<PAGE>   1
                                   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 June 30, 1997

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

For the transition period from             to              .
                               -----------    -------------

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

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


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


                                   Suite 200
                           9610 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       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.


<TABLE>
   <S>                                        <C>
            Class                             Outstanding at July 31, 1997
   ---------------------------                ----------------------------
   Common Stock $.01 Par Value                       12,229,768
</TABLE>

<PAGE>   2



                                 ENTREMED, INC.


                               Table of Contents


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

Item 1 -- Financial Statements

Consolidated Balance Sheets
as of June 30, 1997 and  December 31, 1996                          3

Consolidated Statements of
Operations for the Three Months Ended
June 30, 1997 and 1996, and the Six Months
Ended June 30, 1997 and 1996                                        4

Consolidated Statements of Cash
Flows for the Six Months Ended June 30, 1997
and 1996                                                            5

Notes to Consolidated Financial
Statements                                                          6

Item 2 --  Management's Discussion and Analysis
           of Financial Condition and Results of
           Operations                                               8

Part II.   OTHER INFORMATION

Item 1 --  Legal Proceedings                                       10

Item 2 --  Changes in Securities                                   10

Item 3 --  Defaults upon Senior Securities                         10

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

Item 5 --  Other Information                                       11

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

SIGNATURES                                                         12
</TABLE>
                                      2

<PAGE>   3

                                 ENTREMED, INC.
                          CONSOLIDATED BALANCE SHEETS



<TABLE>
<Caption)
                                                                 June 30,         December 31,
                                                                   1997               1996
                                                              ------------        ------------
ASSETS                                                         (unaudited)
<S>                                                          <C>                 <C>
Current assets:
 Cash and cash equivalents                                   $  29,385,427        $ 33,051,206
 Short term investments                                         19,924,500          19,669,623
 Interest receivable                                               466,039             401,673
 Prepaid expenses                                                  185,855              97,962
                                                             -------------        ------------
Total current assets                                            49,961,821          53,220,464
                                                             -------------        ------------
Furniture and equipment, net                                     1,109,199             824,559
                                                             -------------        ------------
Other assets                                                       403,319             101,316
                                                             -------------        ------------
   Total assets                                              $  51,474,339        $ 54,146,339
                                                             =============        ============


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                            $     756,550        $    600,303
 Accrued liabilities                                               520,461             957,718
 Capital lease obligations                                            -                104,152
 Deferred revenue                                                2,509,167           2,509,167
                                                             -------------        ------------
Total current liabilities                                        3,786,178           4,171,340
                                                             -------------        ------------
Deferred revenue, less current portion                           1,886,667           2,236,666
                                                             -------------        ------------

Minority Interest                                                   36,997              44,142
                                                             =============        ============

Stockholders' equity:
 Preferred stock, $1.00 par value
  5,000,000 shares authorized, no shares issued and
  outstanding as of June 30, 1997 (unaudited)
  and December 31, 1996                                              -                   -
 Common stock, $.01 par value:  20,000,000 shares
  authorized, 12,182,632 (unaudited) and 12,009,598
  shares issued and outstanding as of June 30, 1997
  and December 31, 1996, respectively                              121,826             120,096
 Additional paid-in capital                                     73,503,474          72,830,898
 Accumulated deficit                                           (27,860,803)        (25,256,803)
                                                             -------------        ------------
Total stockholders' equity                                      45,764,497          47,694,191
                                                             -------------        ------------
   Total liabilities and stockholders' equity                $  51,474,339        $ 54,146,339
                                                             =============        ============
</TABLE>





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

                                      3

<PAGE>   4

                                 ENTREMED, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)



<TABLE>
<CAPTION>
                                                                    Three Months Ended              Six months ended     
                                                                          June 30,                      June 30,         
                                                                      1997       1996               1997        1996     
                                                                 ------------------------      ------------------------- 
<S>                                                              <C>          <C>              <C>          <C>          
                                                                                                                         
Revenues:                                                                                                                
  Collaborative research and development                         $ 1,042,500  $ 1,042,500      $ 2,085,000  $  2,085,000 
  Licensing                                                           50,000       50,000          100,000       100,000 
                                                                 -----------  -----------      -----------  ------------ 
                                                                                                                         
Total revenues                                                     1,092,500    1,092,500        2,185,000     2,185,000 
                                                                 -----------  -----------      -----------  ------------ 
                                                                                                                         
                                                                                                                         
Expenses:                                                                                                                
  Research & development                                           1,743,560    1,246,045        4,162,395     3,309,315 
  General & administrative                                         1,219,501      472,224        1,969,161     1,243,635 
                                                                 -----------  -----------      -----------  ------------ 
                                                                   2,963,061    1,718,269        6,131,556     4,552,950 
                                                                                                                         
Interest expense                                                       -           (8,643)          (1,418)      (18,190)
Interest income                                                      685,877      169,474        1,336,829       245,795 
                                                                 -----------   ----------      -----------  ------------ 
                                                                                                                        
Net loss before minority interest                                (1,184,684)    (464,938)      (2,611,145)   (2,140,345)
                                                                                                                        
Minority interest                                                      4,191        -               7,145         -     
                                                                 -----------   ----------     -----------  ------------ 
                                                                                                                        
Net loss                                                        $ (1,180,493) $ (464,938)     $(2,604,000)  $(2,140,345)
                                                                ------------  ----------      -----------   -----------
Net loss per share                                              $      (0.10) $    (0.06)     $     (0.22)  $     (0.29)
                                                                ============  ==========      ===========   =========== 
Weighted average number of shares                                                                                        
   outstanding                                                    12,134,490   7,676,696       12,089,347     7,494,366 
                                                                  ----------   ---------       ----------     --------- 
                                                                                                                         
Pro forma net loss per share                                                  $    (0.05)                   $     (0.23)
                                                                              ==========                     ==========
                                                                                                                         
Pro forma weighted average number                                                                                        
   of shares outstanding                                                       9,237,136                      9,274,585 
                                                                               =========                      ========= 
</TABLE>







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

                                      4

<PAGE>   5





                                 ENTREMED, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                           Six Months Ended
                                                               June 30,
                                                         1997           1996
                                                    ------------------------------

<S>                                                 <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                              $ (2,604,000)    $(2,140,345)
Adjustments to reconcile net loss to net cash
   used by operating activities:
   Depreciation and amortization                           129,101          98,136
   Warrants issued for consulting services                 291,000            -  
   Minority interest                                        (7,145)           -
Changes in assets and liabilities:
   Accounts receivable                                       -           2,500,000
   Prepaid Expenses                                        (87,893)       (212,438)
   Accounts payable                                        156,247         440,016
   Accrued liabilities                                    (437,257)        144,500
   Deferred revenue                                       (349,999)       (350,000)
   Deposits                                                 (2,003)           (422)
   Interest receivable                                     (64,366)        (26,709)
                                                      ------------     -----------
    Net cash provided (used) by operating activities    (2,976,315)        452,738
                                                      ------------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of short-term investments                     9,874,723            -
Purchases of short-term investments                    (10,129,600)           -
Investments                                               (300,000)       (200,000)
Purchases of furniture & equipment                        (413,741)       (113,104)
                                                      ------------     -----------
   Net cash used by investing activities                  (968,618)       (313,104)
                                                      ------------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Payment of capital lease obligations                      (104,152)       (194,033)
Proceeds from sales of common stock                        383,306      48,666,755
                                                      ------------     -----------
   Net cash provided by financing activities               279,154      48,472,722
                                                      ------------     -----------

Net increase in cash and cash equivalents               (3,665,779)     48,612,356
Cash and cash equivalents at beginning of period        33,051,206       6,885,099
                                                      ------------     -----------
Cash and cash equivalents at end of period            $ 29,385,427     $55,497,455
                                                      ============     ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 AND NONCASH INVESTMENT AND FINANCING ACTIVITIES
 Interest paid                                        $      1,418     $    18,190
                                                      ============     ===========
</TABLE>



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

                                      5

<PAGE>   6



                                 ENTREMED, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           JUNE 30, 1997 (UNAUDITED)

1.    BASIS OF PRESENTATION

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

      The accompanying unaudited consolidated financial statements have been
      prepared in accordance with generally accepted accounting principles for
      interim financial information and in accordance with the instructions to
      Form 10-Q and Article 10 of Regulation S-X.  Accordingly, such
      consolidated financial statements do not include all of the information
      and disclosures required by generally accepted accounting principles for
      complete financial statements.  In the opinion of management, all
      adjustments (consisting of normal recurring accruals) considered
      necessary for a fair presentation have been included. Operating results
      for the six month period ended June 30, 1997 are not necessarily
      indicative of the results that may be expected for the year ending
      December 31, 1997.  For further information, refer to the Company's
      audited financial statements and footnotes thereto included in the
      Company's Form 10-K for the year ended December 31, 1996.

2.    NET LOSS PER SHARE

      Net loss per share is based on the weighted average number of common
      shares outstanding.  Pursuant to Securities and Exchange Commission Staff
      Accounting Bulletin No. 83, common and convertible preferred stock issued
      for consideration below the initial public offering (the "IPO") price of
      $15.00 and stock options and warrants issued with exercise prices below
      the IPO price during the twelve-month period preceding the initial filing
      of the registration statement (commonly referred to as "Cheap Stock"),
      have been included in the calculation of common shares using the treasury
      stock method through April 12, 1996 in the six month period ended June
      30, 1996, as if they were outstanding prior to the effective date of the
      IPO.

      The net loss per share amounts for the three and six months ended June
      30, 1996 as required by generally accepted accounting principles, which
      do not give effect to the pro forma conversion of preferred stock and
      Cheap Stock described above, or any stock option or warrant common share
      equivalents considered antidilutive, is as follows:


<TABLE>
<CAPTION>
                                              Three months ended   Six months ended
                                                 June 30, 1996       June 30, 1996
<S>                                         <C>                 <C>

Net loss per share                                     $(0.10)           $(0.30)

Weighted average common shares outstanding         12,134,490         7,068,703
</TABLE>


                                      6
<PAGE>   7

2.    NET LOSS PER SHARE (cont.)

      Pro forma net loss per common share for the six month period ended June
      30, 1997 is calculated using the weighted average number of common shares
      outstanding, Cheap Stock as described above and assumes the conversion of
      the convertible preferred stock at the beginning of the period.

      In February 1997, the Financial Accounting Standards Board issued
      Statement of Financial Accounting Standards No. 128, "Earnings per Share"
      ("SFAS 128"), effective December 1997.  SFAS 128 will require the Company
      to present both "basic" and "diluted" loss per share amounts on the face
      of the statement of operations, replacing the existing net loss per
      share.  Under SFAS 128, basic loss per share would not have changed from
      the reported loss per share of $(0.10) and $(0.06) for the three month
      periods ended June 30, 1997 and 1996, respectively, and $(0.22) for the
      six month period ended June 30 1996.  Basic loss per share for the six
      month period ended June 30, 1997 would have been $(0.30).  Diluted loss
      per share would not have differed from basic loss per share as stock
      option or warrant common share equivalents are antidilutive.


3.    INITIAL PUBLIC OFFERING

      On June 17, 1996, the Company completed an initial public offering of
      3,200,000 shares of the Company's common stock at a price of $15.00 per
      share.  Bristol-Myers Squibb Company, a party to a collaboration with the
      Company, also purchased from the Company in a private placement on the
      closing of the offering 333,333 shares of the Company's common stock at
      $15.00 per share.  The initial public offering resulted in net proceeds
      to the Company of approximately $43,500,000 and the private placement
      with Bristol-Myers Squibb Company ("BMS") resulted in net proceeds to the
      Company of an additional $5,000,000.


4.    CONTINGENCIES

      The Company is a party to certain litigation filed in August 1995 in the
      United States District Court for the Eastern District of Tennessee by
      Bolling McCool & Twist, a consulting firm.  The suit relates to a claim
      for services rendered in the approximate amount of $50,000 and seeks a
      finder's fee in an unspecified amount in connection with the
      Bristol-Myers collaboration.  The Company is unable to predict with
      certainty the eventual outcome of the lawsuit.  The Company is contesting
      the action vigorously and believes that this proceeding will not have a
      material adverse effect on the Company or its financial statements,
      although there can no assurance that this will be the case.

                                      7

<PAGE>   8

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

GENERAL

        Since its inception in September 1991, the Company has devoted
substantially all of its efforts and resources to sponsoring and conducting
research and development on its own behalf and through collaborations with
corporate partners and academic research and clinical institutions, and
establishing its facilities and hiring personnel.  In December 1995, the
Company entered into a collaboration agreement with Bristol-Myers Squibb
Company ("BMS") in which BMS made an equity investment in the Company and
agreed to pay certain research and development fees and expenses, license fees,
milestone payments, and royalties on net sales, if any.  Through June 30, 1997,
with the exception of license fees and research and development funding from
BMS and certain research grants, the Company had not generated any revenue from
operations.  The Company anticipates its revenue sources for the next several
years will be limited to research grants and future collaboration payments from
BMS and from other collaborators under arrangements that may be entered into in
the future.  The timing and amounts of such revenues, if any, will likely
fluctuate and depend upon the achievement of specified milestones.

RESULTS OF OPERATIONS

Three and Six Months Ended June 30, 1997 and June 30, 1996

        Revenues were $1,092,500 for the three month periods ended June 30, 1997
("1997 Three Months") and June 30, 1996 ("1996 Three Months") and $2,185,000
for the six month periods ended June 30, 1997 ("1997 Six Months") and June 30,
1996 ("1996 Six Months").  This reflects revenue received under the BMS
collaboration agreement which was executed in December 1995.  The collaborative
research and development fees relate to the amortization over five years of a
one-time payment of $2,500,000 received in December 1995 and the amortization
of semi-annual payments of $1,835,000 under the BMS collaboration agreement.
The license fee represents the amortization over five years of a one-time
$1,000,000 license fee received in December 1995 under the BMS collaboration
agreement.

        Research and development expenses increased by 40% from approximately
$1,246,000 in the 1996 Three Months to approximately $1,744,000 in the 1997
Three Months and by approximately 26% from approximately $3,309,000 in the 1996
Six Months to approximately $4,162,000 in the 1997 Six Months.  Research and
Development expenditures include sponsored research payments to academic
collaborators and expenses related to the Company's internal research programs.
The increase in research and development costs reflects increased efforts in
the Company's sponsored research and product development programs related to
its angiogenesis and cell permeation technologies.  Overall, research personnel
increased from 18 as of January 1, 1996 to 32 as of June 30, 1997.  Research
and development expenses are expected to continue to increase as the Company
continues to expand its research and development efforts.

        General and administrative expenses increased from approximately 
$472,000 in the 1996 Three Months to approximately $1,220,000 in the 1997 Three
Months, a 158% increase.  For the 1997 Six Months general and administrative
expenses were approximately $1,969,000 as compared to $1,244,000 for the 1996
Six Months, a 58% increase.  The overall increase in general and administrative
expenses during the 1997 period compared to the comparable periods of 1996 is a
result of the Company incurring additional expenses associated with being a
public company, investigating potential strategic relationships, and increasing
the administrative staff to support the research scientists and collaborative
efforts the

                                      8

<PAGE>   9

Company is conducting.  The 1997 Three Months and 1997 Six Months include a one
time expense charge of approximately $400,000 related to certain consulting
work.  The total number of administrative personnel the Company had increased
from 8 as of January 1, 1996 to 12 as of June 30, 1997.

        Interest income increased to approximately $686,000 in the 1997 Three
Months as compared to $169,000 in the 1996 Three Months and to $1,337,000 in
the 1997 Six Months from $246,000 in the 1996 Six Months.  This increase is a
result of the investment of the proceeds received from the BMS collaboration
agreement and the Company's initial public offering.

        The minority interest relates to the portion of the loss recognized by
Cytokine Sciences that is attributable to the minority shareholders of Cytokine
Sciences.

Liquidity and Capital Resources

        At June 30, 1997, the Company had cash and cash equivalents of
approximately $29,385,000 and short-term investments of $19,925,000 with
working capital of approximately $46,176,000, primarily representing the net
proceeds of the Company's initial public offering and concurrent private
placement with BMS in June 1996 together with funds received under the BMS
agreement entered into in December 1995.

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

        As of July 31, 1997, the Company was a party to sponsored research
agreements and clinical trials requiring the Company to fund an aggregate of
approximately $5,084,000 through 1999 (including $4,000,000 to Children's
Hospital) and license agreements requiring milestone payments of up to
$4,360,000 and additional payments upon attainment of regulatory milestones.

        BMS is obligated to make additional semi-annual payments to the Company
of $1,835,000 in each of June and December through June 2000 as well as
additional payments in the event certain mostly late-stage regulatory milestones
are achieved.  BMS may terminate the collaboration agreement and return the
licensed technology to the Company at any time upon six months notice, in which
event it would have no further funding obligation to the Company.

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

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

                                       9
<PAGE>   10

PART II. OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

         This information as set forth in Note 4 of "Notes to Condensed
         Consolidated Financial Statements" appearing in Item 1 of Part I of
         this report is incorporated herein by reference.

Item 2.  CHANGES IN SECURITIES

         Not applicable.

Item 3.  DEFAULT UPON SENIOR SECURITIES

         Not applicable.

Item 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

(a)      The Company's annual meeting of stockholders was held on June 30, 1997
         ("Annual Meeting").

(b)      Not applicable.

(c)      At the Annual Meeting, the stockholders considered and approved the
         following proposals:

         (i)  Election of Directors.  The following sets forth the nominees who
were elected directors of the Company for the term expiring in the year
indicated as well as the number of votes cast for, against or  withheld:


<TABLE>
<CAPTION>
        Term
        (Year                                            Votes
        Expires)  Name                        For      Against  Withheld
        --------  -----------------------  ----------  -------  --------
        <S>       <C>                      <C>         <C>      <C>
        2000      John W. Holaday, Ph. D.  10,645,392   23,223      -   
        2000      Wendell M. Starke        10,659,390    9,225      -   
        1999      Bart Chernow, M.D.       10,659,390    9,225      -   
        1999      Samuel R. Dunlap, Jr.    10,584,974   83,641      -   
        1999      Mark C. M. Randall       10,659,390    9,225      -   
        1998      Donald S. Brooks         10,659,390    9,225      -   
        1998      Leon E. Rosenberg, M.D.  10,659,278    9,337      -   
        1998      Lee F. Meier             10,659,390    9,225      -   
</TABLE>


         (ii)  Amendments to Stock Option Plan.  At the Annual Meeting the
stockholders approved and ratified an amendment to the 1996 Stock Option Plan
("Plan") to increase the number of shares of Common Stock available for option
grants from 516,667 to 1,266,667.  This proposal received 7,319,526 votes in
favor, 505,414 votes against and 419,896 abstentions.  In addition, 2,423,779
shares were not voted.

                                       10
<PAGE>   11

         (iii)  Amendment to Certificate of Incorporation.  At the Annual
Meeting, the stockholders approved a proposal to amend the Company's
Certificate of Incorporation to provide for a classified board.  This proposal
received 7,566,539 votes in favor, 685,508 votes against and 27,889 abstentions.
In addition, 2,388,680 shares were not voted.

         (iv)  Ratification of Appointment of Ernst & Young LLP.  At the Annual
Meeting, stockholders ratified the selection of Ernst & Young LLP as the
independent auditors.  The proposal received 10,574,620 votes in favor, 78,334
votes against, and 15,662 abstentions.


Item 5.  OTHER INFORMATION

         Not applicable.



Item 6.  EXHIBIT AND REPORTS ON FORM 8-K


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


         11    Computation of Earnings Per Share
         21    Subsidiaries of the Registrant
         27.1  Financial Data Schedule

         (b)  No reports on Form 8-K were filed by Registrant during the
              quarter ended June 30, 1997.

                                       11

<PAGE>   12

                                   SIGNATURES


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



                                            ENTREMED, INC.
                                             (Registrant)


Date:  August  12, 1997                  /s/ John W. Holaday
                                        -------------------------------------
                                        John W. Holaday, Ph.D.
                                        President and Chief Executive Officer




Date:  August  12, 1997                 /s/ R. Nelson Campbell
                                        -------------------------------------
                                        R. Nelson Campbell
                                        Chief Financial Officer



                                      12