<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 June 30, 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 August 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 June 30, 2002 and December 31, 2001                                                     3

Consolidated Statements of
Operations for the Three Months Ended
June 30, 2002 and 2001, and the Six Months Ended
June 30, 2002 and 2001                                                                        4

Consolidated Statements of Cash
Flows for the Six Months Ended June 30, 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                                                                 14

Item 2 --  Changes in Securities                                                             14

Item 3 --  Defaults upon Senior Securities                                                   14

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

Item 5 --  Other Information                                                                 15

Item 6 --  Exhibits and Reports on Form 8-K                                                  15

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>
                                                                    June 30,                 December 31,
                                                                      2002                       2001
                                                              --------------------        ------------------
ASSETS                                                            (unaudited)
<S>                                                             <C>                       <C>
Current assets:
   Cash and cash equivalents                                    $       11,373,031        $       41,386,300
   Interest receivable                                                      18,023                    57,038
   Accounts receivable                                                     361,530                   177,158
   Prepaid expenses and other                                              349,230                   371,155
                                                                ------------------        ------------------
Total current assets                                                    12,101,814                41,991,651

Furniture and equipment, net                                             3,812,828                 4,186,079

Other assets                                                                29,407                    40,720
                                                                ------------------        ------------------
     Total assets                                               $       15,944,049        $       46,218,450
                                                                ==================        ==================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                             $        4,863,902        $       16,309,238
   Accrued liabilities                                                     313,920                 2,050,822
   Deferred revenue - current                                               95,496                   -
   Current portion of notes payable                                        468,576                 1,005,727
   Common stock repurchase liability                                     2,937,077                 1,367,914
                                                                ------------------        ------------------
Total current liabilities                                                8,678,971                20,733,701

Non current deferred revenue                                               383,125                   -
Other long term liabilities                                                 80,000                   -
Long term convertible debt                                               4,101,521                 2,272,399
                                                                ------------------        ------------------
   Total liabilities                                                    13,243,617                23,006,100

Minority interest                                                           17,217                    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 June 30, 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
    June 30, 2002 and December 31, 2001, respectively                      225,062                   217,773
   Treasury stock, at cost: 583,333 shares held at
    June 30, 2002 (unaudited) and December 31, 2001                     (7,666,746)               (7,666,746)
   Additional paid-in capital                                          210,248,819               205,013,706
   Deferred stock compensation                                             (61,846)                  (73,369)
   Accumulated deficit                                                (200,062,074)             (174,296,466)
                                                                ------------------        ------------------
Total stockholders' equity                                               2,683,215                23,194,898
                                                                ------------------        ------------------
    Total liabilities and stockholders' equity                  $       15,944,049         $      46,218,450
                                                                ==================         =================
</TABLE>

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



                                       3
<PAGE>


                                 ENTREMED, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                         Three Months Ended                 Six months ended
                                                               June 30,                          June 30,
                                                       2002             2001             2002              2001
                                                 ------------------------------     -------------------------------
<S>                                              <C>               <C>              <C>               <C>
Revenues:
    Grant                                        $         567     $     69,634      $       34,830   $    187,626
    Collaborative R&D                                  232,450                -             232,450              -
    Licensing                                           23,874                -              47,748              -
    Royalty                                                  -          673,862               1,793      1,439,822
    Other                                               52,279           14,027              52,279         14,027
                                                 -------------    -------------       -------------   ------------

Total revenues                                         309,170          757,523             369,100      1,641,475
                                                 -------------    -------------       -------------   ------------

Expenses:
    Research and development                         7,311,902       12,004,901          18,170,574     20,592,128
    General and administrative                       4,238,340        3,924,098           8,029,352      7,158,984
                                                 -------------    -------------       -------------   ------------
                                                    11,550,242       15,928,999          26,199,926     27,751,112

Interest expense                                      (103,118)         (95,519)           (198,494)      (143,730)
Investment income                                       93,061          390,726             263,712        782,149
                                                 -------------    -------------       -------------   ------------

Net loss                                         $ (11,251,129)    $(14,876,269)     $  (25,765,608)  $(25,471,218)
                                                  ============    =============       =============    ===========

Net loss per share (basic and diluted)           $       (0.51)    $      (0.82)     $        (1.18)  $      (1.44)
                                                 =============    =============       =============    ===========

Weighted average number of shares
     outstanding (basic and diluted)                21,922,860       18,269,501          21,850,376     17,698,011
                                                  ============    =============       =============    ===========
</TABLE>


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


                                       4
<PAGE>


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


<TABLE>
<CAPTION>
                                                                                     Six Months Ended
                                                                                         June 30,
                                                                                   2002               2001
                                                                           -----------------------------------
<S>                                                                        <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                                   $   (25,765,608)    $   (25,471,218)
Adjustments to reconcile net loss to net cash
    used in operating activities:
    Depreciation                                                                   742,490             663,214
    Recognition of non-cash stock compensation                                      44,336                -
    Non-cash interest expense                                                      159,184                -
    Loss on common stock repurchase liability                                    1,569,163                -
    Minority interest                                                                 (235)               (256)
    Changes in assets and liabilities:
      Accounts receivable                                                         (184,372)            522,455
      Interest receivable                                                           39,015             (37,908)
      Prepaid expenses and other                                                    33,238          (1,857,155)
      Accounts payable                                                         (11,445,336)          1,425,432
      Accrued liabilities                                                       (1,736,902)            379,898
      Other long term liabilities                                                   80,000                -
      Deferred revenue                                                             478,621                -
                                                                           ---------------     ---------------
     Net cash used in operating activities                                     (35,986,406)        (24,375,538)
                                                                           ---------------     ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of furniture and equipment                                              (369,239)           (658,959)
                                                                           ---------------     ---------------
     Net cash provided by investing activities                                    (369,239)           (658,959)
                                                                           ---------------     ---------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from option and warrant exercises
 and the sale of  common stock                                                   4,878,269          26,248,491
Proceeds from the sale of warrants                                                 322,520                -
Proceeds from issuance of convertible debt                                       1,678,738           2,088,264
Payment of note payable                                                           (537,151)           (486,106)
                                                                           ---------------     ---------------
     Net cash provided by financing activities                                   6,342,376          27,850,649
                                                                           ---------------     ---------------

Net increase (decrease) in cash and cash equivalents                           (30,013,269)          2,816,152
Cash and cash equivalents at beginning of period                                41,386,300          24,503,886
                                                                           ---------------     ---------------
Cash and cash equivalents at end of period                                 $    11,373,031     $    27,320,038
                                                                           ===============     ===============

Cash paid for interest                                                     $        39,310     $        90,356
                                                                           ===============     ===============
</TABLE>

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



                                       5
<PAGE>



                                 ENTREMED, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            JUNE 30, 2002 (UNAUDITED)



1.       BASIS OF PRESENTATION

         Our accompanying unaudited consolidated financial information includes
the accounts of 85% owned subsidiary, Cytokine Sciences, Inc. and 96% 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 six month period ended June 30, 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 consolidated
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>



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 June 30, 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 candidates, and facilities expenses.
          Research and development costs are expensed as incurred.

     -    We are currently involved in certain legal proceedings as discussed in
          the "Commitments and 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.


                                       7
<PAGE>



RESULTS OF OPERATIONS

For the Three and Six Months Ended June 30, 2001 and June 30, 2002.

        Revenues. Revenues decreased approximately 59% in the three month period
ending June 30, 2002 to approximately $309,000 from $758,000 in the comparable
2001 period. For the six month period revenues decreased approximately 77% to
$369,000 from 1,641,000. Royalty revenue decreased approximately 99% in the 2002
periods 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 $1,435,000 for the six month
period ending June 30, 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 $35,000 and $188,000 in 2002 and 2001,
respectively. Included in the three month period ending June 30, 2002 are
revenues of approximately $232,000 reflecting the initiation of externally
funded research collaborations by the Company and MaxCyte. The revenues in this
period result primarily from performance as a subcontractor under an NIH
sponsored Malaria Vaccine program.

        Research and Development Expenses. From inception through June 30, 2002
we have incurred research and development expenses of approximately
$194,901,000. Included in this amount are the expenses related to our three lead
product candidates, Panzem(TM), Endostatin and Angiostatin. At June 30, 2002 the
accumulated expenses for each of these development projects are $16,646,000,
$65,594,000 and $33,552,000 respectively. Project expenses for Panzem(TM) of
$1,992,000, Endostatin of $4,286,000 and Angiostatin of $3,684,000 are reflected
in our 2002 R&D expenses for the six month period ending June 30, 2002 of
approximately $18,171,000. Research and Development expenses for the comparable
2001 period were approximately $20,592,000. Research and Development expenses
for the three month period ending June 30, 2002 were approximately $7,312,000, a
decrease of 33% from the prior quarter and a decrease of 39% from the comparable
2001 period. The decreases primarily result from the absence in this quarter of
bulk protein manufacturing. Bulk protein manufacturing will be completed in the
third quarter 2002 as we wind down production of Endostain and Angiostatin for
Phase II clinical trials. Project costs for Panzem(TM), Endostatin and
Angiostatin were $3,321,000, $8,608,000 and $1,736,000 respectively for the six
month period ending June 30, 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 $4,948,000 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 June 30, 2002 and $750,000 for the comparable period in 2001. MaxCyte's
research and development costs for the six month periods ending June 30, 2002
and June 30, 2001 were $1,124,000 and $1,086,000, 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 June 30, 2002, three of our
proprietary product candidates, Panzem(TM), Endostatin and Angiostatin, were in
the Phase II stage of clinical trials. Completion of clinical trials may take
several years or more, but the length of time generally varies substantially
according to the type, complexity, novelty and intended use of a product
candidate.

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



                                       9
<PAGE>

        Research and development expenses consist primarily of compensation and
other expenses related to research and development personnel, research
collaborations, costs associated with pre-clinical testing and clinical trials
of our product candidates, including the costs of manufacturing the product
candidates, and facilities expenses. Research and development expenses decreased
to approximately $18,171,000 in 2002 from $20,592,000 for the comparable period
in 2001. The decrease in overall research and development costs reflects a lower
level of product manufacturing in 2002. Other cost components of the decrease
are associated with the following:

        -       Increased personnel--Personnel costs increased to $4,040,000 for
                the six month period ended June 30, 2002 from $3,901,000 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 $2,697,000 and $1,259,000 for the six months
                ending June 30, 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 $1,507,000 in
                the six months ending June 30, 2002 from $2,311,000 in the
                period ending June 30, 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
                regulatory support costs increased in 2002 to $563,000 from
                $552,000 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
                decreased to $4,798,000 in 2002 from $8,943,000 in 2001. The
                2002 decrease resulted primarily from the timing of
                manufacturing activities. In 2001 we manufactured bulk
                Endostatin and Angiostatin to buildup a supply of material for
                our ongoing Phase I and the initiation of Phase II clinical
                trials. This buildup began in the three month period ended June
                30, 2001 and will be completed in the third quarter of 2002.
                Upon completion we will have sufficient bulk material to supply
                all current and planned Endostatin and Angiostatin clinical
                trials through 2003. The majority of the cost of bulk
                manufacturing activities was recorded in 2001 with the liability
                of approximately $13,900,000 being paid during the first six
                months of 2002. Although the majority of the bulk manufacturing
                costs were recognized in 2001 and we will reflect lower overall
                manufacturing costs in 2002, we will continue to incur
                manufacturing costs for Panzem and fill finish and product
                release costs for Endostatin and Angiostatin.

        General and administrative expenses increased to $4,238,000 in the three
month period ending June 30, 2002 from $3,924,000 in the comparable 2001 period.
For the six months ended June 30, 2002 general and administrative expenses
increased to $8,029,000 from $7,159,000 in 2001. The 2002 period increase
reflects additional legal fees associated with the Abbott litigation and a
charge of $1,569,000 related to the potential repurchase of our common stock
from Bristol-Myers Squibb and the related guaranteed minimum purchase price.
These increases are partially offset by decreased personnel costs resulting from
a smaller corporate staff versus the comparable 2001 period and the reversal of
accrued compensation charges.

        Interest expense. For the six month period ending June 30, 2002 interest
expense increased 38% to approximately $198,000 from $144,000 in the comparable
period in 2001. The 2002 increase reflects the accrual of interest relating to
MaxCyte's issuance of additional convertible promissory notes in 2002.



                                       10
<PAGE>

        Investment income. Investment income decreased by approximately 66% in
2002 to approximately $264,000 from $782,000 as a result of continued low
investment yields and lower balances in interest bearing cash accounts.

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.

        At June 30, 2002, we had cash and cash equivalents of approximately
$11,373,000 and working capital of approximately $3,423,000, as compared to cash
and cash equivalents of approximately $41,386,000 and working capital of
approximately $21,258,000 at December 31, 2001. The decrease in cash and cash
equivalents primarily reflects the pay down of approximately $11.4 million of
accounts payable (including accrued manufacturing expenses of approximately
$13.9 million relating to our fourth quarter 2001 manufacturing campaign) and
payment of other accrued liabilities of approximately $1.7 million. Our 6/30/02
working capital reflects a current liability of approximately $2,937,000, versus
approximately $1,368,000 at December 31, 2001, relating to our stock repurchase
obligations to BMS discussed below. Net cash provided from financing activities
was approximately $6,342,000 for the six months ended June 30, 2002.

The table below sets forth our contractual obligations at June 30, 2002.

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------
CONTRACTUAL OBLIGATIONS                                   PAYMENTS DUE BY PERIOD
-----------------------------------------------------------------------------------------------------------------------
                                                           Next twelve       1-3 years    4 - 5 years   After 5 years
                                            Total            months
<S>                                     <C>                <C>               <C>          <C>           <C>

Debt                                    $  4,570,000           469,000       4,101,000
Common Stock repurchase liability          2,937,000         2,937,000
Operating Leases                           6,536,000           998,000       1,935,000     1,929,000      1,674,000
Clinical Trial Contracts                   1,367,000         1,367,000
Collaborative Research Contracts             391,000           391,000
Contract Manufacturing                     5,000,000         5,000,000
Total Contractual Obligations           $ 20,801,000        11,162,000       6,036,000     1,929,000      1,674,000
</TABLE>

        In the absence of additional financing, based on outstanding commitments
(and assuming that no additional expense reduction measures or limitations on
cash disbursements are implemented by us), we believe that our available cash
and cash equivalents will be sufficient to fund our operations into the fourth
quarter of 2002. Management is seeking to reduce cash used in operating
activities through a realignment of programs and workforce reductions and
exploring sources of additional financing.

        In August 2002, we announced a realignment of research and development
programs to reduce expenses and focus resources on the development of our
clinical candidates. In conjunction with this plan, we reduced our headcount by
approximately 25% and eliminated funding of research collaborations that do not
support our clinical programs. As a result of these actions we will record a
one-time charge of under $500,000 in the third quarter of this year. Decreased
manufacturing activity along with actions described above will result in a
significant reduction in operating expenses in the fourth quarter onward.

         In addition, we intend to pursue strategic relationships to provide
resources for the further development of our product candidates, and we are
currently involved in discussions with several potential partners. There can be
no assurance, however, that these discussions will result in relationships or
additional


                                       11
<PAGE>

funding. In addition, we will continue to seek capital through the
public or private sale of securities. If we are successful in raising additional
funds through the issuance of equity securities, stockholders may experience
substantial dilution, or the equity securities may have rights, preferences or
privileges senior to those of the holders of our common stock. If we raise funds
through the issuance of debt securities, those securities would have rights,
preferences and privileges senior to those of our common stock.

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

     -   seek to renegotiate the terms of our current liabilities and
         commitments;

     -   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 forfeiture 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.

         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 June 30, 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;

     -   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;

                                       12
<PAGE>

     -   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. MaxCyte received proceeds of $1,100,000 in May 2002
and issued convertible promissory notes with a maturity date of July 15, 2003.
Holders of the May 2002 promissory notes also received warrants to purchase
additional shares of MaxCyte common stock.

        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.

INFLATION AND INTEREST RATE CHANGES

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

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The primary objective of our investment activities is to preserve our
capital until it is required to fund operations while at the same time
maximizing the income we receive from our investments without incurring
investment market volatility risk. Our investment income is sensitive to the
general level of U.S. interest rates. In this regard, changes in the U.S.
interest rates affect the interest earned our cash and cash equivalents.



                                       13
<PAGE>

Due to the short term nature of our cash and cash equivalent holdings, a 10%
movement in market interest rates would not materially impact on the total fair
market value of our portfolio as of June 30, 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

           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 6,
2002; the meeting was adjourned and reconvened on June 24, 2002 for the purpose
of considering proposal (ii) discussed below ("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 case for, against, or withheld:

<TABLE>
<CAPTION>
Year Term Expires   Name                     Votes For       Votes Against     Withheld
----------------------------------------------------------------------------------------
<S>                 <C>                      <C>             <C>              <C>
2005                Jerry Finkelstein        17,843,746      205,205           0
----------------------------------------------------------------------------------------
2005                Mark C. M. Randall       17,844,046      204,905           0
----------------------------------------------------------------------------------------
2005                Jennie C. Hunter-Cevera  17,844,047      204,904           0
----------------------------------------------------------------------------------------
</TABLE>

           (ii) Approve an amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares of the
Company's common stock, $.01 par value, from 35,000,000 shares to 90,000,000
shares, increasing the total authorized capital stock from 40,000,000 shares to
90,000,000 shares. This proposal received 16,706,183 votes in favor, 1,407,200
votes against and 184,479 abstentions.

           (iii) Approve an amendment to the Company's 2001 Long-Term Incentive
Plan increasing from 2,250,000 to 3,250,000 the number shares of Common Stock
reserved for issuance thereunder and changing the maximum number of shares of
Common Stock subject to awards that may be awarded to any one employee from
250,000 shares during any one calendar year to 750,000 shares during any three
consecutive calendar years. This proposal received 16,386,712 votes in favor,
1,613,437 votes against and 48,802 abstentions.

           (iv) Ratification of Appointment of Ernst & Young LLP. At the Annual
Meeting, stockholders approved and ratified the selection of Ernst & Young LLP
as the independent auditors. The proposal received



                                       14
<PAGE>

17,929,360 votes in favor, 101,383 votes against and 18,208 abstentions.

Item 5.    OTHER INFORMATION

           Not applicable.

Item 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a) Exhibits

                99.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER

                99.2 CERTIFICATION OF CONTROLLER

           (b) Reports on Form 8-K

               None




                                   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 14, 2002                            /s/ John W. Holaday
                                        -------------------------------------
                                                 John W. Holaday, Ph.D.
                                                Chief Executive Officer




Date: August 14, 2002                            /s/ Dane R. Saglio
                                        -------------------------------------
                                                   Dane R. Saglio
                                                Chief Accounting Officer


                                       15