<PAGE>   1

                                    FORM 10-Q

                                  UNITED STATES
                       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, 1999

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

For the transition period from ___________ to _____________.

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

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

           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 August 11, 1999
---------------------------                       ------------------------------
Common Stock $.01 Par Value                                14,669,983


<PAGE>   2


                                 ENTREMED, INC.


                                Table of Contents


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

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

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

Consolidated Statements of
Operations for the Three Months Ended
June 30, 1999 and 1998, and the Six Months
Ended June 30, 1999 and 1998                                            4

Consolidated Statements of Cash
Flows for the Six Months Ended June 30, 1999
and 1998                                                                5

Notes to Consolidated Financial
Statements                                                              6

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

Part II.  OTHER INFORMATION

Item 1 -- Legal Proceedings                                            11

Item 2 -- Changes in Securities                                        11

Item 3 -- Defaults upon Senior Securities                              11

Item 4 -- Submission of Matters to Vote of

          Security Holders                                             11

Item 5 -- Other Information                                            12

Item 6 -- Exhibits and Reports on Form 8-K                             12

SIGNATURES                                                             13
</TABLE>


                                       2
<PAGE>   3


                                 ENTREMED, INC.
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                    June 30,                   December 31,
                                                                      1999                         1998
                                                              -------------------            -----------------
ASSETS                                                            (unaudited)
<S>                                                             <C>                          <C>
Current assets:
   Cash and cash equivalents                                    $      17,514,233            $      30,818,689
   Short term investments                                               1,501,845                    4,352,371
   Interest receivable                                                     73,363                      186,927
   Accounts receivable                                                    358,860                      112,383
   Prepaid expenses and other                                               7,784                      170,877
                                                                -----------------            -----------------
Total current assets                                                   19,456,085                   35,641,247

Furniture and equipment, net                                            4,082,070                    2,979,237

Other assets                                                              955,534                      953,519
                                                                -----------------            -----------------
      Total assets                                              $      24,493,689            $      39,574,003
                                                                =================            =================


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                             $       3,471,039            $       2,093,017
   Accrued liabilities                                                  1,199,515                    1,332,682
   Deferred revenue                                                     1,372,500                    2,945,833
                                                                -----------------            -----------------
Total current liabilities                                               6,043,054                    6,371,532

Minority interest                                                          23,210                       14,407

Stockholders' equity:
   Convertible preferred stock, $1.00 par and $1.50
     Liquidation value:
     5,000,000 shares authorized, none issued and
     outstanding at June 30, 1999 (unaudited)
     and December 31, 1998                                                  -                          -
   Common stock, $.01 par value:
     35,000,000 shares authorized, 13,177,192 (unaudited)
     and 13,123,031 shares issued and outstanding at
     June 30, 1999 and December 31, 1998, respectively                    131,772                      131,230
   Additional paid-in capital                                          78,760,100                   78,364,136
   Accumulated deficit                                               (60,464,447)                  (45,307,302)
                                                                -----------------            -----------------
Total stockholders' equity                                             18,427,425                   33,188,064
                                                                -----------------            -----------------
      Total liabilities and stockholders' equity                $      24,493,689            $      39,574,003
                                                                =================            =================
</TABLE>


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


                                       3
<PAGE>   4


                                 ENTREMED, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                          Three Months Ended                     Six months ended
                                                               June 30,                              June 30,
                                                         1999             1998                1999                1998
                                                   --------------------------------    -----------------------------------

<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
     Grant revenues                                          -              72,985             158,819             135,456
     Royalty revenues                                     236,531             -                428,211                -
     Other revenues                                          -                -                  1,040                -
                                                   --------------     ------------     ---------------      --------------

Total revenues                                          1,329,031        1,165,485           2,773,070           2,320,456
                                                   --------------     ------------     ---------------      --------------


Expenses:
     Research & development                             7,619,140        2,345,299          14,726,595           5,844,730
     General & administrative                           2,003,069        1,221,010           3,898,907           2,526,900
                                                   --------------     ------------     ---------------      --------------
                                                        9,622,209        3,566,309          18,625,502           8,371,630

Investment income                                         284,873          588,193             695,287           1,126,417
                                                   --------------     ------------     ---------------      --------------

Net loss                                           $   (8,008,305)    $ (1,812,631)    $   (15,157,145)     $   (4,924,757)
                                                   ==============     ============     ===============      ==============

Net loss per share (basic and diluted)             $        (0.61)    $      (0.15)    $         (1.15)     $        (0.40)
                                                   ==============     ============     ===============      ==============
Weighted average number of shares
      outstanding (basic and diluted)                  13,165,522       12,437,363          13,144,832          12,369,153
                                                    =============     ============     ===============      ==============
</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,
                                                                       1999              1998
                                                                 ----------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                              <C>                 <C>
Net loss                                                         $  (15,157,145)     $  (4,924,757)
Adjustments to reconcile net loss to net cash
     used by operating activities:
     Depreciation                                                       457,489            371,375
     Loss on disposal of furniture & equipment                           65,674               -
     Minority interest                                                    8,803             21,984
     Changes in assets and liabilities:
        Accounts receivable                                            (246,477)          (255,886)
        Interest receivable                                             113,564            137,031
        Prepaid expenses and other                                      161,078             85,724
        Accounts payable                                              1,378,022             35,282
        Accrued liabilities                                            (133,167)          (437,159)
        Deferred revenue                                             (1,573,333)          (350,000)
                                                                 --------------      -------------
      Net cash used by operating activities                         (14,925,492)        (5,316,406)
                                                                 --------------      -------------

CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of short-term investments                                  2,850,526         31,954,030
Purchases of short-term investments                                       -            (15,745,080)
Purchases of furniture & equipment                                   (1,625,996)          (321,527)
                                                                 --------------      -------------
      Net cash provided by investing activities                       1,224,530         15,887,423
                                                                 --------------      -------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from option and warrant exercises                              396,506          2,511,326
                                                                 --------------      -------------
      Net cash provided by financing activities                         396,506          2,511,326
                                                                 --------------      -------------

Net increase (decrease) in cash and cash equivalents                (13,304,456)        13,082,343
Cash and cash equivalents at beginning of period                     30,818,689         18,232,491
                                                                 --------------      -------------
Cash and cash equivalents at end of period                       $   17,514,233      $  31,314,834
                                                                 ==============      =============
</TABLE>


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


                                       5
<PAGE>   6


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

1.     BASIS OF PRESENTATION

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

       The accompanying unaudited consolidated financial statements have been
       prepared in accordance with generally accepted accounting principles for
       interim financial information and in accordance with the instructions to
       Form 10-Q and Article 10 of Regulation S-X. Accordingly, such
       consolidated financial statements d o 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, 1999 are not necessarily
       indicative of the results that may be expected for the year ending
       December 31, 1999. For further information, refer to the Company's
       audited financial statements and footnotes thereto included in the
       Company's Form 10-K for the year ended December 31, 1998.

2.     COMPREHENSIVE INCOME

       In June 1997, the FASB issued Statement No. 130, "Reporting Comprehensive
       Income" ("Statement 130"), which establishes standards for reporting and
       display of comprehensive income and its components (revenues, expenses,
       gains and losses) in financial statements. Statement 130 is effective for
       fiscal years beginning after December 15, 1997. The Company adopted
       Statement 130 in 1998 and has not presented a statement of comprehensive
       income because the effect of the components of comprehensive income is
       not material to its consolidated financial statements.


                                       6
<PAGE>   7

3.     CONTINGENCIES

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

4.     SUBSEQUENT EVENT

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


                                       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. In August 1997, the Company reacquired the
commercial rights to thalidomide from BMS. In December 1998, the Company
sublicensed, on a worldwide basis, its intellectual property covering
thalidomide to Celgene Corporation ("Celgene"). On February 9, 1999, the Company
and BMS agreed to modify the research agreement whereby the Company assumed all
responsibility for preclinical and clinical work on the Angiostatin(R) protein.
On July 1, 1999, the Company and Calbiochem-Novabiochem Corp. ("Calbiochem")
entered into a non-exclusive, worldwide licensing agreement under which
Calbiochem will have the right to sell research grade Endostatin(TM) protein and
Angiostatin(R) protein for non-commercial research purposes. Through June 30,
1999, with the exception of license fees and research and development funding
from BMS and royalty payments from Celgene's sales of thalidomide as well as
certain research grants, the Company has not generated any revenue from
operations. The Company anticipates its revenue sources for the next several
years to include royalty payments from Celgene's sales of thalidomide and
Calbiochem's sales of research grade Endostatin(TM) protein and Angiostatin(R)
protein, research grants and future collaboration payments from collaborators
under arrangements entered into in the future. The timing and amounts of such
revenues, if any, will likely fluctuate and depend upon the achievement of
specified milestones, and results of operations for any period may be unrelated
to the results of operations for any other period.

RESULTS OF OPERATIONS

Three and Six Months Ended June 30, 1999 and June 30, 1998

       Revenues increased approximately 14% from approximately $1,165,000 for
the three months ended June 30, 1998 ("1998 Three Months") to approximately
$1,329,000 for the three months ended June 30, 1999 ("1999 Three Months"). This
increase is due to royalty income from Celgene Corporation on the sale of
thalidomide. For the six months ended June 30, 1999 ("1999 Six Months"),
revenues were approximately $2,773,000 as compared to $2,320,000 the six months
ended June 30, 1998 ("1998 Six Months"), a 20% increase. This increase is due to
an increase in grant revenue earned under a Small Business Innovative Research
program from the National Institutes of Health awarded to the Company in May
1997 and royalty income from Celgene Corporation on the sale of thalidomide. The
collaborative research and development fees relate to the amortization over five
years of a one-time payment from BMS, 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 approximately 225% from
approximately $2,345,000 in the 1998 Three Months to approximately $7,619,000 in
the 1999 Three Months and by approximately 152% from approximately $5,845,000 in
the 1998 Six Months to approximately $14,727,000 in the 1999 Six Months.
Research and development expenditures include sponsored research payments to
academic collaborators,


                                       8
<PAGE>   9

including a $1,000,000 payment to Children's Hospital in March 1999 and March
1998 and expenses related to the Company's internal research programs. The
increase in research and development costs reflects increased efforts in the
Company's internal and sponsored research and product development programs
related to its antiangiogenesis technologies. Overall, research personnel
increased from 42 as of June 30, 1998 to 54 as of June 30, 1999. 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 approximately 64% from
approximately $1,221,000 in the 1998 Three Months to approximately $2,003,000 in
the 1999 Three Months. For the 1999 Six Months, general and administration
expenses were approximately $3,899,000 as compared to approximately $2,527,000
for the 1998 Six Months, a 54% increase. The overall increase in general and
administrative expenses during the 1999 periods compared to comparable periods
of 1998 resulted primarily from the increase in administrative costs associated
with adding administrative staff to support the Company's research efforts and
external collaborations the Company is conducting, investigating potential
strategic relationships, and obtaining professional services. Investment income
decreased approximately 52% from approximately $588,000 in the 1998 Three Months
to approximately $285,000 in the 1999 Three Months and decreased approximately
38% from approximately $1,126,000 in the 1998 Six Months to approximately
$695,000 in the 1999 Six Months. This overall decrease in investment income
during the 1999 periods compared to comparable periods of 1998 is due to the
reduction of the Company's cash and short term investments as such working
capital components are used to fund the Company's operations.

Liquidity and Capital Resources

       At June 30, 1999, the Company had cash and cash equivalents of
approximately $17,514,000 and short-term investments of approximately $1,502,000
with working capital of approximately $13,413,000, primarily representing the
net proceeds of the Company's private placements of equity securities and its
initial public offering, payments from BMS, including equity investments and
various grants.

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

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

       The Company is a party to sponsored research agreements and clinical
trials requiring the Company to fund an aggregate of approximately $2,185,000
through 2000 (including $1,400,000 to Children's Hospital) and license
agreements requiring future milestone payments of up to $3,735,000 and
additional payments upon attainment of regulatory milestones.


                                       9
<PAGE>   10

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

YEAR 2000 COMPLIANCE

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

       Based on a recent assessment, the Company determined that its accounting
software will need to be updated or modified. This should be accomplished
through updates from the software manufacturer. The Company does not expect any
material costs associated with this modification or any disruptions to its
primary operations.

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

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

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

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

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


                                       10
<PAGE>   11


PART II. OTHER INFORMATION

Item 1.    LEGAL PROCEEDINGS

           This information as set forth in Note 3 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

           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 24,
           1999 ("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>
2002       Jerry Finkelstein           10,918,705           55,533           -
2002       Mark C.M. Randall           10,919,050           55,188           -
</TABLE>

           (ii) Approval of 1999 Long-Term Incentive Plan. At the Annual Meeting
the stockholders approved and ratified the Company's 1999 Long-Term Incentive
Plan (the "1999 Plan") reserving 750,000 shares of Common Stock for issuance
under the 1999 Plan. This proposal received 4,830,183 votes in favor, 372,458
votes against and 49,450 abstentions. In addition, 5,722,147 shares were not
voted.

           (iii) 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 10,944,976 votes in favor, 13,491
votes against, and 15,771 abstentions.


                                       11
<PAGE>   12


Item 5.    OTHER INFORMATION

           Not applicable.

Item 6.    EXHIBIT AND REPORTS ON FORM 8-K

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

           10.32    1999 Long-Term Incentive Plan

           10.33    Amendment to Research Agreement, dated June 24, 1999,
                    between the Registrant and Children's Hospital

           27.1     Financial Data Schedule

           (b) No reports on Form 8-K were filed by Registrant during the
               quarter ended June 30, 1999.


                                       12
<PAGE>   13


                                   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 16, 1999                        /s/ John W. Holaday
                                     ------------------------------------
                                            John W. Holaday, Ph.D.
                                     President and Chief Executive Officer



Date:  August 16, 1999                        /s/ R. Nelson Campbell
                                     ------------------------------------
                                               R. Nelson Campbell
                                              Chief Financial Officer


                                       13