series A Preferred
Stock accumulate dividends at an annual rate of 6% and will participate in
dividends declared and paid on our common stock, if any. All accumulated
dividends must be paid before any dividends may be declared or paid on the
common stock.  We have no plans to pay any dividends in the
foreseeable future.





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 in
2010 and the foreseeable future before we commercialize any
products.  Based on our current plans, we expect our current available
cash and cash equivalents, along with the receipt of expected royalty payments
during 2010 and 2011, to be sufficient to meet our cash requirements for the
next twelve months and through fiscal 2011.  In the event the royalty
payments are received in amounts significantly less than our estimates, we plan
to continue to pursue opportunities to raise additional capital to fund our
operating needs.




23


Our
ability to continue as a going concern is dependent on our success at raising
additional capital sufficient to meet our obligations on a timely basis, the
ongoing receipt of royalty payments and our ability to ultimately attain
profitability.  As the amount of the royalty payments to be received
cannot be reasonably estimated, there is no assurance that we will not be
required to raise additional capital sufficient to enable us to continue our
operations for the next twelve months and through fiscal 2011.  If
additional funds are raised by issuing equity securities, dilution to existing
shareholders may result.  There can be no assurance that adequate
additional financing will be available to us on terms that we deem acceptable,
if at all.  In the event we do not have sufficient cash to support the
ENMD-2076 development program, and additional financing is not obtained, we will
explore alternatives to raising capital by being opportunistic about other
potential forms of capital infusion, including strategic alliances or
collaborative development opportunities, engaging in one or more strategic
transactions, monetizing non-core assets and/or other transactions that provide
capital to further the development of ENMD-2076.  If we fail to obtain
additional capital when needed, we will reduce expenses as
appropriate.





We did
not include any adjustments to the consolidated financial statements included in
this Quarterly Report on Form 10-Q to reflect the possible future effects that
may result from the uncertainty of our ability to continue as a going concern
because we believe that we will continue to be a financially sound and viable
business, continuing to conduct clinical trials for, and further development of,
ENMD-2076 and provide value to our shareholders.





In January 2006, we acquired Miikana
Therapeutics, Inc., a private biotechnology company, in exchange for
approximately 905,500 shares of our common stock and the assumption of certain
obligations of Miikana.  We acquired certain drug candidates in
connection with the acquisition, including the lead molecule in the Aurora
Kinase Program, ENMD-2076, which advanced into clinical development in
2008.  ENMD-2076 is a kinase inhibitor with activity towards Aurora A
and multiple other kinases linked to promoting cancer.  Dosing of the
first patient in ENMD-2076 trials triggered a milestone payment of $2 million to
the former Miikana stockholders payable in stock or cash, at the Company’s
discretion.  In June 2008, 233,100 shares of common stock were issued
to the former Miikana stockholders as consideration for the satisfaction of the
milestone payment.  In April 2010, dosing of the first patient in a
Phase 2 trial for ENMD-2076 triggered an additional milestone payment of $3
million, payable in stock or cash, at the Company’s sole
discretion.  In June 2010, 403,550 shares of common stock were issued
to the former Miikana stockholders as consideration for the satisfaction of the
milestone payment.  Former Miikana stockholders may also earn an
additional payment of $4 million for the ENMD-2076 program upon the satisfaction
of additional clinical and regulatory milestones; however, we do not expect
these milestones to be satisfied in 2010.  Additionally, under the
terms of the merger agreement, the former Miikana stockholders may earn up to $9
million of potential payments upon the satisfaction of clinical and regulatory
milestones related to a preclinical program we no longer pursue.  We
do not expect such additional milestones to be satisfied during
2010.  Through the Miikana acquisition, we also acquired rights to
MKC-1, a Phase 2 clinical candidate licensed from Roche by Miikana in April
2005.  Under the terms of the agreement, Roche may be entitled to
receive future payments upon successful attainment of certain clinical,
regulatory and commercialization milestones; however, since ENMD-2076 is the
only program currently under active clinical evaluation by the Company, we do
not expect to trigger any of these milestone payments during fiscal
2010.





In
September 2007, we entered into a $20 million term loan agreement with General
Electric Capital Corporation (the “Term Loan”).   The Term Loan
accrues interest in arrears at a fixed annual rate of
10.47%.   The Term Loan will be repaid in January
2011.  For additional information on the Term Loan, please see Note 6
of the Notes to the Consolidated Financial Statements included in this Quarterly
Report on Form 10-Q.


24





On August
6, 2009, we filed with the SEC a $30 million shelf registration statement on
Form S-3, which was declared effective on October 9, 2009 and allows us to issue
any combination of common stock, preferred stock, warrants to purchase common
stock or preferred stock or units consisting of any of the
foregoing.





As
discussed above, on September 8, 2010, pursuant to the shelf registration
statement, we consummated the issuance and sale, to certain investors, of units
consisting of our common stock and warrants to purchase shares of our common
stock, and received aggregate gross proceeds of $5.1
million.    As of the period ended September 30, 2010, we
have sold approximately $13 million of our securities pursuant to the shelf
registration statement.





At
September 30, 2010, we had cash and short-term investments of $8,432,703 with
working capital of $4,135,388, compared to cash and short-term investments of
$6,366,253 with a working capital deficit of ($1,395,158) at December 31,
2009.





To
accomplish our business plans, we will be required to continue to conduct
substantial development activities for ENMD-2076, our leading
program.  Under our operating plans for the remainder of 2010, we
expect to continue to pursue ENMD-2076 in oncology and complete enrollment of
patients in our ovarian cancer Phase 2 trial at six sites in the United States
and Canada.  We expect our 2010 results of operations to reflect a net
loss of approximately $11,300,000, including non-cash charges of approximately
$4,400,000.





We expect
that the majority of our 2010 revenues will continue to be from royalties on the
sales of Thalomid®.  Thalomid® is sold
by a third-party and we have no control over such party’s sales efforts or the
resources devoted to Thalomid® sales,
or the impact that generic drugs or alternative products will have on the sales
of Thalomid®.  We
expect to record royalty-sharing revenues in the fourth quarter of 2010;
however, there can be no assurance of the amount of revenues that will be
recorded, if any.  In addition, under our licensing agreement with
Oxford Biomedica, PLC and Oxford Biomedica (UK) Limited Oxford, we are entitled
to receive payments upon the achievement of certain milestones with respect to
the development of gene therapies for ophthalmic (eye)
diseases.  However, we do not control the drug development efforts of
Oxford and have no control over when or whether such milestones will be
reached.  We do not believe that we will receive any developmental
milestone payments under this agreement in 2010.





Our
estimated future capital requirements are uncertain and could change materially
as a result of many factors, including the progress of our research, development
and clinical activities.  If adequate funds are not available through
either the capital markets, strategic alliances, or collaborators, we may be
required to delay, reduce the scope of or eliminate our research, development or
clinical program efforts, effect additional changes to our facilities or
personnel, or obtain funds through other arrangements that may require us to
relinquish some of our assets or rights to certain of our existing or future
technologies, product candidates, or products on terms not favorable to
us.





Off-Balance
Sheet Arrangements and Contractual Obligations





We have
no off-balance sheet financing arrangements, and there have been no material
changes to our contractual obligations table in our Form 10-K for the year ended
December 31, 2009.


25





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 the general level of U.S.
interest rates.  In this regard, changes in the U.S. interest rates
affect the interest earned on 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 June 30, 2010.





ITEM
4.   CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures





Based on
an evaluation under the supervision and with the participation of the Company’s
management, the Company’s Executive Chairman and Principal Accounting Officer
have concluded that the Company’s disclosure controls and procedures as defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) were effective as of September 30, 2010 to ensure
that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is (i) recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange
Commission rules and forms and (ii) accumulated and communicated to the
Company’s management, including its Executive Chairman and Principal Accounting
Officer, as appropriate to allow timely decisions regarding required
disclosure.





Management’s
assessment of the effectiveness of internal control over financial reporting is
expressed at the level of reasonable assurance because a control system, no
matter how well designed and operated, can provide only reasonable, but not
absolute, assurance that the control system’s objectives will be
met.





Changes
in Internal Control Over Financial Reporting





There
were no changes in the Company’s internal control over financial reporting that
occurred during the quarter ended September 30, 2010 that have materially
affected or are reasonably likely to materially affect the Company’s internal
control over financial reporting.





In July
2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed
into law.  This legislation includes an exemption for companies with
less than $75 million in market capitalization (non-accelerated filers) to
Section 404(b) of the Sarbanes-Oxley Act of 2002, which requires an external
auditor’s report on the effectiveness of a registrant’s internal control over
financial reporting.  The Securities and Exchange Commission (the
“SEC”) has not published a final rule on this new law.  The Company is
in the process of determining the effects, if any, of this new
law.


26





PART
II.           OTHER
INFORMATION





ITEM
1. LEGAL PROCEEDINGS





We are
subject in the normal course of business to various legal proceedings in which
claims for monetary or other damages may be asserted.  We are not
currently a party to any legal proceedings.





ITEM
1A.  RISK FACTORS





For
information regarding factors that could affect the Company’s results of
operations, financial condition and liquidity, see the risk factors discussion
set forth in Item 1A of EntreMed’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2009 and the information under “Special Note Regarding
Forward-Looking Statements” included in this report.  There have been
no material changes to our risk factors from those disclosed in Item 1A in our
Annual Report on Form 10-K for the fiscal year ended December 31,
2009.





ITEM
      2.
            UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS





Not
applicable.





ITEM
      3.
            DEFAULTS
      UPON SENIOR SECURITIES





Not
applicable.





ITEM
      4.
            REMOVED
      AND RESERVED





ITEM
      5.
            OTHER
      INFORMATION





Not
applicable.





ITEM
      6.
            EXHIBITS





4.1
            Form
      of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1
      to the Company’s Current Report on Form 8-K filed with the Commission on
      September 10, 2010)


10.1
            Form
      of Securities Purchase Agreement by and among the Company and the
      purchasers party thereto, dated September 7, 2010 (incorporated by
      reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed with the Commission on September 10,
2010)


10.2
            China
      Rights Agreement, dated September 7, 2010, by and between the Company and
      Selected Value Therapeutics I, LLC
†


31.1
            Rule
      13a-14(a) Certification of Executive
Chairman


31.2
            Rule
      13a-14(a) Certification of Principal Accounting
  Officer


32.1
            Section
      1350 Certification of Executive
Chairman


32.2
            Section
      1350 Certification of Principal Accounting
  Officer





†
Pursuant to a request for confidential treatment, portions of this Exhibit have
been redacted from the publicly filed document and have been furnished
separately to the Securities and Exchange Commission as required by Rule 24b-2
under the Securities Exchange Act of 1934, as amended.


27





SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





ENTREMED,
      INC.(Registrant)Date:
      November 12, 2010
                          
                          /s/ Michael M. TarnowMichael
      M. TarnowExecutive
      ChairmanDate:
      November 12, 2010
                          
                          /s/ Kathy R. Wehmeir-DavisKathy
      R. Wehmeir-DavisPrincipal
      Accounting
Officer




28


EXHIBIT
INDEX





4.1
            Form
      of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1
      to the Company’s Current Report on Form 8-K filed with the Commission on
      September 10, 2010)


10.1
            Form
      of Securities Purchase Agreement by and among the Company and the
      purchasers party thereto, dated September 7, 2010 (incorporated by
      reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed with the Commission on September 10,
2010)


10.2
            China
      Rights Agreement, dated September 7, 2010, by and between the Company and
      Selected Value Therapeutics I, LLC
†


31.1
            Rule
      13a-14(a) Certification of Executive
Chairman


31.2
            Rule
      13a-14(a) Certification of Principal Accounting
  Officer


32.1
            Section
      1350 Certification of Executive
Chairman


32.2
            Section
      1350 Certification of Principal Accounting
  Officer





†
Pursuant to a request for confidential treatment, portions of this Exhibit have
been redacted from the publicly filed document and have been furnished
separately to the Securities and Exchange Commission as required by Rule 24b-2
under the Securities Exchange Act of 1934, as amended.




29