<PAGE>


                                  FORM 10-Q

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20459

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

For the quarterly period ended March 31, 2002

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

For the transition period from ___________ to _____________.

                        Commission file number 0-20713
                                               -------

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

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

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

                                    20850
                                    -----
                                  (Zip code)

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

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

YES  X   NO
   ----    ----

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

          Class                                 Outstanding at May 9, 2002
---------------------------                     --------------------------
Common Stock $.01 Par Value                               21,922,860


<PAGE>
                                ENTREMED, INC.

                              Table of Contents

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

Item 1 -- Financial Statements

Consolidated Balance Sheets
as of March 31, 2002 and December 31, 2001                                   3

Consolidated Statements of
Operations for the Three Months Ended
March 31, 2002 and 2001                                                      4

Consolidated Statements of Cash
Flows for the Three Months Ended March 31, 2002
and 2001                                                                     5

Notes to Consolidated Financial
Statements                                                                   6

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

Item 3 -- Quantitative and Qualitative Disclosures
          About Market Risk                                                 13

Part II.  OTHER INFORMATION

Item 1 -- Legal Proceedings                                                 13

Item 2 -- Changes in Securities                                             13

Item 3 -- Defaults upon Senior Securities                                   13

Item 4 -- Submission of Matters to Vote of
          Security Holders                                                  14

Item 5 -- Other Information                                                 14

Item 6 -- Exhibits and Reports on Form 8-K                                  14

SIGNATURES                                                                  15
</TABLE>

              SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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



                                      2
<PAGE>



                                ENTREMED, INC.
                         CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                        March 31,            December 31,
                                                          2002                   2001
                                                     ---------------      ----------------
ASSETS                                                (unaudited)
<S>                                                <C>                   <C>
Current assets:
  Cash and cash equivalents                          $   26,302,823       $    41,386,300
  Interest receivable                                        80,741                57,038
  Accounts receivable                                        67,780               177,158
  Prepaid expenses and other                                338,958               371,155
                                                     ---------------      ----------------
Total current assets                                     26,790,302            41,991,651

Furniture and equipment, net                              4,026,148             4,186,079

Other assets                                                 45,135                40,720
                                                     ---------------      ----------------
    Total assets                                     $   30,861,585       $    46,218,450
                                                     ===============      ================


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                   $   10,174,003       $    16,309,238
  Accrued liabilities                                       918,581             2,050,822
  Deferred revenue - current                                 95,496               -
  Current portion of notes payable                          740,504             1,005,727
  Common stock repurchase liability                       1,615,830             1,367,914
                                                     ---------------      ----------------
Total current liabilities                                13,544,414            20,733,701

Non current deferred revenue                                358,110               -
Other long term liabilities                                  80,000               -
Long term convertible debt                                2,885,968             2,272,399
                                                     ---------------      ----------------
  Total liabilities                                      16,868,492            23,006,100

Minority interest                                            17,218                17,452

Stockholders' equity:
  Convertible preferred stock, $1.00 par and $1.50
   Liquidation value:
   5,000,000 shares authorized, none issued and
   outstanding at March 31, 2002 (unaudited)
   and December 31, 2001
  Common stock, $.01 par value:
   35,000,000 shares authorized, 22,506,193 (unaudited)
   and 21,777,330 shares issued and outstanding at
   March 31, 2002 and December 31, 2001, respectively       225,062               217,773
  Treasury stock, at cost: 583,333 shares held at
   March 31, 2002 (unaudited) and December 31, 2001      (7,666,746)           (7,666,746)
  Additional paid-in capital                            210,290,350           205,013,706
  Deferred stock compensation                               (61,846)              (73,369)
  Accumulated deficit                                  (188,810,945)         (174,296,466)
                                                     ---------------      ----------------
Total stockholders' equity                               13,975,875            23,194,898
                                                     ---------------      ----------------
   Total liabilities and stockholders' equity        $   30,861,585       $    46,218,450
                                                     ===============      ================
</TABLE>

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


                                      3
<PAGE>

                                 ENTREMED, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                   Three Months Ended
                                                                        March 31,
                                                                 2002               2001
                                                            -------------------------------
<S>                                                       <C>              <C>
Revenues:
   Licensing                                                $       23,874    $          -
   Grants                                                           34,263         117,992
   Royalties                                                         1,793         765,960
                                                            ---------------   -------------
Total revenues                                                      59,930         883,952
                                                            ---------------   -------------


Costs and expenses:
   Research and development                                     10,858,672       8,587,227
   General and administrative                                    3,791,012       3,234,886
                                                            ---------------   -------------
                                                                14,649,684      11,822,113

Interest expense                                                   (95,376)        (48,211)
Investment income                                                  170,651         391,423
                                                            ---------------   -------------

Net loss                                                    $  (14,514,479)   $(10,594,949)
                                                            ===============   =============

Net loss per share (basic and diluted)                      $        (0.67)   $     ( 0.62)
                                                            ===============   =============

Weighted average number of shares
    outstanding (basic and diluted)                             21,777,087      17,126,520
                                                            ===============   =============
</TABLE>


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



                                      4
<PAGE>
                                ENTREMED, INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     Three Months Ended
                                                                           March 31,
                                                                       2002       2001
                                                              ------------------------------
<S>                                                       <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                      $(14,514,479)   $(10,594,949)
Adjustments to reconcile net loss to net cash
   used in operating activities:
   Depreciation                                                    366,795         316,477
   Recognition of non-cash stock compensation                       23,727             -
   Non-cash interest expense                                        72,369             -
   Loss on common stock repurchase liability                       247,916             -
   Minority interest                                                  (234)           (122)
   Changes in assets and liabilities:
     Accounts receivable                                           109,378         493,236
     Interest receivable                                           (23,703)        (80,118)
     Prepaid expenses and other                                     27,782      (1,370,847)
     Accounts payable                                           (6,135,235)       (105,065)
     Accrued liabilities                                        (1,132,241)       (142,725)
     Other long term liabilities                                    80,000             -
     Deferred revenue                                              453,606             -
                                                              --------------  --------------
    Net cash used in operating activities                      (20,424,319)    (11,484,113)
                                                              --------------  --------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of furniture and equipment                              (206,864)       (233,680)
                                                              --------------  --------------
    Net cash used in investing activities                         (206,864)       (233,680)
                                                              --------------  --------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from option and warrant exercises
 and the sale of  common stock                                   4,940,409      26,217,269
Proceeds from the sale of warrants                                 322,520             -
Proceeds from issuance of convertible debt                         550,000       2,078,591
Payment of note payable                                           (265,223)       (240,019)
                                                              --------------  --------------
    Net cash provided by financing activities                    5,547,706      28,055,841
                                                              --------------  --------------

Net increase (decrease) in cash and cash equivalents           (15,083,477)     16,338,048
Cash and cash equivalents at beginning of period                41,386,300      24,503,886
                                                              --------------  --------------
Cash and cash equivalents at end of period                    $ 26,302,823    $ 40,841,934
                                                              ==============  ==============

Cash paid for interest                                        $     23,007    $     48,211
                                                              ==============  ==============
</TABLE>

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


                                      5

<PAGE>

                                ENTREMED, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2002 (UNAUDITED)



1.      BASIS OF PRESENTATION

        Our accompanying unaudited consolidated financial information includes
the accounts of 85% owned subsidiary, Cytokine Sciences, Inc. and 96.1% owned
subsidiary MaxCyte, Inc. MaxCyte was formed in July 1998 as a wholly owned
subsidiary and on April 1, 2000 was capitalized with $40,000 in cash including
$1,000 from a MaxCyte officer. In addition, EntreMed, Inc. (the "Company")
agreed to contribute certain technology and provide additional funding in
exchange for preferred stock. The Company provides facility and administrative
services for which MaxCyte is obligated to repay us. All intercompany balances
and transactions have been eliminated in consolidation.

        The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and in accordance with the instructions to Form
10-Q and Article 10 of Regulation S-X.  Accordingly, such consolidated
financial statements do not include all of the information and disclosures
required by generally accepted accounting principles for complete financial
statements.  In the opinion of our management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31,
2002 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2002. For further information, refer to our
audited financial statements and footnotes thereto included in our Form 10-K
for the year ended December 31, 2001.


2.      CONTINGENCIES

        On May 30, 2000, Abbott Laboratories filed a law suit against
Children's Medical Center Corporation and us in the Federal District Court in
Massachusetts requesting, among other things, that the court substitute Dr.
Donald Davidson as inventor on Children's U.S. Patent No. 4,854,221 which
covers use of the Kringle 5 region of the plasminogen molecule as an
anti-angiogenic agent and a declaratory judgment from the court to invalidate
any agreement between Children's Hospital and EntreMed regarding this patent.
Abbott also filed a claim for misappropriation of trade secrets related to the
Kringle 5 molecule seeking actual and punitive damages from the defendants. On
July 18, 2000, we filed counterclaims against Abbott Laboratories including
tortuous interference with contract and a declaratory judgement that Abbott's
patent covering Kringle 5 is invalid and that Children's patent covering
Kringle 5 is valid. The lawsuit is in the discovery phase. Although we do not
currently believe that the Abbott lawsuit will have a material impact on the
operations of the company, and we intend to vigorously contest the allegations
raised in the lawsuit, there is a risk that Children's patent or any agreement
with Children's with respect to the use of the patent could be invalidated or
found not to exist.

         The Abbott lawsuit is not directed to nor does the suit affect our
Angiostatin molecule, Kringles 1-3 of the plasminogen molecule, that is
currently in Phase I clinical trials.


                                      6



<PAGE>





3.      ALLERGAN LICENSING AGREEMENT

        Under a licensing agreement effective as of January 18, 2002, we
entered into a five-year strategic alliance with Allergan Inc. to develop and
commercialize small molecule angiogenic inhibitors for treatment and
prevention of diseases and conditions of the eye. Under the terms of a
licensing agreement, Allergan will receive exclusive worldwide license to
commercialize Panzem.

        In connection with the licensing agreement, Allergan purchased 728,863
Units from the Company at a purchase price of $6.86 per Unit. Each Unit
consists of one share of Common Stock and a warrant to purchase 0.15 shares of
Common Stock. The warrants have a term of five years and an exercise price
equal to $12.15 per share. Allergan will have certain registration rights
beginning one year after the closing of the transaction.



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

Overview

        Since our inception in September 1991, we have devoted substantially
all of our efforts and resources to sponsoring and conducting research and
development on our own behalf and through collaborations. Through March 31,
2002, all of our revenues have been generated from license fees, research and
development funding, royalty payments, the sale of royalty rights, and certain
research grants; we have not generated any revenue from direct product sales.
We anticipate our primary revenue sources for the next few years to include
research grants and collaboration payments under current or future
arrangements. The timing and amounts of such revenues, if any, will likely
fluctuate and depend upon the achievement of specified research and
development milestones, and results of operations for any period may be
unrelated to the results of operations for any other period.

CRITICAL ACCOUNTING POLICIES AND THE USE OF ESTIMATES

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

        -   Contract and upfront license payments where we have continued
            involvement through a research or development collaboration are
            recognized net of royalties ratably over the contract period.

        -   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. The majority of our royalty income is from
            Celgene on the sale of THALOMID(R).

        -   Malaria Grant Revenue - The Company receives government grants for
            the development of potential malaria vaccines. Grants are funded
            in specific amounts based on funding requests submitted to the
            grantor. Grant revenues are recognized and realized at the time
            that research and development activities are performed.

        -   Research and development expenses consist primarily of
            compensation and other expenses related to research and
            development personnel, research collaborations, costs associated
            with pre-clinical testing and clinical trials of our product
            candidates, including the costs of manufacturing the product


                                      7
<PAGE>


            candidates, and facilities expenses. Research and development
            costs are expensed as incurred.

        -   We are currently involved in certain legal proceedings as
            discussed in the "Contingencies" note in the Notes to
            Consolidated Financial Statements. We do not believe these
            legal proceedings will have a material adverse effect on our
            consolidated financial position, results of operations or cash
            flows. However, were an unfavorable ruling to occur there exists
            the possibility of a material impact on the operating results of
            that period.

RESULTS OF OPERATIONS

For the Three Months Ended March 31, 2001 and March 31, 2002.

        Revenues. Revenues decreased approximately 93% in the three month
period ending March 31, 2002 to approximately $60,000 from $884,000 in the
comparable 2001 period. Royalty revenue decreased approximately 99% in the
2002 period reflecting the absence of royalty income resulting from the sale
of our right to receive royalty income from Celgene's sales of thalidomide
(THALOMID(R)). In accordance with our 1998 collaborative sublicensing
agreement for thalidomide with Celgene, we recognized net royalty revenues
from Celgene's sales of thalidomide (THALOMID(R)) of approximately $765,000
for the period ending March 31, 2001. Included in grant revenues are funds
received from a Small Business Innovative Research, or SBIR, program of the
National Institutes of Health of approximately $34,000 and $118,000 in 2002
and 2001, respectively.

        Research and Development Expenses. From inception through March 31,
2002 we have incurred research and development expenses of approximately
$187,589,000. Included in this amount are the expenses related to our three
lead product candidates, Panzem(TM), Endostatin and Angiostatin. At March 31,
2002 the accumulated expenses for each of these development projects are
$15,621,000, $64,298,000 and $31,668,000 respectively. Project expenses for
Panzem(TM) of $956,000, Endostatin of $3,048,000 and Angiostatin of $1,831,000
are reflected in our 2002 R&D expenses for the period ending March 31, 2002 of
approximately $10,859,000. Research and Development expenses for the
comparable 2001 period were approximately $8,587,000. Project costs for
Panzem(TM), Endostatin and Angiostatin were $1,850,000, $1,370,000 and
$1,849,000 respectively for the period ending March 31, 2001.  In addition to
the accumulated expenses attributable to our three lead product candidates, we
have sponsored several research programs at Children's Hospital, Boston in an
aggregate of $18,050,000 and our subsidiary MaxCyte has incurred approximately
$4,734,000 in research and development costs.  Reflected in our research and
development expenses are sponsored research payments to Children's Hospital of
$1,000,000 in the period ended March 31, 2002 and $750,000 for the comparable
period in 2001. MaxCyte's research and development costs for the periods
ending March 31, 2002 and March 31, 2001 were $562,000 and $544,000,
respectively.  The balance of our accumulated research and development
expenses are attributable to discovery research and preclinical development of
additional product candidates and costs associated with the management of
research and development operations and facilities.

        The amounts of expenditures that will be necessary to execute our
business plan are subject to numerous uncertainties, which may adversely
affect our liquidity and capital resources. As of March 31, 2002, three of our
proprietary product candidates, Panzem(TM), Endostatin and Angiostatin, were
in various stages of clinical trials. Completion of clinical trials may take
several years or more, but the length of time generally varies substantially
according to the type, complexity, novelty and intended use of a product
candidate.

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



                                      8
<PAGE>





<TABLE>
<CAPTION>
----------------------------------------------
                        ESTIMATED
                        COMPLETION
CLINICAL PHASE          PERIOD
----------------------------------------------
<S>                   <C>
Phase I                 1 Year
----------------------------------------------
Phase II                1-2 Years
----------------------------------------------
Phase III               2-4 Years
----------------------------------------------
</TABLE>

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

        -   the number of patients that ultimately participate in the trial;

        -   the duration of patient follow-up that seems appropriate in view
            of the results;

        -   the number of clinical sites included in the trials; and

        -   the length of time required to enroll suitable patient subjects.

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

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

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

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

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



                                      9
<PAGE>

acceptable to us, would jeopardize the future success of our business.

        Research and development expenses consist primarily of compensation
and other expenses related to research and development personnel, research
collaborations, costs associated with pre-clinical testing and clinical trials
of our product candidates, including the costs of manufacturing the product
candidates, and facilities expenses. Research and development expenses
increased to approximately $10,859,000 in 2002 from $8,587,000 for the
comparable period in 2001. The cost increases are primarily associated with
the following:

        -  Increased personnel--Personnel costs increased to  $2,228,000 for
           the period ended March 31, 2002 from $1,940,000 in 2001. Staffing
           increased 10% in 2002 from 2001. Additions to research and
           development have been necessary to support a higher level of
           product development activities, including, process sciences,
           manufacturing and increased clinical activities. Included in the
           increases are salary and related fringe benefits, recruiting and
           relocation costs.

        -  Collaborative Research Agreements-- We have made payments to our
           collaborators of $1,605,000 and $1,129,000 for the three months
           ending March 31, 2002 and 2001 respectively. Sponsored research
           payments to academic collaborators include payments to Children's
           Hospital, Boston of $1,000,000 in 2002 and $750,000 in 2001.

        -  Clinical Trial Costs--Clinical costs decreased to $774,000 in the
           three months ending March 31, 2002 from $1,507,000 in the period
           ending March 31, 2001. The decrease reflects the completion of some
           Phase I and the transition into Phase II clinical trials for our
           three lead product candidates. Costs of such trials include the
           clinical investigator site fees, monitoring costs and data
           management costs. Contracted regulator support costs decreased in
           2002 to $137,000 from $342,000 in 2001.  In addition, we contribute
           clinical trial product material under our CRADA with the NCI who is
           conducting trials collaboratively with EntreMed on Endostatin and
           Panzem.

        -  Contract Manufacturing Costs-- The costs of manufacturing the
           material used in clinical trials for our three lead product
           candidates is reflected in contract manufacturing. These costs
           include bulk manufacturing, encapsulation and fill finish services
           and product release costs. Contract manufacturing costs increased
           to $3,158,000 in 2002 from $2,138,000 in 2001. The 2002 increase
           resulted primarily from the manufacturing of Endostatin to provide
           material for our ongoing Phase I and the expansion of Phase II
           clinical trials.

        General and administrative expenses increased to $3,792,000 in the
three month period ending March 31, 2002 from $3,235,000 in the comparable
2001 period. The 2002 period increase reflects higher personnel costs and
additional legal fees associated with the Abbott litigation. Also reflected in
2002 is a charge of $248,000 related to the potential repurchase of our common
stock from Bristol-Myers Squibb and the related guaranteed minimum purchase
price.

        Interest expense. For the period ending March 31, 2002 interest
expense increased 98% to approximately $95,000 from $48,000 in the comparable
period in 2001. The 2002 amount reflects the accrual of interest relating to
MaxCyte's issuance of convertible promissory notes.

        Investment income. Investment income decreased by approximately 56% in
2002 to approximately $171,000 from $391,000 as a result of lower investment
yields on interest bearing cash accounts.



                                      10
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

          To date, we have been engaged primarily in research and development
activities. As a result we have experienced and expect to continue to incur
operating losses for 2002 and the foreseeable future before we commercialize any
products. Over the next several years, we expect to incur substantial additional
research and development costs, including costs related to early-stage research,
preclinical and clinical trials, product candidate manufacturing, increased
administrative expenses to support our research and development operations and
increased capital expenditures for expanded research capacity, various equipment
needs and facility improvements. In addition, under the terms of certain license
agreements, we must be diligent in bringing potential products to market and
would make future milestone payments of up to $2,685,000. If we fail to comply
with the milestones or fail to make any required sponsored research or milestone
payment, we could face the termination of the relevant sponsored research or
license agreement.

          We intend to pursue strategic relationships to provide resources for
the further development of our product candidates, and we are currently involved
in discussion with several potential partners. We will continue to pursue
raising capital through the public or private sale of securities in the Company.
We may not, however, be able to raise additional financing on terms that will be
satisfactory to us, or at all.

        If we are unable to raise additional capital, we will take one or more
        of the following actions:

        - delay, reduce the scope of, or eliminate one or more of our product
          research and development programs;

        - reduce or eliminate our sponsored research programs, which may
          result in the forfeit of our rights to future technologies;

        - obtain funds through licenses or arrangements with collaborative
          partners or others that may require us to relinquish rights to
          certain of our technologies, product candidates or products that we
          would otherwise seek to develop or commercialize on our own.

        Based on our assessment of the availability of capital and the above
described actions, in the absence of new financing, we believe we will have
adequate resources to meet our 2002 obligations as they become due. At March
31, 2002, we had cash and cash equivalents of approximately $26,302,000 with
working capital of approximately $12,800,000 reflecting the payment of
liabilities relating to our Q4 2001 manufacturing campaigns.   Our cash and
working capital balances represent the net proceeds of our private placements
of equity securities and our public offerings, payments from BMS which
included equity investments, royalties received from Celgene, proceeds from
secured borrowing, the sale of royalty rights and various grants.

        From inception through March 31, 2002, we have financed our operations
        primarily from:

        -   the net proceeds of approximately $17,000,000 from private
            placements of equity securities prior to being a public company;

        -   payments from Bristol-Myers Squibb of approximately $29,200,000
            (of which $11,500,000 was an equity investment);

        -   various grants of approximately $1,966,000 from the World Health
            Organization and SBIR;

        -   net royalty revenues of approximately $5,670,000 recognized from
            Celgene's sales of THALOMID(R);

        -   net proceeds of approximately $43,541,000 from our initial public
            offering;



                                      11
<PAGE>


        -   net proceeds of approximately $28,400,000 from a private offering
            completed on July 27, 1999 of 1,478,118 shares of our common
            stock, Series 1 Warrants and Series 2 Warrants.;

        -   net proceeds of $17,818,000 from exercise of Series 2 Warrants and
            $6,402,000 from exercise of Series 1 Warrants issued in connection
            with the July 27, 1999 private offering;

        -   proceeds of $3,000,000 from a borrowing in December 1999 secured
            by our equipment;

        -   net proceeds of approximately $20,680,000 from a public offering
            completed on June 19, 2000 of 1,000,000 shares of our common
            stock;

        -   net proceeds of approximately $24,382,000 from a public offering
            completed on March 2, 2001 of 1,450,000 shares of our common
            stock;

        -   net proceeds of approximately $1,529,000 from the March 28, 2001
            sale of 100,000 shares of our common stock resulting from the
            exercise of the underwriter over-allotment pursuant to the public
            offering completed on March 2, 2001;

        -   net proceeds of approximately $22,410,000 from the August 6, 2001
            sale of our right to receive future THALOMID(R) royalties;

        -   net proceeds of approximately $21,100,000 from a private offering
            completed on December 18, 2001 of 2,921,627 shares of our common
            stock and warrants; and

        -   proceeds of $5,000,000 from the sale of common stock to Allergan
            Inc. in January 2002.

        In addition to the items detailed above, on March 15, 2001 our
subsidiary MaxCyte received net proceeds of approximately $2,185,000 from the
issuance of convertible promissory notes with a maturity date of December 31,
2003. The notes accrue simple interest at 8% per annum, payable upon maturity.
The notes, plus the accrued interest, are convertible to common stock at any
time at the option of the holder and are subject to a mandatory conversion to
Series B Convertible Preferred Stock upon the occurrence of certain specified
events. Holders of the promissory notes also received warrants to purchase a
total of 10,925 shares of common stock of EntreMed. In February 2002, MaxCyte
received additional proceeds of $550,000 and issued additional convertible
promissory notes with a maturity date of December 31, 2003.  Holders of the
promissory notes also received warrants to purchase a total of 2,750 shares of
common stock of EntreMed.

        The Series 1 Warrants issued in connection with the private offering
completed on July 27, 1999 are terminable by us at any time after January 27,
2002 if our common stock trades at a per share price greater than $61.91 for
ten consecutive trading days and such Warrants are not exercised within a
specified period after our delivery of a written notice. If the remaining
Series 1 Warrants were fully exercised, they would result in us receiving
$18,001,000 in aggregate exercise proceeds. We terminated the remaining Series
2 Warrants under a similar provision on June 1, 2000.

        In December 2000 and 1999, we exercised our option to repurchase
shares of our common stock from BMS for $13.143 per share. Shares repurchased
totaled 291,666 and 291,667 for repurchase prices of $3,833,367 and $3,833,379
in 2000 and 1999 respectively. Shares repurchased from BMS are accounted for
as treasury stock. In December 2001, BMS agreed not to sell the remaining
291,666 shares until December 1, 2002 unless the trading price of our stock
exceeds a specified threshold. In addition, BMS granted us a right of first
offer and extended our repurchase right until that time. We also may share
some of the proceeds from sales of the remaining shares with BMS. We
guaranteed to either repurchase the shares from BMS for $13.143 or pay to BMS
the difference between the per share sales price and $13.143 if the shares are
sold at less than $13.143 during the 10 days after December 1, 2002.


                                      12


<PAGE>



INFLATION AND INTEREST RATE CHANGES

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



CONTRACTUAL OBLIGATIONS

The table below sets forth our contractual obligations at March 31, 2002.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
CONTRACTUAL OBLIGATIONS                                   PAYMENTS DUE BY PERIOD
-----------------------------------------------------------------------------------------------------
                                                   Less than    1-3 years    4-5 years  After 5 years
                                    Total            year
<S>                             <C>              <C>          <C>         <C>          <C>
Debt                               $3,626,000        740,000    2,886,000
Common Stock repurchase
liability                           1,616,000      1,616,000
Operating Leases                    6,617,000        945,000    1,816,000    1,904,000      1,952,000
Clinical Trial Contracts            1,146,000      1,146,000
Collaborative Research
Contracts                             688,000        550,000      138,000
Contract Manufacturing                500,000        500,000
Total Contractual Obligations     $14,193,000      5,497,000    4,840,000    1,904,000      1,952,000
</TABLE>




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 our cash and cash equivalents.  Due
to the short term nature of our cash and cash equivalent holdings, a 10%
movement in market interest rates would not materially impact on the total
fair market value of our portfolio as of March 31, 2002.

PART II.       OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

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


Item 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

RECENT SALES OF UNREGISTERED SECURITIES.   On January 18, 2002, in connection
with entering into our strategic alliance with Allergan, Inc., we sold to
Allergan 728,863 Units at a purchase price of $6.86 per Unit. Each Unit
consists of one share of our Common Stock and a warrant to purchase 0.15
shares of our Common Stock. The warrants have a term of five years and an
exercise price equal to $12.15 per share. The Units were sold pursuant to
Section 4(2) of the Securities Act of 1933 as any transaction not involving a
public offering.

Item 3.  DEFAULT UPON SENIOR SECURITIES

         Not applicable.




                                      13
<PAGE>


Item 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

         Not applicable.

Item 5.  OTHER INFORMATION

         Not applicable.

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits

              None

         (b) Reports on Form 8-K

               The Company filed a Form 8-K with the Securities and Exchange
         Commission on February 1, 2002, to report the signing of a strategic
         alliance with Allergan, Inc.

               The Company filed a Form 8-K/A with the Securities and Exchange
         Commission on March 11, 2002, to amend the report on Form 8-K filed
         on February 1, 2002.

               The Company filed a Form 8-K/A with the Securities and Exchange
         Commission on March 15, 2002, to amend the report on Form 8-K/A filed
         on March 11, 2002.





                                      14
<PAGE>



                                  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: May 15, 2002                              /s/ John W. Holaday
                                           ----------------------------------
                                                  John W. Holaday, Ph.D.
                                                 Chief Executive Officer




Date: May 15, 2002                              /s/ Dane R. Saglio
                                           ----------------------------------
                                                  Dane R. Saglio
                                               Chief Accounting Officer

                                      15