U.S. SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C. 20549
                             FORM 10-QSB


(Mark One)

[x]  Quarterly report under Section 13 or 15(D) of the Securities
     Exchange Act of 1934

         For the quarterly period ended September 30, 2004

[ ]  Transition  report under Section 13 or 15(D) of the Exchange
     Act

     For the transition period from __________ to __________


                   Commission file number 0-15888
                                          _______

                      IGENE Biotechnology, Inc.
 _________________________________________________________________
 (Exact name of Small Business Issuer as Specified in its Charter)


                   Maryland                         52-1230461
___________________________________________    ____________________
     (State or Other Jurisdiction of             (I.R.S. Employer
      Incorporation or organization)            Identification No.)


       9110 Red Branch Road, Columbia, Maryland 21045-2024
       ___________________________________________________
            (Address of Principal Executive Offices)

                          (410) 997-2599
        _________________________________________________
        (Issuer's Telephone Number, Including Area Code)

                               None
       ____________________________________________________
       (Former Name, Former Address and Former Fiscal Year,
                   if Changed Since Last Report)



Check  whether the Issuer: (1) filed all reports required to be filed
by  Section 13 or 15(D) of the Exchange Act during the past 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
       _____              _____

State  the  number  of  shares  outstanding  of  each of the issuer's
classes of common equity, as of the latest practicable date:

99,024,568 shares as of November 9, 2004.
________________________________________

Transitional Small Business Disclosure Format (check one):

Yes                No      x
       _____             _____

<PAGE>
                             FORM 10-QSB
                      IGENE Biotechnology, Inc.

                                INDEX



PART I   -   FINANCIAL INFORMATION

                                                            Page

     Consolidated Balance Sheets .........................  5-6

     Consolidated Statements of Operations ...............  7

     Consolidated Statements of Stockholders' Deficit.....  8-9

     Consolidated Statements of Cash Flows ...............  10

     Notes to Consolidated Financial Statements ..........  11-16

     Management's Discussion and Analysis of Financial
     Conditions and Results of Operations ................  17-22

PART II  -   OTHER INFORMATION ...........................  23-24

SIGNATURES ...............................................  25

EXHIBIT INDEX ............................................  26

<PAGE>

                      IGENE BIOTECHNOLOGY, INC.

             QUARTERLY REPORT UNDER SECTION 13 OR 15(D)

               OF THE SECURITIES EXCHANGE ACT OF 1934
<PAGE>

                               PART I
                        FINANCIAL INFORMATION
<PAGE>
<TABLE>
                       IGENE Biotechnology, Inc.  and Subsidiaries
                               Consolidated Balance Sheets

<CAPTION>
                                                 September 30,      December 31,
                                                         2004              2003
                                                 _____________     _____________
                                                  (Unaudited)
<S>                                              <C>               <C>
ASSETS
CURRENT ASSETS

  Cash and cash equivalents                      $     12,087      $     63,075
  Accounts receivable                                 199,095           156,458
  Due From Joint Venture                              711,879           495,183
  Prepaid expenses and other current assets            19,287            43,675
                                                 _____________     _____________

                                                      942,348           758,391

OTHER ASSETS
  Property and equipment, net                         134,495           148,931
  Loans receivable from manufacturing agent           118,965           122,964
  Investment in unconsolidated joint venture        8,737,506        11,391,506
  Other assets                                          5,125             4,886
                                                 _____________     _____________

     TOTAL ASSETS                                $  9,938,439      $ 12,426,678
                                                 =============     =============
</TABLE>



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

                               -5-
<TABLE>
                      IGENE Biotechnology, Inc. and Subsidiaries
                             Consolidated Balance Sheets
                                   (continued)
<CAPTION>
                                                                September 30,      December 31,
                                                                        2004              2003
                                                                _____________     _____________
                                                                 (Unaudited)
<S>                                                             <C>               <C>

LIABILITIES, REDEEMABLE PREFERED STOCK
  AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Accounts payable and accrued expenses                         $    207,705      $    185,862
  Equipment lease payable                                                ---             1,498
                                                                _____________     _____________

     TOTAL CURRENT LIABILITIES                                       207,705           187,360

LONG-TERM LIABILITIES
  Notes payable                                                    5,842,267         5,842,767
  Convertible debentures                                           4,624,212         4,814,212
  Accrued interest                                                 3,968,070         3,398,272

REDEEMABLE PREFERRED STOCK
  Carrying amount of redeemable preferred
     stock, 8% cumulative, convertible,
     voting, series A, $.01 par value per
     share. Stated value was $ 18.24
     and $17.44, respectively.  Authorized
     1,312,500 shares, issued 18,509 and 25,605 respectively         337,604           454,745
                                                                _____________     _____________

  Carrying amount of redeemable preferred stock,
     8% cumulative, convertible, voting, series B,
     $.01 par value per share.  Stated value $8.80 per share.
     Authorized, issued and outstanding zero and 187,500 shares,
     respectively, Redemption amount $1,500,000                          ---         1,650,000
                                                                _____________     _____________

     TOTAL LIABILITIES                                            14,979,858        16,347,356
                                                                _____________     _____________

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
  Common stock --- $.01 par value per share.
     Authorized 750,000,000 shares;
     issued and outstanding 99,024,568
     and 92,747,469 shares, respectively.                            990,246           927,475
  Additional paid-in capital                                      36,813,996        34,471,490
  Deficit                                                        (42,845,661)      (39,319,643)
                                                                _____________     _____________

     TOTAL STOCKHOLDERS' DEFICIT                                  (5,041,419)       (3,920,678)
                                                                _____________     _____________

     TOTAL LIABILITIES AND
     STOCKHOLDERS' DEFICIT                                      $  9,938,439      $ 12,426,678
                                                                =============     =============

</TABLE>

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

                               -6-
<TABLE>
                                      IGENE Biotechnology, Inc. and Subsidiaries
                                        Consolidated Statements of Operations
                                                      (Unaudited)
<CAPTION>

                                                        Three months ended            Nine months ended
                                                    ___________________________  ___________________________

                                                    September 30, September 30,  September 30, September 30,
                                                            2004          2003           2004          2003
                                                    _____________ _____________  _____________ _____________
<S>                                                 <C>           <C>            <C>           <C>
REVENUE
_______

  Sales - AstaXin(R)                                $        ---  $        ---   $        ---  $    463,486
  Cost of sales - AstaXin(R)                                 ---           ---            ---       444,946
                                                    _____________ _____________  _____________ _____________

          GROSS PROFIT                                       ---           ---            ---        18,540
                                                    _____________ _____________  _____________ _____________

OPERATING EXPENSES
__________________

  Marketing and selling                                   45,536        57,265        254,803       277,120
  Research, development and pilot plant                  227,103       198,195        631,035       576,596
  General and administrative                             154,077       172,804        514,905       557,131
  Litigation expense                                         ---        75,610         40,580        75,610
  Operating expenses reimbursed by Joint Venture        (420,519)     (327,310)    (1,163,694)     (891,691)
                                                    _____________ _____________  _____________ _____________

          TOTAL OPERATING EXPENSES                         6,197       176,564        277,629       594,766
                                                    _____________ _____________  _____________ _____________

          OPERATING LOSS                                  (6,197)     (176,564)      (277,629)     (576,226)

EQUITY IN LOSS OF UNCONSOLIDATED SUBSIDIARY             (892,000)     (222,000)    (2,654,000)     (569,000)

INTEREST EXPENSE                                        (191,471)     (233,539)      (594,389)     (616,671)
                                                    _____________ _____________  _____________ _____________

  NET LOSS FROM CONTINUING OPERATIONS                 (1,089,668)     (632,103)    (3,526,018)   (1,761,897)

DISCONTINUED OPERATIONS
_______________________

Gain on disposal of discontinued operations                  ---           ---            ---       237,437
                                                    _____________ _____________  _____________ _____________

          NET LOSS                                  $ (1,089,668) $   (632,103)  $ (3,526,018) $ (1,524,460)
                                                    ============= =============  ============= =============

BASIC AND DILUTED NET LOSS
  PER COMMON SHARE FROM CONTINUING OPERATIONS       $      (0.01)        (0.01)  $      (0.04)        (0.02)
                                                    _____________ _____________  _____________ _____________

BASIC AND DILUTED NET INCOME (LOSS)
  PER COMMON SHARE FROM DISCONTINUED OPERATIONS     $      (0.00)        (0.00)  $      (0.00)        (0.00)
                                                    _____________ _____________  _____________ _____________

BASIC AND DILUTED NET LOSS PER COMMON SHARE         $      (0.01)        (0.01)  $      (0.04)        (0.02)
                                                    ============= =============  ============= =============

</TABLE>

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

                               -7-
<TABLE>

           IGENE Biotechnology, Inc. and Subsidiaries
        Consolidated Statements of Stockholders' Deficit
                           (Unaudited)
<CAPTION>

                                                            Redeemable Preferred Stock
                                                                 (shares/amount)
                                                          ______________________________
<S>                                                       <C>             <C>

Balance at January 1, 2003                                    213,655     $ 1,947,774

Cumulative undeclared dividends
  on redeemable preferred stock                                   ---          12,290

Conversion of preferred stock to common                           550          (9,416)

Exercise of warrants                                              ---             ---

Net loss for the nine months ended September 30, 2003             ---             ---
                                                          ============    ============


Balance at September 30, 2003                                 213,105     $ 1,950,648
                                                          ============    ============

Balance at January 1, 2004                                    213,105     $ 2,104,745

Cumulative undeclared dividends
  on redeemable preferred stock                                   ---          10,019

Conversion of preferred stock to common                      (194,596)     (1,777,160)

Exercise of warrants                                              ---             ---

Net loss for the nine months ended September 30, 2004             ---             ---
                                                          ============    ============

Balance at September 30, 2004                                  18,509     $   337,604
                                                          ============    ============

</TABLE>


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

                               -8-
<TABLE>
                                      IGENE Biotechnology, Inc. and Subsidiaries
                                   Consolidated Statements of Stockholders' Deficit
                                              (Unaudited - Continued)
<CAPTION>
                                                                                         Additional                    Total
                                                                   Common Stock          Paid-in                       Stockholders'
                                                                  (shares/amount)        Capital         Deficit       Deficit
                                                           __________________________  _____________  _____________  _____________
<S>                                                        <C>           <C>           <C>            <C>            <C>
Balance at January 1, 2003                                  92,943,746   $   929,437   $ 22,387,604   $(37,120,502)  $(13,803,461)

Cumulative undeclared dividends
  on redeemable preferred stock                                    ---           ---        (12,674)           ---        (12,674)

Shares received and retired in ProBio Sale                  (7,000,000)      (70,000)      (140,000)           ---       (210,000)

Investment in unconsolidated joint venture                         ---           ---     11,983,131            ---     11,983,131

Shares issued for manufacturing agreement                    2,066,738        20,666         70,896            ---         91,562

Net loss for the nine months ended September 30, 2003              ---           ---           ---      (1,524,460)    (1,524,460)
                                                           ============  ============  =============  =============  =============
Balance at September 30, 2003                               88,010,484   $   880,103   $ 34,288,957   $(38,644,962)  $ (3,475,902)
                                                           ============  ============  =============  =============  =============

Balance at January 1, 2004                                  92,747,469   $   927,475   $ 34,471,490   $(39,319,643)  $ (3,920,678)

Cumulative undeclared dividends
  on redeemable preferred stock                                    ---           ---        (10,019)           ---        (10,019)

Conversion of redeemable preferred stock                       389,192         3,892      1,773,268            ---      1,777,160

Shares issued for manufacturing agreement                    2,382,907        23,829        266,682            ---        290,511

Shares reissued for ProBio agreement                         1,000,000        10,000        100,000            ---        110,000

Conversion of ProBio debentures                              1,900,000        19,000        171,000            ---        190,000

Shares issued for payment of legal services                    250,000         2,500         25,000            ---         27,500

Conversion of notes payable                                      5,000            50            325            ---            375

Exercise of employee stock options                             350,000         3,500         16,250            ---         19,750

Net loss for the nine months ended September 30, 2004              ---           ---            ---     (3,526,018)    (3,526,018)
                                                           ============  ============  =============  =============  =============
Balance at September 30, 2004                               99,024,568   $   990,246   $ 36,813,996   $(42,845,661)  $ (5,041,419)
                                                           ============  ============  =============  =============  =============

</TABLE>

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

                               -9-
<TABLE>
           IGENE Biotechnology, Inc. and Subsidiaries
              Consolidated Statements of Cash Flows
                           (Unaudited)

<CAPTION>
                                                                      Nine months ended
                                                               _______________________________

                                                               September 30,     September 30,
                                                                       2004              2003
                                                               _____________     _____________
<S>                                                            <C>               <C>
Cash flows from operating activities
  Net loss                                                     $ (3,526,018)     $ (1,524,460)
  Adjustments to reconcile net loss to net cash used
  by operating activities:
     Depreciation                                                    14,436            16,596
     Amortization                                                       ---            54,729
     Issuance of Shares to Fermtech per ProBio agreement            110,000               ---
     Manufacturing cost paid in shares of common stock              290,511            91,562
     Issuance of common stock for legal services                     27,500               ---
     Equity in loss of unconsolidated subsidiary                  2,654,000           569,000

     Decrease (increase) in:
        Accounts receivable                                         (42,637)          125,033
        Inventory                                                       ---           374,709
        Due from Joint Venture                                     (216,696)              ---
        Prepaid expenses and other current assets                    28,148           264,478

     Increase (decrease) in:
        Accounts payable and accrued expenses                       591,641          (199,703)
                                                               _____________     _____________

  Net cash used in operating activities                             (69,115)         (228,056)
                                                               _____________     _____________

Cash flows from investing activities
  Capital (expenditures) and sales                                      ---             7,194
                                                               _____________     _____________

  Net cash provided by investing activities                             ---             7,194
                                                               _____________     _____________

Cash flows from financing activities
  Proceeds (repayment) from borrowing                                  (125)         (250,000)
  Payment of equipment lease                                         (1,498)              ---
  Proceeds from exercise of employee stock options                   19,750               ---
                                                               _____________     _____________

  Net cash (used) provided by financing activities                   18,127          (250,000)
                                                               _____________     _____________

  Net decrease in cash and cash equivalents                         (50,988)         (470,862)

  Cash and cash equivalents at beginning of period                   63,075           497,711
                                                               _____________     _____________

  Cash and cash equivalents at end of period                   $     12,087      $     26,849
                                                               =============     =============

Supplementary disclosure and cash flow information
__________________________________________________

Cash paid for interest                                         $     24,347      $     72,964
Cash paid for income taxes                                              ---               ---

See Note (3) for non-cash investing and financing activities.

</TABLE>

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

                              -10-

            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements

(1)  Unaudited consolidated financial statements

     The  September  30, 2004, consolidated financial  statements
     presented  herein  are  unaudited, and  in  the  opinion  of
     management,  include  all adjustments  (consisting  only  of
     normal recurring accruals) necessary for a fair presentation
     of  financial position, results of operation and cash flows.
     Such  financial  statements  do  not  include  all  of   the
     information  and footnote disclosures normally  included  in
     financial  statements prepared in accordance with accounting
     principles  generally  accepted  in  the  United  States  of
     America.   This  quarterly report on Form 10-QSB  should  be
     read  in conjunction with Igene's Annual Report on Form  10-
     KSB for the year ended December 31, 2003.

(2)  Nature of Operations

     Igene  Biotechnology, Inc. (the "Company") was  incorporated
     under the laws of the State of Maryland on October 27,  1981
     as  "Industrial Genetics, Inc."  Igene changed its  name  to
     "IGI  Biotechnology, Inc." on August 17, 1983 and to  "Igene
     Biotechnology, Inc." on April 14, 1986.  Igene is located in
     Columbia,  Maryland  and  is  engaged  in  the  business  of
     industrial microbiology and related biotechnologies.   Igene
     had operational subsidiaries in Norway and Chile through the
     first  quarter  of  2003.   IGENE Biotechnology,  Inc.  (the
     "Company")   is  engaged  in  the  business  of  developing,
     marketing, and manufacturing specialty ingredients for human
     and animal nutrition.   Igene was formed to develop, produce
     and   market  value-added  specialty  biochemical  products.
     Igene  is  a  supplier of natural astaxanthin, an  essential
     nutrient  in different feed applications and as a source  of
     pigment  for  coloring farmed salmon  species.   Igene  also
     supplies  nutraceutical ingredients,  as  well  as  consumer
     ready health food supplements, including astaxanthin.  Igene
     is   focused   on   fermentation  technology,  pharmacology,
     nutrition  and  health  in  its marketing  of  products  and
     applications worldwide.

     Igene  has  devoted  its  resources to  the  development  of
     proprietary  processes to convert selected agricultural  raw
     materials  or feedstocks into commercially useful  and  cost
     effective   products  for  the  food,   feed,   flavor   and
     agrochemical industries.  In developing these processes  and
     products,  Igene has relied on the expertise and  skills  of
     its  in-house  scientific staff and, for  special  projects,
     various consultants.

     In  an  effort to develop a dependable source of production,
     March  19,  2003,  Tate  & Lyle PLC and Igene Biotechnology,
     Inc. announced  a  50:50 joint venture to produce AstaXin(R)
     for the  aquaculture industry.  Production will utilize Tate
     &  Lyle's  fermentation  capability together with the unique
     technology  developed  by  Igene.   Part  of  Tate  & Lyle's
     existing  Selby,  England,  citric  acid  facility  will  be
     modified to include the  production  of 1,500 tons per annum
     of this product.  Tate & Lyle's investment  of  $25  million
     includes the contribution of certain of its facility  assets
     currently  used  in  citric  acid  production.    Commercial
     production is commencing in the calendar year 2004.

(3)  Noncash investing and financing activities

     During  the  nine months ended September 30,  2004,  194,596
     shares  of  redeemable  preferred  stock,  with  a  recorded
     aggregate  value of $1,777,159, were converted into  389,192
     shares  of  common  stock.   This portion  included  the  8%
     Cumulative  Convertible Preferred Stock, Series  B  and  has
     relieved the Company of this amount from long-term debt.

     During the nine months ended September 30, 2004, $190,000 of
     the  $1,000,000 of Convertible Debentures issued as part  of
     the  2001  ProBio purchase, were converted to common  stock.
     These  shares were converted at $.10 per share, for a  total
     of 1,900,000 shares.  These shares were issued and the notes
     cancelled.  This relieved the Company of $190,000  of  long-
     term debt.


                              -11-

            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements
                           (continued)

     During  the  nine months ended September 30,  2004,  250,000
     shares  were issued to the Company's attorney in  connection
     with  the  settlement of the ADM matter.  These shares  were
     issued  at an estimated value of $.11 per share, aggregating
     to $27,500.  These costs were expensed in the second quarter
     as part of the ADM legal expense.

     During  the  nine months ended September 30, 2004,  $500  of
     Notes  Payable were converted using 5,000 warrants at  $.075
     per  share.  The notes and warrants were cancelled and 5,000
     shares of common stock were issued.

     During  the  nine months ended September 30,  2004,  350,000
     shares of common stock were issued as part of employee stock
     option exercises.  The Company received $19,750 based on  an
     average exercise price of $.056 per share.

     During  the  nine months ended September June 30,  2004  and
     2003,  Fermic, Igene's manufacturing agent, earned 2,382,907
     and  2,066,738 shares, respectively, of common stock as part
     of the manufacturing agreement. Fermic earns 2,250 shares of
     common  stock for each kilogram of pure Astaxanthin produced
     and  delivered  as part of the manufacturing agreement.  The
     average price is based on the market value of the shares  at
     the  time the product is produced.   Fermic can earn  up  to
     20,000,000   shares  in  total  under  the  contract.    The
     2,382,907  shares were earned at an average price  of  $.122
     per  share for 2004, and 2,066,738 shares were earned at  an
     average   price  of  $.044  per  share  for  2003.   Through
     September 30, 2004, 13,472,129 shares have been earned.  Any
     shares earned by Fermic will be issued on a quarterly basis.
     Igene  relied on Section 4(2) of the Securities Act of 1933,
     as   amended,   to  issue  the  shares  to  Fermic   without
     registration   under  that  act.   Igene   relied   on   the
     representations  and  warranties  of  Fermic  made  in   the
     manufacturing   agreement  in  claiming  the  aforementioned
     exemption.

     During  the nine months ended September 30, 2004  and  2003,
     the Company recorded in each quarter dividends in arrears on
     8%  redeemable preferred stock cumulating at $.16 per  share
     aggregating to $10,020 and $12,674, respectively, which  has
     been  removed  from  paid-in capital  and  included  in  the
     carrying value of the redeemable preferred stock.

     On  March 18, 2003, the Company entered into a Joint Venture
     Agreement  with  Tate  &  Lyle  Fermentation  Products  Ltd.
     ("Tate").  Pursuant  to  the Joint  Venture  Agreement,  the
     Company and Tate agreed to form a joint venture (the  "Joint
     Venture")  to  manufacture, market and sell Astaxanthin  and
     derivative products throughout the world for all uses  other
     than  as  a  Nutraceutical  or otherwise  for  direct  human
     consumption.  Tate contributed $24,600,000 in  cash  to  the
     Joint  Venture that was then used to purchase certain  plant
     assets,  while  the Company has agreed to  transfer  to  the
     Joint  Venture its technology relating to the production  of
     Astaxanthin  and assets related thereto. These  assets  will
     continue to be used by the Joint Venture in the same  manner
     as  historically used by the Company.  The Company and  Tate
     each have a 50% ownership interest in the Joint Venture  and
     equal  representation  on  the Board  of  Directors  of  the
     Company.   The value of the Company's technology  investment
     was  deemed equivalent to the cash contribution made by Tate
     &  Lyle.   Unamortized production costs  in  the  amount  of
     $316,869 were contributed to the Joint Venture reducing  the
     adjustment to additional paid in capital.

     In  February,  2003,  Igene sold its  subsidiary  ProBio  to
     Fermtech  AS in exchange for aggregate consideration  valued
     at approximately $343,000, consisting of 7,000,000 shares of
     Igene  common  stock (including 2,000,000 shares  that  were
     placed  into  escrow  and  may be reissued  to  Fermtech  as
     described below), valued for the purposes of the acquisition
     at   $.03  per  share,  plus  forgiveness  of  approximately
     $168,000  of debt that Igene owed to ProBio at the  time  of
     purchase in 2001.  The escrowed 2,000,000 shares   were   to
     be   earned   by   Fermtech based  upon  Mr.   Benjaminsen's
     continued  employment with  the Company.  As Mr. Benjaminsen


                              -12-

            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements
                           (continued)


     remained employed  by Igene through  2003,  1,000,000 of the
     escrowed shares  of common stock were delivered to Fermtech.
     These shares were expensed in the second quarter of 2004, as
     a  marketing  expense  of   $110,000.   If  Mr.  Benjaminsen
     remains  employed  by  Igene  through  2004,  the  remaining
     1,000,000 escrowed shares will be released  from  escrow and
     delivered to Fermtech.  The expenses incurred by the Company
     related to the delivery  of  the  remaining  escrowed shares
     will be  determined  by the market value of the stock at the
     time of delivery.

     During the nine months ended September 30, 2003, the Company
     elected  to  extend repayment on demand notes of  $6,043,659
     and  related accrued interest of $2,865,810 until March  31,
     2006.

(4)  Foreign Currency Translation and Transactions

     Since   the   day-to-day  operations  of   Igene's   foreign
     subsidiary   in   Chile  are  dependent  on   the   economic
     environment of the parent's currency, the financial position
     and  results  of  operations of Igene Chile  are  determined
     using  Igene's  reporting  currency  (US  dollars)  as   the
     functional  currency.  All exchange gains  and  losses  from
     remeasurement  of monetary assets and liabilities  that  are
     not  denominated in US dollars are recognized  currently  in
     income.   These  losses and gains occurred  primarily  as  a
     result  of  the effect of valuation of the Chilean  Peso  on
     Igene's  accounts receivables, which are mostly  denominated
     in Pesos.

(5)  Joint Venture

     On  March 18, 2003, the Company entered into a Joint Venture
     Agreement  with  Tate  &  Lyle  Fermentation  Products  Ltd.
     ("Tate").   Pursuant  to  a  Joint  Venture  Agreement,  the
     Company  and  Tate  agreed  to form  the  Joint  Venture  to
     manufacture,  market  and  sell Astaxanthin  and  derivative
     products throughout the world for all uses other than  as  a
     Nutraceutical  or  otherwise for direct  human  consumption.
     Tate  contributed $24,600,000 in cash to the Joint  Venture,
     that  was then used to purchase certain plant assets,  while
     the  Company  has agreed to contribute to the Joint  Venture
     its technology relating to the production of Astaxanthin and
     assets  related  thereto. These assets will continue  to  be
     used by the Joint Venture in the same manner as historically
     used  by the Company.  The Company and Tate each have a  50%
     ownership   interest  in  the  Joint   Venture   and   equal
     representation  on  the  Board of  Directors  of  the  Joint
     Venture Company.  Unamortized production costs in the amount
     of  $316,869 were contributed to the Joint Venture  reducing
     the adjustment to additional paid in capital.

     The  Joint Venture is accounted for under the equity method.
     Astaxanthin  revenue is recorded on the books of  the  Joint
     Venture.  Certain costs incurred by Igene are reimbursed  by
     the  Joint Venture.  These reimbursements are reported as  a
     contra  amount  in  the  Operating Expense  section  of  the
     Igene's Consolidated Statements of Operations.

(6)  Stockholders' Equity (Deficit)

     As  of  September, 2004 and 2003, 37,018 and 52,310  shares,
     respectively, of authorized but unissued common  stock  were
     reserved   for  issue  upon  conversion  of  the   Company's
     outstanding preferred stock.

     As of September 30, 2004 and 2003, 74,354,500 and 74,604,500
     shares,  respectively,  of authorized  but  unissued  common
     stock  were reserved for issue and exercise pursuant to  the
     Company's Employee Stock Option Plans.

     As  of September 30, 2004 and 2003, 10,000,000 and 6,666,666
     shares,  respectively,  of authorized  but  unissued  common
     stock  were reserved for distribution and exercise  pursuant
     to  a  stock  option  agreement with past  officers  of  the
     Company.



                              -13-

            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements
                           (continued)

     As  of  September  30, 2004 and 2003, 17,565,970  shares  of
     authorized but unissued common stock were reserved  for  the
     conversion  of outstanding convertible promissory  notes  in
     the  aggregate amount of $1,082,500 held by directors of the
     Company.

     As  of  September  30, 2004 and 2003, 66,427,651  shares  of
     authorized but unissued common stock were reserved  for  the
     conversion  of outstanding convertible promissory  notes  in
     the  aggregate amount of $3,414,212 held by directors of the
     Company.

     As  of September 30, 2004 and 2003, 8,100,000 and 10,000,000
     shares,  respectively,  of authorized  but  unissued  common
     stock  were  reserved  for  the  conversion  of  outstanding
     convertible  promissory  notes in the  aggregate  amount  of
     $810,00 and $1,000,000, respectively, issued as part of  the
     purchase of ProBio.

     As   of  September  30,  2004  and  2003,  205,261,073   and
     198,016,073 shares, respectively, of authorized but unissued
     common  stock were reserved for the exercise of  outstanding
     warrants.

     As  of  September 30, 2004 and 2003, 6,527,871 and 9,629,997
     shares,  respectively,  of authorized  but  unissued  common
     stock  were reserved for issuance to the Company's  contract
     manufacturer   pursuant  to  the  terms   of   the   current
     manufacturing contract.

(7)  Basic and diluted net loss per common share

     Basic  and  diluted net loss per common share for the  nine-
     month periods ended September 30, 2004 and 2003, is based on
     95,620,781 and 89,925,204 shares, respectively, of  weighted
     average   common  shares  outstanding.   For   purposes   of
     computing net loss per common share, the amount of net  loss
     has  been  increased by cumulative undeclared  dividends  in
     arrears  on  preferred stock in the amount  of  $10,019  and
     $12,290  for  the nine months ended September 30,  2004  and
     2003,  respectively.  No adjustment has been  made  for  any
     common  stock equivalents outstanding because their  effects
     would be antidilutive.

(8)  Income Taxes

     The  Company  uses  the liability method of  accounting  for
     income  taxes  as required by SFAS No. 109, "Accounting  for
     Income  Taxes".   Under  the liability method,  deferred-tax
     assets  and  liabilities are determined based on differences
     between the financial statement carrying amounts and the tax
     bases  of  existing assets and liabilities (i.e.,  temporary
     differences) and are measured at the enacted rates that will
     be  in  effect  when  these differences  reverse.   Deferred
     income  taxes  will  be recognized when it  is  deemed  more
     likely  than  not that the benefits of such deferred  income
     taxes will be realized; accordingly, all net deferred income
     taxes have been eliminated by a valuation allowance.

(9)  Uncertainty

     Igene has incurred net losses in each year of its existence,
     aggregating  approximately  $42,800,000  from  inception  to
     September  30,  2004  and  its  liabilities  and  redeemable
     preferred   stock  exceeded  its  assets  by   approximately
     $5,041,000 at that date.  These factors indicate that  Igene
     will  not be able to continue in existence unless it is able
     to   raise   additional   capital  and   attain   profitable
     operations.

     The  continuing  successful marketing  of  Igene's  product,
     AstaXin(R), has permitted  Igene the opportunity  to attract
     additional capital through it's venture with Tate and  Lyle.
     Igene began manufacturing and selling AstaXin(R) during 1998
     and  has  continued  to  do so to date  through  it's  joint
     venture  with  Tate,  attempting  to   increase  sales   and
     manufacturing levels.  Igene believes this technology to  be
     highly marketable.  Igene hopes to continue increasing sales
     of  AstaXin(R),  eventually  achieving  gross  profits  and,
     subsequently,    profitable   operations,    although    the
     achievement of these goals cannot be assured.

                              -14-

            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements
                           (continued)

(10) Stock Based Compensation

     The  Company accounts for its stock based compensation plans
     under  the  recognition and measurement  principles  of  APB
     opinion  No. 25, "Accounting for Stock Issued to Employees",
     and related interpretations.  No stock option based employee
     compensation cost is reflected in net income, as all options
     granted  under the plan had an exercise price equal  to  the
     market  value of the underlying common stock on the date  of
     grant.   The following table illustrates the effect  on  net
     income and earnings per share if the Company had applied the
     fair   value  recognition  provisions  of  SFAS   No.   123,
     "Accounting  for  Stock-Based Compensation"  and  disclosure
     provisions  of  SFAS  No. 148, "Accounting  for  Stock-Based
     Compensation-Transition  and  Disclosure",  to   stock-based
     employee  compensation for the three and  six  months  ended
     September 30:

<TABLE>
<CAPTION>
                                                       Three months ended            Nine months ended
                                                  ____________________________  ____________________________
                                                  September 30,  September 30,  September 30,  September 30,
                                                          2004           2003           2004           2003
                                                  _____________  _____________  _____________  _____________
<S>                                               <C>            <C>            <C>            <C>

     Net loss:
       As reported                                $ (1,089,668)  $   (632,103)  $ (3,526,018)  $ (1,524,460)
     Less pro forma stock-based employee
       compensation expense determined under
       fair value based method net of related
       tax effects                                  (1,317,790)      (159,578)    (1,648,237)      (423,756)
                                                  _____________  _____________  _____________  _____________

     Net loss                                     $ (2,407,458)  $   (791,681)  $ (5,174,255)  $ (1,948,216)
                                                  =============  =============  =============  =============

     Net loss per Share:
       Basic - as reported                        $      (0.01)  $      (0.01)  $      (0.04)  $      (0.02)
       Basic - pro forma                          $      (0.02)  $      (0.01)  $      (0.05)  $      (0.02)

       Diluted - as reported                      $      (0.01)  $      (0.01)  $      (0.04)  $      (0.02)
       Diluted - pro forma                        $      (0.02)  $      (0.01)  $      (0.05)  $      (0.02)

</TABLE>

(11) Recent Accounting Pronouncements

     In  April  2003,  the Financial Accounting  Standards  Board
     ("FASB") issued Statements of Financial Accounting Standards
     ("SFAS") No. 149, "Amendment of  Statement 133 on Derivative
     Instruments and Hedging Activities". SFAS No. 149 amends and
     clarifies  financial accounting and reporting for derivative
     instruments,   including   certain  derivative   instruments
     embedded  in  other  contracts, and for  hedging  activities
     under  SFAS  No. 133, "Accounting for Derivative Instruments
     and  Hedging  Activities".  This statement is effective  for
     contracts entered into or modified after June 30,  2003  and
     for  hedging relationships designated after June  30,  2003.
     There  was  no  material impact on the  Company's  financial
     condition  or  results of operations upon adoption  of  this
     statement.

     In  May  2003,  the  Financial  Accounting  Standards  Board
     ("FASB")  issued  SFAS  No.  150,  "Accounting  for  Certain
     Financial   Instruments   with   Characteristics   of   Both
     Liabilities and Equity".  SFAS No. 150 establishes standards
     for  how an issuer classifies and measures certain financial
     instruments  with  characteristics of both  liabilities  and
     equity.     It  requires  that an  issuer  classify  certain
     financial instruments as a liability, although the financial
     instrument  may  previously  have been classified as equity.
     This  statement  is   effective  for  financial  instruments
     entered  into or  modified  after May 31, 2003 and otherwise
     is  effective  at the beginning  of the first interim period
     beginning after June 15,  2003.  The effect of adopting this
     pronouncement required the reclassification of $2.04 million
     of  redeemable preferred stock as a liability as of December
     31, 2003.


                              -15-

            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements
                           (continued)


     In  January  2003,  the  FASB issued Interpretation  No.  46
     "Consolidation  of  Variable Interest Entities"  ("FIN  46")
     which  explains identification of variable interest entities
     and  the  assessment of whether to consolidate the entities.
     FIN  46  requires existing unconsolidated variable  interest
     entities  to  be consolidated by their primary beneficiaries
     if  the entities do not effectively disperse risk among  the
     involved  parties.  The provisions of FIN 46  are  effective
     for  all financial statements issued after January 1,  2003.
     The  Company  had  no significant variable interest  in  any
     entities  which  would require disclosure or  consolidation.
     The  Company's investment in the Joint Venture does not meet
     the criteria of a variable interest entity under Fin 46.

(12) Summary of Significant Activity of Joint Venture

     The  following  statement displays the significant  activity
     for  the Joint Venture for the three and nine months   ended
     September  30,  2004.   As shown, 50%  of  the  activity  is
     recorded  as part of Igene's Financial Statements as  income
     from investment in Joint Venture:

<TABLE>
<CAPTION>
                                               Three Months    Nine Months
                                                  Ended           Ended
                                              September 30,   September 30,
                                                      2004            2004
                                              _____________   _____________
<S>                                           <C>             <C>
     Net Sales                                $  1,662,000    $  3,668,000
     Less: manufacturing cost                   (2,394,000)     (6,382,000)
                                              _____________   _____________

     Gross Profit                                 (732,000)     (2,714,000)
     Less: selling, general and admin             (977,000)     (2,509,000)
                                              _____________   _____________

     Operating Loss                             (1,709,000)     (5,233,000)
     Interest Expense                              (75,000)        (85,000)
                                              _____________   _____________

     Loss before tax                          $ (1,784,000)   $ (5,308,000)
                                              =============   =============

     50% equity interest Igene                $   (892,000)   $ (2,654,000)
                                              =============   =============
</TABLE>

                              -16-

           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations


CAUTIONARY STATEMENTS FOR PURPOSES OF "SAFE HARBOR PROVISIONS" OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:

EXCEPT  FOR  HISTORICAL  FACTS, ALL  MATTERS  DISCUSSED  IN  THIS
REPORT, WHICH ARE FORWARD LOOKING, INVOLVE A HIGH DEGREE OF  RISK
AND  UNCERTAINTY.  CERTAIN STATEMENTS IN THIS  REPORT  SET  FORTH
MANAGEMENT'S   INTENTIONS,   PLANS,  BELIEFS,   EXPECTATIONS   OR
PREDICTIONS  OF THE FUTURE BASED ON CURRENT FACTS  AND  ANALYSES.
WHEN   WE   USE  THE  WORDS  "BELIEVE,"  "EXPECT,"  "ANTICIPATE,"
"ESTIMATE,"  "INTEND"  OR  SIMILAR  EXPRESSIONS,  WE  INTEND   TO
IDENTIFY FORWARD-LOOKING STATEMENTS.  YOU SHOULD NOT PLACE  UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS.  ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE INDICATED IN SUCH STATEMENT, DUE  TO
A  VARIETY OF FACTORS, RISKS AND UNCERTAINTIES.  POTENTIAL  RISKS
AND  UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED  TO,  COMPETITIVE
PRESSURES  FROM OTHER COMPANIES AND WITHIN THE BIOTECH  INDUSTRY,
ECONOMIC  CONDITIONS IN THE COMPANY'S PRIMARY  MARKETS,  EXCHANGE
RATE FLUCTUATIONS, REDUCED PRODUCT DEMAND, INCREASED COMPETITION,
INABILITY   TO  PRODUCE  REQUIRED  CAPACITY,  UNAVAILABILITY   OF
FINANCING,  GOVERNMENT  ACTION,  WEATHER  CONDITIONS  AND   OTHER
UNCERTAINTIES  IDENTIFIED IN THE COMPANY'S FILING WITH  THE  U.S.
SECURITIES AND EXCHANGE COMMISSION.

Overview of Financial Position
______________________________

     During  the nine-month periods ended September 30, 2004  and
2003,  in addition to the Joint Venture discussed in more  detail
below,  the  following actions affected the  Company's  financial
position.

     -  During  the nine months ended September 30, 2004, 194,596
        shares  of  redeemable  preferred  stock, with a recorded
        aggregate  value  of  $1,777,160,  were  converted   into
        389,192 shares of common stock. This portion included the
        8%  Cumulative  Convertible   Preferred  Stock,  Series B
        preferred securities and has relieved the Company of this
        amount from long-term debt.

     -  During the nine months ended September 30, 2004, $190,000
        dollars  of  the  $1,000,000  of  Convertible  Debentures
        issued  as  part  of  the  2001  ProBio  purchase,   were
        converted to common stock. These shares were converted at
        $.10 per share, for a total of 1,900,000  shares.   These
        shares  were  issued  and  the  notes  cancelled,   which
        relieved the Company of $190,000, of long-term debt.

     -  Increases  in  accounts  payables and accrued expenses of
        $591,641  were  a  source  of  cash.  This was reduced by
        increases  in  amounts  due  from  the  Joint  Venture of
        $313,934 and increases in accounts receivable of $42,637.

     -  The  carrying  value of  redeemable preferred  stock  was
        increased  and  paid-in  capital  available   to   common
        shareholders was decreased by $10,019 in 2004 and $12,290
        in   2003,  reflecting  cumulative  unpaid  dividends  on
        redeemable preferred stock.

     -  Proceeds  of  employee  stock options provided $19,750 in
        cash flows.

During  2004,  the  Joint  Venture has been  in  the  process  of
commissioning the production facility.  Through the  period  this
plant  has been in the start-up phase.  This has resulted in  the
reported losses for the quarter and year-to-date as equipment  is
brought on-line and initially utilized for production activity.



                              -17-

           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

     In  December 1988, as  part of an overall effort to  contain
costs  and  conserve working capital, Igene suspended payment  of
the quarterly dividend on its preferred stock.  Resumption of the
dividend  will  require significant improvements  in  cash  flow.
Unpaid  dividends cumulate for future payment or addition to  the
liquidation  preference  or redemption  value  of  the  preferred
stock.   As of September 30, 2004, total dividends in arrears  on
Igene's preferred stock total $189,532 ($10.24 per share) and are
included in the carrying value of the redeemable preferred stock.

Critical Accounting Policies
____________________________

     The  preparation  of our financial statements in  conformity
with  accounting  principles generally  accepted  in  the  United
States  requires  management to make judgments,  assumptions  and
estimates  that  affect  the amounts reported  in  our  financial
statements  and accompanying notes.  Actual results could  differ
materially  from  those  estimates.  The following  are  critical
accounting  policies  important to our  financial  condition  and
results   presented  in  the  financial  statements  and  require
management  to  make judgments and estimates that are  inherently
uncertain:

     The  Joint Venture's inventories are stated at the lower  of
cost  or  market.   Cost is determined using  a  weighted-average
approach,  which approximates the first-in first-out method.   If
the  cost of the inventories exceeds their expected market value,
provisions are recorded for the difference between the  cost  and
the  market  value.   Inventories consist of  currently  marketed
products.

     The Joint Venture recognizes revenue from product sales when
there is persuasive evidence that an arrangement exists, delivery
has   occurred,   the  price  is  fixed  and  determinable,   and
collectibility is reasonably assured.  Allowances are established
for   estimated  uncollectible  amounts,  product   returns   and
discounts.

     The  Joint Venture will enter into a lease of real  property
with  an affiliate of Tate & Lyle in Selby, England upon which  a
new  manufacturing facility will be constructed and  operated  by
the  Joint Venture.  The Joint Venture is accounted for under the
equity  method  of accounting as the Company has a 50%  ownership
interest.

Results of Operations
_____________________

Sales and other revenue

    As  part  of  the Joint Venture Agreement, all further  sales
are  recognized  through  the Joint  Venture.   Therefore,  Igene
recorded  no  sales  of AstaXin(R) during the nine  months  ended
September 30, 2004.   Sales of AstaXin(R) during  the  nine-month
period  ended  September 30, 2003 were $463,486.  Sales  activity
for  the  Joint  Venture  are reported below.   Sales  have  been
limited  in  the  past  quarters due to  insufficient  production
quantity.   As  of  June 30, 2003, Igene had sold  the  remaining
inventory  in the Company's possession to the Joint  Venture  per
the  Joint  Venture Agreement.  Management anticipates  that  the
Joint  Venture  with Tate & Lyle will provide a  more  dependable
product  flow.   However,  there  can  be  no  assurance  of  the
dependability of production, or that any increases in sales  will
occur, or that they will be material.

                              -18-

           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

Cost of sales and gross profit

    As  with  sales  revenue,  future cost  of  sales  and  gross
profits  will  be  recognized through the Joint  Venture.   Igene
reported  no  gross  profit  on  sales of AstaXin(R) for the nine
months  ended  September  30,  2004.   Gross  profit  on sales of
AstaXin(R) was  $18,540 for the nine month period ended September
30, 2003. Gross profit was  4% of sales for the nine months ended
September 30, 2003.    The  Company  attributes the fall in gross
profit to  a  combination  of  pricing pressure in the market and
inefficiencies  in  production.   Management expects the level of
gross profit to improve in the future as a percentage  of  sales.
Demand  is expected to increase as the Company increases customer
usage  and  market  share.  Management expects the level of gross
profit  to  improve  through  the  Joint  Venture,  with expected
increases  in  production  efficiency  received  from  the  Joint
Venture with Tate & Lyle offsetting pricing competition,  but can
provide no assurances as to  future increased production or gross
profit.

     Cost of sales for the nine month period ended September  30,
2003, was $444,946.  No cost of sales were recorded for the  nine
month period ended September 30, 2004.

Marketing and selling expenses

     For  the  quarters ended September 30, 2004 and 2003,  Igene
recorded  marketing and selling expense in the amount of  $45,536
and $57,265, respectively, a decrease of $11,729 or 20%.  For the
nine  months  ended September 30, 2004 and 2003,  Igene  recorded
marketing  and  selling  expense in the amount  of  $254,803  and
$277,120, respectively, a decrease of $22,317 or 8%.  As a result
of  the  disposition of it's ProBio subsidiary in February  2003,
Igene  had expected reduced marketing and selling costs  incurred
as part of the prior combination with ProBio, such as the removal
of  the  ProBio  marketing  and sales force.   In  addition,  the
reduction  of salable product currently available to  Igene  from
its  current  manufacturer was expected to cause a  corresponding
reduction  in  marketing and selling expense.  The marketing  and
selling  expense increased during the second quarter as a  result
of  recognizing the expense associated with the shares issued  to
Fermtech.  As Mr. Benjaminsen remained employed by Igene  through
2003,  1,000,000  of  the escrowed shares of  common  stock  were
delivered  to  Fermtech.   A marketing  and  selling  expense  of
$110,000 was recognized in the second quarter as a result of  the
issuance  of  the  shares of common stock.   If  Mr.  Benjaminsen
remains  employed by Igene through 2004, the remaining  1,000,000
escrowed  shares  will be released from escrow and  delivered  to
Fermtech.   As a result of the Joint Venture with Tate and  Lyle,
Igene  is  expecting  an  increase  in  salable  product  with  a
corresponding increase in marketing and sales costs once the  new
facility increases its level of production.  Additionally,  as  a
result  of  the  Joint Venture, these expenses are reimbursed  to
Igene. However, no assurances can be made in regards to increased
production  from  the  new  facility  nor  with  regard  to   the
corresponding increase in marketing and selling costs.

Research, development and pilot plant expenses

     For  the  quarter ended September 30, 2004 and  2003,  Igene
recorded research and development costs in the amount of $227,103
and  $198,195, respectively, an increase of $28,908 or 15%.   For
the nine months ended September 30, 2004 and 2003, Igene recorded
research  and  development costs in the amount  of  $631,035  and
$576,596,  respectively, an increase of  $54,439  or  9%.   These
costs  are  expected to remain relatively constant in support  of
increasing  the  efficiency of the manufacturing process  through
experimentation  in the Company's pilot plant, developing  higher
yielding  strains of yeast and making other improvements  in  the
Company's  AstaXin(R) technology.  Igene is hoping this will lead
to  an increase in salable product at a reduced cost to Igene and
the  Joint  Venture.   However  no assurances can be made in that
regard.   These  costs are currently funded through reimbursement
from the Joint Venture.


                              -19-

           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

Operating expenses

     General  and  administrative expenses for the quarter  ended
September   30,  2004  and  2003  were  $154,077   and   $172,804
respectively,  a  decrease  of  $18,727  or  11%.   General   and
administrative expenses for the nine months ended  September  30,
2004 and 2003 were $514,905 and $557,131 respectively, a decrease
of $42,226 or 7.6%.  These costs are expected to remain constant,
as  Igene  works  to keep overhead costs at a reduced  level  and
spend  funds on research and development efforts.  A  portion  of
these costs are funded by reimbursement through the Joint Venture
and  the  remainder  will  need to be funded  through  profitable
operations  or  through  contributions  from  directors;   though
neither of these can be assured.

Litigation expenses

     Previously reported litigation (original lawsuit filed  July
21,  1997,  U.S.  District Court, Baltimore, MD)  between  Archer
Daniels Midland, Inc. ("ADM") and Igene, involving allegations of
patent  infringement and counterclaims concerning  the  theft  of
trade secrets, was resolved on September 29, 2003.  Resolution of
the  dispute  between  ADM  and  Igene  did  not  result  in   an
unfavorable  outcome to Igene.  Igene will continue to  make  and
sell  its  product, AstaXin(R).  The Company incurred $40,580 for
the nine months ended September 30, 2004.  During the nine months
ended  September  30, 2004, 250,000 shares  were  issued  to  the
Company's attorney in connection with the settlement of  the  ADM
matter.   These shares were issued at an estimated value of  $.11
per share, aggregating $27,500.  These costs were expensed in the
second  quarter  as  part of the litigation  expense.   With  the
settlement  of  this matter, the related costs  are  expected  to
cease.

Interest expense

     Interest  expense for the quarters ended September 30,  2004
and  2003 was $191,472 and $233,539, respectively, a decrease  of
$42,067 or 18%.  For the nine months ended September 30, 2004 and
2003, interest expense was $594,389 and $616,671, respectively, a
decrease  of  $22,282  or  4%  The interest  expense  was  almost
entirely  composed  of  interest  on  the  Company's  long   term
financing from its directors and other stockholders, and interest
on  the Company's subordinated debenture in both periods.  It  is
expected  this  number  may decrease due to  the  conversions  by
holders of long term debt to equity.

Equity in earnings of unconsolidated subsidiary

     The  following  statement displays the significant  activity
for  the  Joint  Venture  for the three  and  nine  month   ended
September 30, 2004.  As shown, 50% of the activity is recorded as
part of Igene's Financial Statements as income from investment in
Joint Venture:

<TABLE>
<CAPTION>
                                               Three Months    Nine Months
                                                  Ended           Ended
                                              September 30,   September 30,
                                                      2004            2004
                                              _____________   _____________
<S>                                           <C>             <C>
     Net Sales                                $  1,662,000    $  3,668,000
     Less: manufacturing cost                   (2,394,000)     (6,382,000)
                                              _____________   _____________

     Gross Profit                                 (732,000)     (2,714,000)
     Less: selling, general and admin             (977,000)     (2,509,000)
                                              _____________   _____________

     Operating Loss                             (1,709,000)     (5,233,000)
     Interest Expense                              (75,000)        (85,000)
                                              _____________   _____________

     Loss before tax                          $ (1,784,000)   $ (5,308,000)
                                              =============   =============

     50% equity interest Igene                $   (892,000)   $ (2,654,000)
                                              =============   =============
</TABLE>

                              -20-

           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

     As  a result of the Joint Venture, the production, sales and
marketing  of  Astaxanthin now take place in  the  unconsolidated
Joint  Venture  subsidiary.  For the quarter ended September  30,
2004,  Igene's  portion of the Joint Venture loss  was  $892,000.
The  loss was a result of a 50% interest in the following:  Gross
profit  (loss)  for  the  quarter  was  $(732,000)  on  sales  of
$1,662,000,  less manufacturing cost of $2,394,000.  Selling  and
general  and administrative expenses for the period were $977,000
and  interest income (expense) was $(75,000).  The resulting loss
before  tax was $1,784,000.  For the quarter ended September  30,
2004, Igene's 50% portion of the Joint Venture loss was $892,000.

     During  2004,  the  Joint  Venture  is  in  the  process  of
commissioning the Selby Production facility.  Through the  period
this plant has been in the start-up phase.  This has resulted  in
the reported losses for the quarter and year to date as equipment
is   brought   on-line  and  initially  utilized  for  production
activity.

Disposition of ProBio Subsidiary

     As  reported  on Form 8-K filed on February  20,  2003,  the
Company,  in  an  effort to focus on and grow its core  business,
disposed  of all 10,000 of the issued and outstanding  shares  of
capital  stock  of its former subsidiary, ProBio  Nutraceuticals,
AS,  a Norwegian corporation.  Fermtech AS, a joint stock company
incorporated  in the Kingdom of Norway and owned equally  by  our
then  chief  executive officer, Stein Ulve  and  our  then  chief
marketing  officer,  Per  Benjaminsen, purchased  the  shares  of
ProBio.   Effective December 31, 2002, Mr. Ulve resigned  as  CEO
and  director of Igene and Mr. Benjaminsen ceased acting  as  our
chief marketing officer, though Mr. Benjaminsen has maintained  a
position with Igene.

     The  amount  of consideration paid for ProBio was determined
through  arms-length  negotiations between Igene  management,  on
behalf  of  Igene,  and  Mr. Ulve, on behalf  of  Fermtech.   The
principles followed in determining the amount paid for the ProBio
shares  involved  consideration  of  ProBio's  cash  flow,   cash
position, revenue and revenue prospects.

     The  equipment  and  other  physical  property  disposed  of
belonging to ProBio included inventory, personal computers, a web
site  and  trademark, other office equipment and  furniture,  and
accounts   receivables   and   accounts   payables   related   to
nutraceuticals.   For the nine months ended September  30,  2002,
the  net operating loss of the division being sold as ProBio  was
$340,632,  on  sales  of  $1,555,014, and  is  reflected  on  the
September  30,  2002 income statement of Igene  as  a  loss  from
discontinued operations.

Gain on disposition

     Igene  sold ProBio to Fermtech AS in exchange for  aggregate
consideration  valued  at approximately $343,000,  consisting  of
7,000,000  shares of Igene common stock that was owned by  ProBio
(including 2,000,000 shares that were placed into escrow and  may
be  reissued  to  Fermtech as described below),  valued  for  the
purposes  of  the acquisition at $.03 per share, plus forgiveness
of  approximately $168,000 of debt that Igene owed to  ProBio  at
the  time  of  purchase  in  2001. As  Mr.  Benjaminsen  remained
employed by Igene through 2003, 1,000,000 of the escrowed  shares
of  common  stock were delivered to Fermtech. These  shares  were
expensed in the second quarter of 2004, as a marketing expense of
$110,000.   If Mr. Benjaminsen remains employed by Igene  through
2004,  the  remaining 1,000,000 escrowed shares will be  released
from  escrow and delivered to Fermtech.  Gain on disposal  during
the first quarter of 2003 was $237,427.  This gain was a one-time
occurrence  as  a  result of the disposition of  the  assets  and
liabilities associated with ProBio.



                              -21-

           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

Net loss and basic and diluted net loss per common share

     As a  result  of  the  foregoing, the Company  reported  net
losses of $1,089,668 and $632,103, respectively, for the quarters
ended  September 30, 2004 and 2003, an increase in  the  loss  of
$457,565  or 72%.  This represents a loss of $.01 per  basic  and
diluted common share in the quarters ended September 30, 2004 and
2003.   The  weighted average number of shares  of  common  stock
outstanding of 97,103,270 and 90,991,535, for the quarters  ended
September 30, 2004 and 2003, respectively, increased by 6,111,735
shares.  This  resulted from the weighted average adjustments  of
the  following  transactions: the issuance  of  1,905,000  shares
issued  in  conversion of debentures, 389,192  shares  of  common
stock  in conversion of preferred stock, 3,102,323 shares  issued
to  the  manufacturer as part of the agreement, 1,000,000  shares
issued  to  Fermtech as part of the ProBio disposition agreement,
and  450,000  shares  issued as part  of  employee  stock  option
exercises,  and 250,000 shares issued as a bonus to  the  Company
attorney in the ADM matter.

Liquidity and Capital Resources

     Historically, Igene  has  been funded  primarily  by  equity
contributions  and loans from stockholders. As of  September  30,
2004,  Igene had working capital of $734,643, and cash  and  cash
equivalents  of  $12,087.   Currently Igene  is  also  funded  by
research and development reimbursements from the Joint Venture.

     Cash used  by  operating activities  during  the  nine-month
period ended September 30, 2004 and 2003 amounted to $69,115  and
$228,056, respectively, a decrease in cash used of $158,941.

     Cash of $7,194 was provided by investing activities on asset
sales  for the nine months ended September 30, 2003, and no  cash
was provided for the nine-month period ended September 30, 2004.

     Cash was used by financing activities in repayment of  loans
in  the  amount  of  $250,000  for the  nine-month  period  ended
September  30,  2003,  as  opposed to  the  $18,127  provided  by
financing  activities for the nine-month period  ended  September
30, 2004. Financing activities in this period consisted primarily
of employee stock option plan purchases.

     Over the  next twelve months, Igene believes  it  will  need
additional  working capital. Igene hopes to achieve profits  from
sales of AstaXin(R) through the Joint Venture.  Funding  is  also
expected  to be received from the new venture with Tate  &  Lyle.
However,  there  can be no assurance that projected  profits,  if
any, from sales, or additional funding from the Joint Venture, if
any,   will  be  sufficient  for  Igene  to  fund  its  continued
operations.

     The  Company  does  not believe that  inflation  has  had  a
significant  impact  on  its  operations  during  the  nine-month
periods ended September 30, 2004 and 2003.

Item 3.  Controls and Procedures

As  of the end of the most recently completed fiscal quarter, the
Company's  management, with the participation  of  the  principal
executive  officer and principal financial officer, has evaluated
the  effectiveness  of  the  Company's  disclosure  controls  and
procedures,  and  has  concluded that  the  Company's  disclosure
controls  and procedures are effective to ensure that information
required  to be disclosed by the Company in the reports  that  it
files  or  submits under the Securities Exchange Act of 1934,  as
amended,   is  accumulated  and  communicated  to  the  Company's
management,   including  its  principal  executive  officer   and
principal  financial  officer, as  appropriate  to  allow  timely
decisions  regarding  required disclosure and  are  effective  to
ensure  that such information is recorded, processed,  summarized
and reported within the time periods specified in the SEC's rules
and forms.

There  were no changes in Igene's internal control over financial
reporting that occurred during the last fiscal quarter  that  has
materially  affected,  or  is  reasonably  likely  to  materially
affect, the Company's internal control over financial reporting.

                              -22-

                    IGENE Biotechnology, Inc.
                             PART II
                        OTHER INFORMATION

Item 2.   Changes  in   Securities  and  Small  Business   Issuer
          Purchases of Equity Securities.

     During  the  nine months ended September 30,  2004,  250,000
shares  were issued to the Company's attorney in connection  with
the settlement of the ADM matter.  These shares were issued at an
estimated  value of $.11 per share, aggregating to $27,500.   The
cost  was expensed in the second quarter as part of the ADM legal
expense.

     In  February,  2003,  Igene sold its  subsidiary  ProBio  to
Fermtech  AS  in exchange for aggregate consideration  valued  at
approximately $343,000, consisting of 7,000,000 shares  of  Igene
common  stock (including 2,000,000 shares that were  placed  into
escrow  and  may  be  reissued to Fermtech as  described  below),
valued  for  the purposes of the acquisition at $.03  per  share,
plus  forgiveness of approximately $168,000 of  debt  that  Igene
owed  to  ProBio at the time of purchase in 2001.   The  escrowed
2,000,000  shares were to be earned by Fermtech  based  upon  Mr.
Benjamin's  continued  employment  with  the  Company.   As   Mr.
Benjaminsen remained employed by Igene through 2003, 1,000,000 of
the  escrowed shares of common stock were delivered to  Fermtech.
These  shares were expensed in the second quarter of 2004,  as  a
marketing  expense  of  $110,000.   If  Mr.  Benjaminsen  remains
employed  by Igene through 2004, the remaining 1,000,000 escrowed
shares will be released from escrow and delivered to Fermtech.

Limitation on Payment of Dividends
__________________________________

     Dividends  on Common Stock are currently prohibited  because
of  the  preferential rights of holders of Preferred Stock.   The
Company  has  paid no cash dividends on its Common Stock  in  the
past  and does not intend to declare or pay any dividends on  its
Common stock in the foreseeable future.

Item 3.   Defaults Upon Senior Securities.

     In  December 1988, as part of an overall effort  to  contain
costs and conserve working capital, the Company suspended payment
of  the quarterly dividend on its preferred stock.  Resumption of
the  dividend will require significant improvements in cash flow.
Unpaid  dividends cumulate for future payment or addition to  the
liquidation  preference  or redemption  value  of  the  preferred
stock.   As of September 30, 2004, total dividends in arrears  on
the  Company's preferred stock total $189,532 ($10.24 per  share)
and  are  included  in  the  carrying  value  of  the  redeemable
preferred stock.

Item 4.   Submission of Matters to a Vote of Security Holders.

     At  the annual meeting of stockholders held on June 8, 2004,
the  following matter was submitted for a stockholders' vote  and
was  approved by the requisite number of votes: the  election  of
five  directors  of  the  Company. The  directors  nominees  were
Stephen F. Hiu, Thomas L. Kempner, Michael G. Kimelman, Sidney R.
Knafel, and Patrick F. Monahan.

     Results of the voting were as follows:

<TABLE>
<CAPTION>

                                                                                    Broker
                                       Votes          Against or     Votes          Non-
                                       For            Withheld       Abstained      Votes
                                       __________     __________     __________     __________
<S>                                    <C>            <C>            <C>            <C>
     (1)  Election of Directors
            Stephen F. Hiu             73,185,546     98,950         ---            ---
            Thomas L. Kempner          73,185,546     98,950         ---            ---
            Michael G. Kimelman        73,185,546     98,950         ---            ---
            Sidney R. Knafel           73,185,546     98,950         ---            ---
            Patrick F. Monahan         73,185,546     98,950         ---            ---

</TABLE>
                              -23-

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

(a)  Exhibits

     Exhibit 3.1 - Articles of Incorporation of the Registrant as
             amended  to  date,  constituting  Exhibit   3.1   to
             Registration  Statement No. 333-41581 on  Form  SB-2
             are incorporated herein by reference.

     Exhibit 3.2 - Bylaws of the Registrant, constituting Exhibit
             3.2  to the Registrant's Registration Statement  No.
             33-5441 on Form S-1, are hereby incorporated  herein
             by reference.

     Exhibit 31(a) - Certification of Principal Executive Officer
             pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)

     Exhibit 31(b) - Certification of Principal Financial Officer
             pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)

     Exhibit 32(a) - Certification  of  Chief  Executive  Officer
             pursuant to 18 U.S.C. SECTION 1350.

     Exhibit 32(b) - Certification  of  Chief  Financial  Officer
             pursuant to 18 U.S.C. SECTION 1350.


                              -24-

                           SIGNATURES


In  accordance  with  the  requirements  of the Exchange Act, the
registrant  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



                              IGENE Biotechnology, Inc.
                              ___________________________________
                              (Registrant)




Date   November 11, 2004     By  /s/STEPHEN F. HIU
                                 ________________________________
                                    STEPHEN F. HIU
                                    President




Date   November 11, 2004     By  /s/EDWARD J. WEISBERGER
                                 ________________________________
                                    EDWARD J. WEISBERGER
                                    Chief Financial Officer

                              -25-

                          EXHIBIT INDEX


     Exhibit 3.1 - Articles of Incorporation of the Registrant as
             amended  to  date,  constituting  Exhibit   3.1   to
             Registration  Statement No. 333-41581 on  Form  SB-2
             are incorporated herein by reference.

     Exhibit 3.2 - Bylaws of the Registrant, constituting Exhibit
             3.2  to the Registrant's Registration Statement  No.
             33-5441 on Form S-1, are hereby incorporated  herein
             by reference.

     Exhibit 31(a) - Certification of Principal Executive Officer
             pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)

     Exhibit 31(b) - Certification of Principal Financial Officer
             pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)

     Exhibit 32(a) - Certification  of  Chief  Executive  Officer
             pursuant to 18 U.S.C. SECTION 1350.

     Exhibit 32(b  - Certification  of  Chief  Financial  Officer
             pursuant to 18 U.S.C. SECTION 1350.


                              -26-