SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 10549
FORM 10-QSB





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

For the quarterly period ended September 30, 1998

[    ]    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:  21,814,173
shares as of 
November 11, 1998.

Transitional Small Business Disclosure Format (check one):

Yes                      No        x    

FORM 10-QSB
IGENE Biotechnology, Inc.


INDEX



PART I    -    FINANCIAL INFORMATION
                                                             
Page

     Balance Sheets           5-6

     Income Statements        7

     Statements of Stockholder's Deficit          8-9

     Statements of Cash Flows      10-11

     Notes to Financial Statements      12-14

     Management's Discussion and Analysis of Financial
     Condition and Results of Operations          15-19

PART II   -    OTHER INFORMATION        20

SIGNATURES               23

IGENE BIOTECHNOLOGY, INC.

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 193

PART I

FINANCIAL INFORMATION

Item 1.  Financial Statements.
<TABLE>

IGENE Biotechnology, Inc.
Balance Sheets

<CAPTION>
          September 30,  September 30,  December 31,
                  1998           1997           1997
          (Unaudited)    (Unaudited)
<S>       <C>  <C>  <C>
ASSETS
CURRENT ASSETS
     Cash and cash equivalents     $   823,135    $     304,581  $      24,548
     Accounts receivable 10,485    14,494    14,494
     Inventory 595,955   ---  ---
     Supplies  14,145    ---  4,710
     Prepaid expenses    359,713   947  ---
     Deferred costs ---  92,731    ---
     Due from stockholders    ---  97,094    153,594
     Equipment held for resale     ---  512,848   ---
     Loan receivable, current portion            268,544                    ---        
249,217

          TOTAL CURRENT ASSETS           2,071,977         1,022,695         446,563


OTHER ASSETS
     Property and equipment, net   335,585   53,045    297,006
     Loan receivable, net of current portion 46,889    ---  250,783
     Debt issue costs    203,773   ---  ---
     Security deposits             10,600            10,600          10,600

          TOTAL ASSETS   $   2,668,824  $ 1,086,340    $  1,004,952


</TABLE>

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

<PAGE>


<TABLE>
IGENE Biotechnology, Inc.
Balance Sheets
(continued)
<CAPTION>
          September 30,  September 30,  December 31,
                       1998                1997               
1997
          (Unaudited)    (Unaudited)
<S>       <C>  <C>  <C>
LIABILITIES, REDEEMABLE PREFERED STOCK
  AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
     Accounts payable and accrued expenses   $      259,461 $   
462,669   $     
515,137
     Debenture interest payable    90,000    90,000    45,000
     Promissory notes payable                  ---       
2,332,500       2,000,000
          TOTAL CURRENT LIABILITIES             349,461           
 2,885,169       
2,560,137
LONG-TERM DEBT
     Promissory notes payable 6,082,500 ---  1,082,500
     Variable rate subordinated debenture     1,500,000    
1,500,000 1,500,000
     Accrued interest            243,300                     ---  
              ---
          TOTAL LIABILITIES        8,175,261    4,385,168      
5,142,637

COMMITMENTS AND CONTINGENCIES

REDEEMABLE PREFERRED STOCK
     Carrying amount of redeemable preferred 
          stock, 8% cumulative, convertible,
          voting, series A, $.01 par value per
          share. Redemption value $14.40, $13.76,
          and $13.92, respectively. Authorized
          1,312,500 shares, issued 29,592, 35,842,
          and 29,592 shares, respectively            426,125      
      493,186             
411,920

STOCKHOLDERS' DEFICIT
     Preferred stock, $.01 par value per share, 
          8% cumulative, convertible, voting,
          series A. Authorized, issued and
          outstanding 187,500 shares as of
          September 30, 1997 and 
          December 31, 1997.  Aggregate 
          involuntary liquidation value of 
          $2,580,000, and $2,610,000, respectively.    ---  1,875 
   1,875
     Common stock, $.01 par value per share.
          Authorized, 250,000,000, 35,000,000 and 
          35,000,000 shares; issued and 
          outstanding 21,814,173, 19,143,973, 
          and 19,206,473 shares, respectively.    218,142  
191,440   192,065
     Additional paid-in capital    18,653,173     18,062,529    
18,233,670
     Deficit   (24,803,877    )        (22,047,859     )       
(22,977,215)  
          TOTAL STOCKHOLDERS' DEFICIT     (5,932,562   )         
(3,792,015    )          
(4,549,605)

          TOTAL LIABILITIES AND 
            STOCKHOLDERS'  DEFICIT $  2,668,824   $  1,086,340  
$   1,004,952
</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>

<TABLE>
IGENE Biotechnology, Inc.
Income Statements
(Unaudited)


<CAPTION>
                                                                  
                    Three 
months 
ended                         Nine months ended       
               
               September 30,  September 30,  September 30, 
September 30,
                         1998         1997             1998       
  1997
<S>       <C>  <C>  <C>  <C>
Sales          $               --- $             ---   $  
203,675    $     14,394
Cost of sales        34,513               ---          555,607    
     10,900      

     Gross profit (loss)      (34,513   )                       
---     (351,932)            
3,494

Selling, General & Administrative expenses:
     Manufacturing overhead   24,644    ---  108,601   ---
     Marketing and selling    207  2,681     896  7,216
     Research, development and pilot plant   138,321   77,637   
362,006   255,681
     General and administrative    96,821    94,305    413,369  
250,812
     Litigation expenses        38,318         280,000            
  222,016        
280,000             

          Total selling, general and
            administrative expenses          298,311        
454,623    1,106,888        
793,709  

          Operating loss   (332,824)        (454,623) 
(1,458,820)       (790,215)

Other income (expense)   
     Interest income     22,173    ---  59,907    ---
     Income from renegotiation of liabilities     ---       --- 
51,204
     Loss on disposal of equipment (273 )                       
---  (3,553    )                       
---
     Interest expense      (175,268     )               (86,996 
)             (424,196)     
(219,715)

          Net loss  $ (486,191     )          $ (541,619)         
$ (1,826,662)     $ (958,726)

          Net loss per common share     $       (0.02  )         
$       (0.03 )       
$         (0.09)         
$       (0.05)


</TABLE>

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

<PAGE

<TABLE>
IGENE Biotechnology, Inc.
Statements of Stockholders' Deficit
(Unaudited)


<CAPTION>
                                                                  
    Redeemable Preferred 
Stock                     
Preferred Stock
                                                                  
               
(shares/amount)                             
(shares/amount)     
<S>       <C>  <C>  <C>  <C>
Balance at December 31, 1996  35,842    $ 475,982 187,500   $   
1,875

Cumulative undeclared dividends
     on redeemable preferred stock ---  17,204    ---  ---

Issuance of common stock
     through exercise of
     employee stock options   ---  ---  ---  ---

Issuance of common stock in lieu
     of cash in payment of interest
     on subordinated debenture     ---  ---  ---  ---

Net loss for nine months 
     ended September 30, 1997            ---                  --- 
              ---            
--
-

Balance at September 30, 1997     35,842     $ 493,186   187,500
$    1,875

Balance at December 31, 1997  29,592    $ 411,920 187,500   $   
1,875

Cumulative undeclared dividends
     on redeemable preferred stock ---  14,205    ---  ---

Conversion of preferred stock   
     to common stock     ---  ---  (187,500) (1,875)

Issuance of common stock in lieu of
     cash in payment of interest on
     subordinated debenture   ---  ---  ---  ---

Issuance of common stock in lieu of
     cash in payment of legal retainers
     and fees  ---  ---  ---  ---

Exercise of warrants     ---  ---  ---  ---

Capital contribution - forgiveness of
     interest on promissory notes  ---  ---  ---  ---

Net loss for nine months 
     ended September 30, 1998            ---            ---       
    ---            
--
-

Balance at September 30, 1998     29,592     $426,125            
--- $         ---

</TABLE>
The accompanying notes are an integral part of the financial
statements.
<PAGE>
<TABLE>
IGENE Biotechnology, Inc.
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 December 31, 1996  18,631,139     $ 186,311
$17,971,220     $(21,089,133  )       $ 
(2,929,727)

Cumulative undeclared dividends
     on redeemable preferred stock ---  ---  (17,204   )          
             ---                  
(17,204)

Issuance of common stock
     through exercise of
     employee stock options   472,834   4,729     18,913    --- 
23,642

Issuance of common stock in lieu
     of cash in payment of interest
     on subordinated debenture     40,000    400  89,600    --- 
90,000

Net loss for nine months ended
     September 30, 1997                ---              ---       
         ---        
(958,726
     )             (958,726)

Balance at September 30, 1997 19,143,973     $191,440 
$18,062,529    $(22,047,859   )      $  
(3,792,015)

Balance at December 31, 1997  19,206,473     $192,065 
$18,233,670            $(22,977,215)          
$  (4,549,605)

Cumulative undeclared dividends
     on redeemable preferred stock ---  ---              (14,205) 
   ---                   
(14,205)

Conversion of preferred stock 
     to common stock     375,000   3,750     (1,875)   ---  ---

Issuance of common stock in lieu of
     cash in payment of interest on
     subordinated debenture   40,000    400  89,600    --- 
90,000

Issuance of common stock in lieu 
     of cash in payment of 
legal retainers and fees 2,190,000 21,900    140,100   --- 
162,000

Exercise of warrants     2,700     27   243  ---  270

Capital contribution - forgiveness of
     interest on promissory notes  ---  ---  205,640   --- 
205,640

Net loss for nine months ended
     September 30, 1998                 ---              ---      
             ---
     (1,826,662     )        
(1,826,662)

Balance at September 30, 1998  $21,814,173   $ 218,142
$18,653,173    $(24,803,877   )      
$(5,932,562)

</TABLE>
The accompanying notes are an integral part of the financial
statements.

<PAGE>

<TABLE>
IGENE Biotechnology, Inc.
Statements of Cash Flows
(Unaudited)
<CAPTION>
                                                                  
                                                    
Nine months ended
                    September 30,  September 30,
                                  1998                  1997     

<S>                 <C>  <C>
Cash flows from operating activities:
     Net loss  $ (1,826,662   )                   $      
(958,726)
     Adjustments to reconcile net loss to net cash provided
          By operating activities:
          Depreciation   32,578    5,502
          Amortization   7,939     ---
          Loss on disposal of equipment 3,553     ---
          Interest on debenture paid in shares of common stock  
90,000    90,000
          Decrease (increase) in:
               Accounts receivable 4,009                          
         (4,498)
               Inventory                            (595,955    
)                                      
---
               Prepaid expenses and other current assets   
(234,148  )                                 
9,831 
          Increase (decrease) in:
               Accounts payable and accrued expenses           
265,264               
206,869

               Net cash used in operating activities      
(2,253,422 )                           
(651,022)

Cash flows from investing activities:
     Capital expenditures     (86,192   )                         
   (39,075)
     Purchase of equipment held for resale   ---                  
            (512,848)
     Other deferred costs     ---                                
(92,731)
     Repayment of principal of loan receivable    184,567   ---
     Proceeds from disposal of equipment                  11,482  
                  ---

               Net cash provided by (used in) investing
activities              109,857                            
   
(644,654)

Cash flows from financing activities:
     Repayments from (advances to) stockholders   28,594          
                        
(80,224)
     Proceeds from issuance of common stock  270  23,642
     Issuance of promissory notes  ---  1,615,500
     Issuance of demand notes 950,000   ---
     Proceeds from rights offering 2,438,288 ---
     Repayment of demand notes           (475,000 )               
                      --
-

               Net cash provided by financing activities         
2,942,152             1,558,918

               Net increase (decrease) in cash and cash
equivalents   798,587   263,242

               Cash and cash equivalents at beginning of period   
          24,548              
41,339

                    $        823,135    $        304,581

Supplementary disclosure and cash flow information:
     Cash paid during the period for interest     $         
14,569   ---
     Cash paid during the period for income taxes ---  ---

</TABLE>

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

<PAGE>
IGENE Biotechnology, Inc.
Statements of Cash Flows
(Unaudited - Continued)

Noncash investing and financing activities:

During the nine months ended September 30, 1998 and 1997, the
Company recorded
dividends in 
arrears on 8% redeemable preferred stock at $.48 per share
aggregating $14,205
and $17,204, 
respectively, which has been removed from paid-in capital and
included in the
carrying value of 
the redeemable preferred stock.

During the nine months ended September 30, 1998, the Company
issued notes
payable of $5,000,000 
through a rights offering.  Stockholders purchased rights, using
$1,875,000 in
promissory notes 
and $475,000 of demand notes due to the Company, resulting in net
cash proceeds
of $2,438,288 
which is after fees associated with the offering of $211,712. 
Theses related
fees have been 
capitalized as Debt issue costs and will be amortized over the
term of the
debt.  As part of 
this transaction, the Company also recorded forgiveness of
interest on certain
promissory notes 
of $205,640 as additional paid-in capital.

During the nine months ended September 30, 1998, the Company
cancelled certain
promissory notes 
payable to, and related amounts due from a stockholder
aggregating $125,000 by
agreement with 
the stockholder.

During the nine months ended September 30, 1998 and 1997 the
Company issued
40,000 shares of 
common stock in each period in payment of interest on the
variable rate
subordinated debenture.  
If paid in cash, the interest would have been payable at 12% in
the amount of
$90,000 in each 
period.  Shares may be issued in lieu of cash under the terms of
the debenture
agreement at the 
higher of $2.25 per share or market price per share.  The stock
was issued and
related interest 
was paid at $2.25 per share, or $90,000, in each period.

During the nine months ended September 30, 1998 the Company
issued stock in
lieu of cash 
payments for legal services rendered and legal retainers
aggregating $162,000,
based on the 
market price per share of common stock on the dates of the
related agreements. 
The Company 
recorded the issue, on May 20, 1998, of 190,000 shares of common
stock at
$0.142 per share, or 
$27,000, per an agreement effective August 27, 1997, by reducing
trade accounts
payable to the 
Company's patent counsel by $27,000.  The Company also recorded
the issue, on
April 29, 1998 
and June 26,1998 of a total of 2,000,000 shares of common stock
at $.0675 per
share, or 
$135,000, per agreements effective February 20, 1998, by
recording $135,000 in
prepaid 
expenses, representing legal retainers on deposit with litigation
counsel.

During the nine months ended September 30, 1998, the holder of
187,500 shares
of preferred 
stock (par value of $.01 per share or $1,875) as to which
mandatory redemption
rights had been 
waived, converted the preferred stock into 375,000 shares of
common stock (par
value of $0.01 
per share or $3,750).  Paid-in capital has been reduced by
$1,875.

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

<PAGE>

IGENE Biotechnology, Inc.
Notes to Financial Statements


(1) Unaudited financial statements

The financial statements presented herein as of September 30,
1998 and 1997 and
for the 
three month and nine month periods then ended 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 and
results of
operation and 
cash flows.  Such financial statements do not include all of the
information
and 
footnote disclosures normally included in audited financial
statements prepared
in 
accordance with generally accepted accounting principles.

(2) Inventories

Inventory, stated at lower of cost, on a first-in first-out
basis, or market
value, 
represents AstaXinr manufactured and held for sale, as follows:

     Raw materials            $               ---
     Work-in-process                      ---
     Finished goods                 595,955

          Total inventory          $    595,955

Inventory has been reduced by $345,961 during the nine months
ended September
30, 1998 
to reflect the excess of cost over market value.

(3) Stockholders' Equity (Deficit)

At September 30, 1998 and 1997, 59,184 and 446,684 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, 1998 approximately 21,410,000 shares of
authorized but
unissued 
common stock were reserved for exercise pursuant to the Company's
1997 and 1986
Stock 
Option Plans.

As of September 30, 1998 and 1997, 280,000 and 360,000 shares,
respectively, of 
authorized but unissued common stock were reserved for issuance
for payment of
interest 
on the variable rate subordinated debenture and 375,000 shares of
authorized
but 
unissued common stock were reserved for issuance upon conversion
of the
variable rate 
subordinated debenture.

As of September 30, 1998 and 1997, 13,174,478 and 25,674,478
shares,
respectively, of 
authorized but unissued common stock were reserved for the
conversion of
outstanding 
convertible promissory notes in the aggregate amount of
$1,082,000 and
$2,332,500, 
respectively, held by directors of the Company.

As of September 30, 1998 and 1997, 100,964,878 and 29,964,878
shares,
respectively, of 
authorized but unissued common stock were reserved for the
exercise of
outstanding 
warrants.


<PAGE>

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

(3) Stockholders' Equity (Deficit) (continued)

On February 13, 1998, the Company distributed to holders of
common shares and 
equivalents, transferable rights to purchase an aggregate of
$5,000,000 of 8%
Notes due 
March 31, 2003.  Subscribing shareholders also received warrants
to purchase
common 
stock at $0.10 per share aggregating 50,000,000 shares.  The
offering was fully 
subscribed and expired on March 31, 1998.  The Company issued
$5,000,000 in
notes which 
shareholders purchased using $1,875,000 in outstanding promissory
notes and
$475,000 in 
outstanding demand notes. The Company was charged a total of
$211,712 in fees
relating 
to the offering, resulting in net proceeds of $2,438,288.  The
Company has
capitalized 
$211,712 in fees and costs associated with this debt issue, which
will be
amortized over 
5 years, the term of the notes payable.

On April 6, 1998, the Company extended 4,290,400 in outstanding
warrants to
purchase 
common stock, which were to expire on April 3, 1998 to April 3,
2008.

On April 6, 1998, the Company issued 9,500,000 warrants to
purchase common
stock, at 
$0.10 per share, to certain directors who were the lenders of
$950,000 in
demand notes 
issued in 1998.  The Company also issued 4,000,000 warrants to
purchased common
stock at 
$0.10 per share, expiring 5 years from issue, to Mr. Michael
Kimelman, the
chairman of 
the board of directors.  

The Company agreed, on February 20, 1998, to issue 2,000,000
shares of common
stock to 
its legal counsel, in payment of retainers for on-going
litigation relating to
ADM, as 
described in note (5).  The stock was issued in May and June of
1998 at $.0675
per 
share, or $135,000.

In May of 1998 the Company also issued 190,000 shares of common
stock to its
patent 
counsel in payment of outstanding fees, pursuant to an agreement
dated August
27, 1997.  
The stock was issued in May of 1998 at $0.142 per share, the
market price as of
the date 
of the agreement, for an aggregate amount of $27,000.

Effective April 16, 1998, the Company issued 3,350,000 employee
stock options
to its 
employees at $0.10 per of share of common stock, expiring on the
sooner of ten
years 
from date of issue or ten days following cessation of employment.

Effective May 1, 1998, the Company issued 1,500,000 stock options
to its CEO,
Ramin 
Abrishamian, expiring two years from the date of issue. 
Effective May 1, 1998,
Mr. 
Abrishamian resigned his position as CEO of the Company.  Mr.
Abrishamian
declined to 
stand for re-election at the 1998 annual meeting and therefore
ceased to be a
director 
of the Company as of September 29, 1998.

(4) Net loss per common share 

Net loss per common share for the nine-month periods ended
September 30, 1998
and 1997 
is based on 20,273,882 and 18,976,637, 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 dividends declared and cumulative
undeclared
dividends in 
arrears on preferred stock.

<PAGE>

IGENE Biotechnology, Inc.
Notes to Financial Statements
(continued)
(5) Contingencies

In May 1995, the Company signed a non-exclusive licensing
agreement with Archer
Daniels 
Midland Company (ADM) for the manufacture and sale of AstaXinr. 
On February
29, 1996 
ADM informed the Company that it had decided not to utilize the
technology and
requested 
that IGENE return approximately $250,000 in payments made to
IGENE under the
licensing 
agreement.  IGENE maintains that ADM is not entitled to the
return of payments
and that 
additional monies are owed to IGENE.  On July 21, 1997, ADM filed
suit against
IGENE in 
the U.S. District Court in Greenbelt, Maryland alleging patent
infringement and 
requesting a preliminary injunction against IGENE to cease the
use of its
astaxanthin 
manufacturing process.  ADM's request for injunctive relief was
denied.  On
August 4, 
1997, IGENE filed a $300,450,000 contract and trade secrets
lawsuit in U.S.
District 
Court in Baltimore, Maryland against ADM, contending that ADM
stole IGENE's
formula for 
making its natural astaxanthin pigment, AstaXinr.  IGENE is also
claiming
breach of 
contract, in regards to the licensing agreement entered into by
IGENE and ADM
in 1995.  
IGENE contends that it complied with all material terms of this
agreement,
including 
concentration levels of its pigment.  IGENE's claim was
re-asserted as a
counter-claim 
against ADM and the two cases were joined in the District Court
in Baltimore,
Maryland 
on August 24, 1997.  On September 10, 1997 the District Court
denied ADM's
request for a 
preliminary injunction on the basis that ADM could not
demonstrate a likelihood
of 
success on the merits of its case.  Management believes ADM's
claims to be
meritless.  
Management's basis for this is that ADM claims that the levels of
pigment IGENE
said it 
could produce did not meet contract levels.  Management has
copies of ADM's
internal 
memos showing that the levels of pigment meet the contract
specifications.  It
is 
Management's contention that it is not probable that this dispute
will result
in an 
unfavorable outcome.  Accordingly, no liability has been
reflected in the
accompanying 
balance sheet.  The Company had expenses of $658,185 in 1997, and
$222,016 in
the nine 
months ended September 30, 1998 relating to this litigation,
which is on-going. 
The 
Company presently estimates that the cost of this litigation will
be
approximately 
$1,000,000 per year.  At the present time, a range of reasonably
possible loss
cannot be 
estimated.

(6) Uncertainty

The Company has incurred net losses in each year of its
existence, aggregating 
approximately $24,800,000 from inception to September 30, 1998
and its
liabilities and 
redeemable preferred stock exceeded its assets by approximately
$5,900,000 at
that date.  
These factors indicate that the Company will not be able to
continue in
existence unless 
it is able to raise additional capital and attain profitable
operations.

Management has instituted a program of significant cost
reductions, deferred
all except 
immediately necessary capital expenditures, and suspended payment
of dividends
on the 
Company's preferred stock.  The implementation of these measures
to conserve
working 
capital together with the successful marketing and licensing of
the company's
products, 
which management hopes to achieve, may permit the Company to
attract additional
capital 
and enable it to continue.

The Company has contracted with a manufacturer and began
manufacture and sale
of its 
AstaXinr technology during the nine months ended September 30,
1998.  The
Company 
believes this technology to be highly marketable.

To increase working capital, the Company issued a rights offering
in February
1998 which 
along with projected sales revenue, the Company believes will
provide
sufficient cash 
for operations through September 30, 1999.  The Company will also
encourage the
holders 
of convertible promissory notes to convert them into common
stock.


<PAGE>

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

Certain statements in this report set forth management's
intentions, plans,
beliefs, 
expectations or predictions of the future based on current facts
and analyses. 
Actual 
results may differ materially from those indicated in such
statements, due to a
variety 
of factors including reduced product demand, increased
competition, government
action, 
weather conditions, and other factors.

Results of Operations

Sales revenue for the nine months ended September 30, 1998 and
1997 of $203,675
and 
$14,394 respectively, increased by $189,281.  The revenue earned
in 1998
resulted 
entirely from sales of AstaXinr during the quarter ended June 30,
1998, which
are 
expected to resume in early 1999 at approximately $145,000 per
month.  The
Company has 
distributed additional samples of AstaXinr to potential customers
during the
quarter 
ended September 30, 1998, which are expected to result in
additional sales,
after a 
product testing period of not more than three months. However,
there can be no
assurance 
that such sales will continue to occur or that they will be
profitable.   The
Company 
began production of AstaXinr in January of 1998 using a contract
manufacturer. 
Sales 
revenue earned in 1997 resulted entirely from sales of
ClandoSanr.  No sales of 
ClandoSanr have occurred during 1998 due to reduced marketing
efforts for this
product, 
as the Company concentrated on AstaXinr production in 1997 and
1998.  The
Company 
continues to be interested in ClandoSanr, however, and plans to
make marketing 
arrangements with distributors in the future.

Cost of sales for the nine months ended September 30, 1998 and
1997 of $555,907
and 
$10,900, respectively, increased by $545,007.  This increase
resulted entirely
from 
production of AstaXinr beginning in January 1998.  During the
nine months ended 
September 30, 1998 a gross loss on sales of AstaXinr of $351,932
was recorded. 
This 
resulted from inefficiencies in the initial production runs,
which caused the
costs of 
production to exceed the market value of the product during the
nine months
ended 
September 30, 1998.  Production efficiency has improved during
the nine months
ended 
September 30, 1998 and the Company expects to have gross profits
on sales of
AstaXinr by 
early 1999.   However, there can be no assurance that such gross
profits will
occur or 
that they will be material.  The Company expects to incur
production costs of 
approximately $138,000 per month in the near term, which are
expected to be
funded by 
product sales.  Once the Company is producing and selling
AstaXinr at a gross
profit, 
management plans to consider expanding production capacity to
meet an expected 
increasing demand for AstaXinr.  During the nine months ended
September 30,
1997, a 
gross profit of $3,494 resulted entirely from sales of
ClandoSanr.  There were
no sales 
or gross profits on sales of ClandoSanr during 1998.  See also
the preceding
paragraph.

Manufacturing overhead for the nine months ended September 30,
1998 was
$108,601, 
representing non-production costs associated with support of
manufacturing
efforts for 
AstaXinr.  Such costs are expected to continue at approximately
$8,000 per
month in the 
near term, and are expected to be funded by product sales.  There
were no
manufacturing 
overhead costs in 1997, since manufacture of AstaXinr did not
begin until
January of 
1998.

Marketing and selling expenses for the nine months ended
September 30, 1998 and
1997 
were $896 and $7,216, respectively, a decrease of $6,320, or 88%. 
This
decrease 
resulted from decreased marketing efforts for ClandoSanr in 1998
from 1997. 
Marketing 
expenses for AstaXinr have been minimal to date, since the
Company's contract 
manufacturer acted as non-exclusive distributor and marketer of
AstaXinr during
the nine 
months ended September 30, 1998.  The Company is presently using
other
distributing and 
marketing methods.  Marketing expenses for AstaXinr are expected
to increase,
since the 
Company will need to increase its sales, and so will need to make
additional
marketing 
efforts either on its own or with the help of other distributors
and/or
marketers.  
These additional expenses are expected to be funded by revenues
from product
sales.

<PAGE>

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


Results of Operations (continued)

Research, development and pilot plant expenses for the nine
months ended
September 30, 
1998 and 1997 were $362,006 and $255,681, respectively, an
increase of
$106,325, or 42%.  
This increase resulted from increased pilot plant capacity and
field studies
relating to 
AstaXinr in support of the manufacturing of this product.  These
expenses are
expected 
to continue at approximately $25,000 per month in support of
increasing the
efficiency 
of the manufacturing process through experimentation in the pilot
plant and
through 
improving the Company's technology.  These expenses are expected
to be funded
through 
approximately June 1999 by available cash from previous financing
activities,
and by 
profitable operations beyond that date, if profitable operations
have occurred.

General and administrative expenses for the nine months ended
September 30,
1998 and 
1997 were $413,369 and $250,812, respectively, an increase of
$162,557, or 65%. 
This 
increase resulted primarily from the hiring of a CEO on July 1,
1997, which
resulted in 
an increase of approximately $92,000 for the nine months ended
September 30,
1998 in 
compensation and benefits over the nine months ended September
30, 1997, during
which 
time the Company did not have a CEO.  Other significant
components of this
increase were 
an increase of approximately $30,000 caused by increased
international travel
and 
communications involved in the support of manufacturing and
marketing of
AstaXinr, an 
increase of $21,000 in accounting consultant and shareholder
administration
expenses 
caused by the increased reporting requirements associated with
the Company's
rights 
offering of February 1998, and contract manufacturing activities
which began in
January 
1998.  General and administrative expenses are expected to
continue in the near
future 
at approximately $36,000 per month. These expenses are expected
to be funded
through 
approximately June 1999 by available cash from previous financing
activities,
and by 
profitable operations beyond that date, if profitable operations
have occurred.
The 
Company does not plan to hire a replacement CEO in the near
future, and will be
operated 
by its President and Board of Directors, and a full-time
controller has been
hired to 
eliminate the need for accounting consultant services.

Litigation expenses for the nine months ended September 30, 1998
of $222,016
represent 
the Company's expenses associated with its defense of the suit by
ADM and the
Company's 
counter-suit.  Management expects to recover legal expenses
through damage
awards and 
preservation of the commercial product rights associated with
AstaXinr. 
However, there 
can be no assurance that the Company will receive damage awards
or that its
rights will 
be preserved.  The Company estimates that the cost of this
litigation will be 
approximately $1,000,000 per year.  At the present time, a range
of reasonably
possible 
loss from the litigation cannot be estimated.  There were no
litigation
expenses 
incurred during the nine months ended September 30, 1997.

Interest expenses for the nine months ended September 30, 1998
and 1997 were
$424,196 
and $219,715, respectively, an increase of  $204,481, or 88%. 
This increase
resulted 
primarily from $13,800 in interest paid on demand notes issued
during the first
quarter 
of 1998, which have been completely repaid or cancelled through
exercise of
rights in 
the offering of February 1998; and from $200,000 in interest
accrued on
$5,000,000 in 8% 
notes issued on March 31, 1998, which interest is payable either
annually or at
the 
notes' maturity (March 31, 2003), at the Company's option.

Interest income for the nine months ended September 30, 1998 was
$59,907.  This 
represents excess cash proceeds from the rights offering which
were placed in
short-term 
interest bearing investment accounts.  No interest income was
earned during the
nine 
months ended September 30, 1997.


<PAGE>


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

Results of Operations (continued)

As a result of the foregoing, the Company reported net losses of
$1,826,662 and 
$958,726, or $0.09 and $0.05 per share, respectively, for the
nine months ended 
September 30, 1998 and 1997.  The weighted average number of
shares of common
stock 
outstanding increased to 20,273,882 for the nine months ended
September 30,
1998 from 
18,976,637 for the nine months ended September 30, 1997.  This
increase of
1,311,814 
weighted average shares is caused by the issuance of 80,000
shares of common
stock in 
lieu of interest payments on the variable rate subordinated
debenture, the
issuance of 
10,000 shares pursuant to the exercise of employees' stock
options, the
conversion of 
187,500 shares of preferred stock into 375,000 shares of common
stock, and the
issuance 
of 2,190,000 shares of stock in payment of legal fees and
retainers during the
twelve 
month period ended September 30, 1998.

Financial Position

During the nine months ended September 30, 1998 and 1997 the
following
materially 
affected the Company's financial position:

The Company began producing AstaXinr in January 1998,
capitalizing inventory of
$595,955 
as of September 30, 1998.

The Company had sales of $203,675 during May and June of 1998,
which were
included in 
accounts receivable as of June 30, 1998, and substantially
collected during the
quarter 
ended September 30, 1998.

The Company paid expense advances and retainers of $335,000 to
its attorneys
during the 
nine months ended September 30, 1998, which have been capitalized
and are
included in 
prepaid expenses as of September 30, 1998; and which will be
drawn down against
future 
costs associated with on-going litigation against ADM.

The Company issued, on March 31, 1998,  $5,000,000 of long-term
notes payable
pursuant 
to its rights offering of February 13, 1998.  The notes mature on
March 31,
2003 with 
interest payable at 8% payable either annually or at maturity, at
the Company's
option.  
The Company also issued warrants to purchase 50,000,000 shares of
common stock
at $0.10 
per share expiring March 31, 2008.   Short-term promissory notes
of $1,875,000
and 
demand notes of $475,000 were repaid through exercise of rights
in this
offering, and 
$211,712 of related debt issue costs were capitalized and are
being amortized
over the 
term of the notes.

During the nine months ended September 30, 1998, the Company
issued $950,000 in
demand 
notes to certain directors, $475,000 of which were repaid
pursuant to the
issuance of 
new debt in the rights offering, and $475,000 of which were
repaid in cash.

During the nine months ended September 30, 1997, the Company
issued $1,615,500
of 
convertible promissory notes to directors.

During the nine months ended September 30, 1998 and 1997, the
Company purchased
$86,192 
and $39,075, respectively, in research and development and
manufacturing
equipment.


<PAGE>


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

Financial Position (continued)

During the nine months ended September 30, 1997, the Company
expended $512,848
for 
manufacturing equipment and fixtures, which were held for resale
and were sold
in 
December 1997 to its contract manufacturer, at cost.

During the nine months ended September 30, 1998 the Company
received principal 
repayments of $184,567 on its loan receivable from its contract
manufacturer,
which 
financed the manufacturer's purchase of $500,000 of manufacturing
equipment
from the 
Company, at cost.

In December of 1988, the Company suspended payment of the
quarterly dividend on
its 
preferred stock.  Resumption of the dividend will require
significant
improvement in 
cash flow.  Unpaid dividends cumulate for future payment or
increase the
liquidation 
preference or redemption value of the preferred stock.  As of
September 30,
1998 and 
1997, total dividends in arrears on the Company's preferred stock
was $189,389
and 
$1,286,450, respectively, of which $189,389 ($6.40 per share) and
$206,450
($5.76 per 
share), respectively, was included in the carrying value of the
redeemable
preferred 
stock as of September 30, 1998 and 1997 and $1,080,000 was
included in the
liquidation 
preference of the limited redemption preferred stock as of
September 30, 1997. 
In 
September 1998 the holder of 187,500 shares of limited redemption
preferred
stock 
converted them into 375,000 shares of common stock.

Liquidity and Capital Resources

Historically, the Company has been funded primarily by equity
contributions and
loans 
from stockholders.  As of September 30, 1998 and 1997, the
Company had working
capital 
(deficit) of $1,722,516 and $(1,862,474).  Working capital
increased by
$3,584,990 
during the twelve-month period ended September 30, 1998.  This
increase
resulted from 
net proceeds from the Company's rights offering of February 1998
of $2,438,288
and the 
restructuring of $1,875,000 in short-term debt to long-term
maturities through
the 
rights offering.  The Company had cash and cash equivalents of
$823,135 and
$304,581, 
respectively, as of September 30, 1998 and 1997.

The Company believes that as a result of the proceeds from the
rights offering,
and 
projected product sales revenue, it will have sufficient cash
liquidity to
operate 
through September 30, 1999.  However, there can be no assurances
that
additional sales 
will occur or that they will be profitable.

Cash used by operations in the nine months ended September 30,
1998 and 1997
amounted to 
$2,253,422 and $651,022, respectively.  The increase in cash used
in operations
of 
$1,602,400 resulted from production costs related to the
production of
AstaXinr, which 
the Company began manufacturing in January 1998 and litigation
costs associated
with the 
Company's suit against ADM.

Cash provided by (used in) investing activities for the nine
months ended
September 30, 
1998 and 1997 amounted to $109,857 and $(644,654), respectively. 
The increase
of 
$413,807 in cash provided by investing activities resulted from
the purchase of 
equipment for resale of $512,848 during the nine months ended
September 30,
1997 and the 
receipt of principal repayments on loan receivable during the
nine months ended 
September 30, 1998 of $184,567.


<PAGE>

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

Cash provided by financing activities for the nine months ended
September 30,
1998 and 
1997 amounted to $2,942,152 and $1,558,918, respectively, an
increase of
$1,383,234 
resulting primarily from net proceeds from the rights offering of
$2,438,288
during the 
nine months ended September 30, 1998 offset by $1,615,500 in
promissory notes
issued 
during the nine months ended September 30, 1997.

Uncertainty

The Company has incurred net losses in each year of its
existence, aggregating 
approximately $24,800,000 from inception to September 30, 1998
and its
liabilities and 
redeemable preferred stock exceeded its assets by approximately
$5,900,000 at
that date.  
These factors indicate that the Company will not be able to
continue in
existence unless 
it is able to raise additional capital and attain profitable
operations.

Management has instituted a program of significant cost
reductions, deferred
all except 
immediately necessary capital expenditures, and suspended payment
of dividends
on the 
Company's preferred stock.  The implementation of these measures
to conserve
working 
capital together with the successful marketing and licensing of
the company's
products, 
which management hopes to achieve, may permit the Company to
attract additional
capital 
and enable it to continue.  However, there can be no assurance
that these
measures and 
marketing efforts will be successful and that the company will be
able to
continue.

The Company began manufacture and sale of its AstaXinr technology
during the
nine months 
ended September 30, 1998.  The Company believes this technology
to be highly
marketable.

To increase working capital, the Company issued a rights offering
in February
1998, 
which along with projected sales revenue, the Company believes
will provide
sufficient 
cash for operations through June 30, 1999.  The Company will also
encourage the
holders 
of convertible promissory notes to convert them into common
stock.

Year 2000 Issues

Many existing computer programs and systems use only the last two
digits to
refer to a 
year.  Therefore, these programs and systems will not properly
recognize dates,
and may 
malfunction when using dates after December 31, 1999.  The
Company has made
efforts to 
assess its exposure and vulnerability to Year 2000 Issues.  This
assessment is
not yet 
completed.  However, management has determined that certain
consequences of its
Year 
2000 Issues may have a material effect on the Company's business,
results of
operations, 
or financial condition, without taking into account the Company's
effort to
avoid those 
consequences.

The Company presently conducts substantially all of its
manufacturing
operations at the 
facility of its contract manufacturer, located in Mexico City,
Mexico.  The
Company is 
in the process of determining whether the systems of this
contract manufacturer
are Year 
2000 Compliant.  However, the Company believes that its
manufacturing operation
is not 
likely to be materially affected if the contract manufacturer's
internal
systems are not 
Year 2000 Compliant.  The Company has also not determined, and
may be unable to 
determine, whether the municipal infrastructure and utility
providers' systems
in Mexico 
City are Year 2000 Compliant.  The Company's manufacturing
operations could be 
materially affected by power failures or malfunctions caused by
Year 2000
Issues in 
Mexico City, if its efforts to mitigate them are unsuccessful. 
The Company may
suffer 
production interruptions during power failures caused by Year
2000 Issues.  The
Company 
plans to have sufficient inventory levels on hand to meet demand
in case of
short-term 
manufacturing interruptions.  The contract manufacturer plans to
obtain back-up 
generator power systems in case of prolonged power outages.  The
Company does
not 
anticipate significant costs associated with addressing these
Year 2000 Issues.

<PAGE

IGENE Biotechnology, Inc.
PART II
OTHER INFORMATION

Item 1.   Legal Proceedings.

In May 1995, the Company signed a non-exclusive licensing
agreement with Archer
Daniels 
Midland Company (ADM) for the manufacture and sale of AstaXinr. 
On February
29, 1996 
ADM informed the Company that it had decided not to utilize the
technology and
requested 
that IGENE return approximately $250,000 in payments made to
IGENE under the
licensing 
agreement.  IGENE maintains that ADM is not entitled to the
return of payments
and that 
additional monies are owed to IGENE.  On July 21, 1997, ADM filed
suit against
IGENE in 
the U.S. District Court in Greenbelt, Maryland alleging patent
infringement and 
requesting a preliminary injunction against IGENE to cease the
use of its
astaxanthin 
manufacturing process.  ADM's request for injunctive relief was
denied.  On
August 4, 
1997, IGENE filed a $300,450,000 contract and trade secrets
lawsuit in U.S.
District 
Court in Baltimore, Maryland against ADM, contending that ADM
stole IGENE's
formula for 
making its natural astaxanthin pigment, AstaXinr.  IGENE is also
claiming
breach of 
contract, in  regards to the licensing agreement entered into by
IGENE and ADM
in 1995.  
IGENE contends that it complied with all material terms of this
agreement,
including 
concentration levels of its pigment.  IGENE's claim was
re-asserted as a
counter-claim 
against ADM and the two cases were joined in the District Court
in Baltimore,
Maryland 
on August 24, 1997.  On September 10, 1997 the District Court
denied ADM's
request for a 
preliminary injunction on the basis that ADM could not
demonstrate a likelihood
of 
success on the merits of its case.  Management believes ADM's
claims to be
meritless.  
Management's basis for this is that ADM claims that the levels of
pigment IGENE
said it 
could produce did not meet contract levels.  Management has
copies of ADM's
internal 
memos showing that the levels of pigment meet the contract
specifications.  It
is 
Management's contention that it is not probable that this dispute
will result
in an 
unfavorable outcome.  Accordingly, no liability has been
reflected in the
accompanying 
balance sheet.  The Company had expenses of $658,185 in 1997, and
$222,016 in
the nine 
months ended September 30, 1998 relating to this litigation,
which is on going.

Item 2.   Changes in Securities and Use of Proceeds.

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
tock in 
the foreseeable future.

With respect to sales of securities not registered under the
Securities Act,
see Note 3 
to the financial statements, at page 13 of this report.

Item 3.   Defaults Upon Senior Securities.

When and if funds are legally available for such payment under
statutory
restrictions, 
the Company may pay annual cumulative dividends on the Preferred
Stock of $.64
per share 
on a quarterly basis.  During 1988 the Company declared and paid
a cash
dividend of $.16 
per share of Preferred Stock.  No dividends have been declared or
paid since
1988.  Any 
resumption of dividend payments on preferred Stock would require
significant
improvement 
in cash flow.  Preferred Stock dividends are payable when and if
declared by
the 
Company's Board.  Unpaid dividends accumulate for future payment
or addition to
the 
liquidation preference and redemption price of the Preferred
Stock.  As of
September 30, 
1998 the total amount of dividends in arrears with respect to the
Company's
preferred 
Stock was $189,389.


<PAGE>


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

At the annual meeting of stockholders held on September 29, 1998,
the following
matters 
were submitted to stockholders' vote and were approved by a
majority of votes:
(1) seven 
directors were elected: Michael G. Kimelman, Thomas L. Kempner,
Stephen F. Hiu,
Patrick 
F. Monahan, Joseph C. Abeles, John A. Cenerazzo, and Sidney R.
Knafel; and (2)
approval 
of the appointment of Berenson & Company LLP as the Company's
independent
auditors for 
1998.

     Results of the voting were as follows:
<TABLE>
<CAPTION>
                         Votes          Votes          Votes
                         For       Against        Abstained
Unvoted
     <S>                 <C>       <C>       <C>       <C>
(1)  Election of Directors
Michael G. Kimelman 17,469,956     55,400         ---      
3,970,301
Thomas L. Kempner   17,469,956     55,400         ---      
3,970,301
Stephen F. Hiu      17,469,956     55,400         ---      
3,970,301
Patrick F. Monahan  17,469,956     55,400         ---      
3,970,301
Joseph C. Abeles    17,469,856     55,500         ---      
3,970,301
John A. Cenerazzo   17,469,956     55,400         ---      
3,970,301
Sidney R. Knafel    17,469,956     55,400         ---      
3,970,301

     (2)  Approval of Auditors          17,472,455     17,301     
   35,600    
     3,970,301

</TABLE>

Item 5.   Other Information 

Effective May 1, 1998, Mr. Ramin Abrishamian, the Company's Chief
Executive
Officer 
(CEO) resigned his position as CEO.  Mr. Abrishamian remained a
director of the
Company 
until September 29, 1998, but he declined to stand for
re-election at the 1998
annual 
meeting of that date.

Item 6.   Exhibits and Reports on Form 8-K

(a) Exhibits filed herewith or incorporated by reference herein
are set forth
in the 
following table prepared in accordance with Item 601 of
Regulations S-B.

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 hereby 
incorporated by reference.

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

4.1 Form of Variable Rate Convertible Subordinated Debenture Due
2002 (Class
A), 
constituting Exhibit 4.4 to Registration Statement No. 33-5441 on
Form S-1, is 
hereby incorporated herein by reference.

4.2 Indenture between the Company and American Stock Transfer &
Trust Company
as 
Trustee, relating to 8% notes due 2002, constituting Exhibit 4.2
to 
Registration Statement No. 333-41581 on Form SB-2, is hereby
incorporated by 
reference.

4.3 Warrant agreement between the Company and American Stock
Transfer & Trust 
Company, as Warrant Agent relating to warrants expiring 2007,
constituting 
Exhibit 4.3 to Registration Statement No. 333-41581 on Form SB-2,
is hereby 
incorporated by reference.

<PAGE>


10.1 Form of Conversion and Exchange Agreement used in May 1988
in connection
with 
the conversion and exchange by certain holders of shares of
Preferred Stock 
for Common Stock and Warrants, constituting Exhibit 10.19 to
Registration 
Statement No. 33-5441 on Form S-1, is hereby incorporated herein
by reference.

10.2 Exchange Agreement made as of July 1, 1988 between the
Registrant and
Essex 
Industrial Chemicals, Inc. with respect to the exchange of
187,500 shares of 
Preferred Stock for a Debenture, constituting Exhibit 10.21 to
Registration 
Statement No. 33-5441 on Form S-1, is hereby incorporated herein
by reference.

10.3 Preferred Stockholders' Waiver Agreement dated May 5, 1988,
incorporated
by 
reference to the identically numbered exhibit in Form S-1
Registration 
Statement No. 33-23266.

10.4 Form of Agreement between the Registrant and Certain
Investors in
Preferred 
Stock dated September 30, 1987, incorporated by reference to the
identically 
numbered exhibit in Amendment No. 1 to Form S-1 Registration
Statement No. 33-
23266.

10.5 Letter Agreement executed May 11, 1995 between Archer
Daniels Midland and 
IGENE Biotechnology, Inc., along with November 11, 1995
Amendment, 
constituting Exhibit 10.11 to the Registrant's Report on Form
10-KSB for the 
year ended December 31, 1995 is incorporated herein by reference.

10.6 Agreement of Lease effected December 15, 1995 between
Columbia Warehouse 
Limited Partnership and IGENE Biotechnology, Inc. constituting
Exhibit 10.13 
to the registrant's report on Form 10-KSB for the year ended
December 31, 1995 
is incorporated herein by reference.

10.7 Toll Agreement effective as of June 24, 1997 between Igene
Biotechnology,
Inc. 
and Fermic, S.A. de C.V., constituting Exhibit 10.9 is
Registration Statement 
No. 333-41581 on Form SB-2, is incorporated herein by reference. 
(Portions of 
this exhibit have been omitted pursuant to a request for
confidential 
treatment.)

10.8 Loan agreement dated August 1, 1997 between the Investors
and the Company, 
constituting Exhibit 10.7 to Registration Statement No. 333-41581
on Form SB-
2, is hereby incorporated by reference.

27.  Financial Data Schedule.

(b) Reports on Form 8-K - none


<PAGE>

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 13, 1998        By        /s/Stephen F. Hiu         
        
                         Stephen F. Hiu
                         President and Treasurer
                         (On behalf of the Registrant and as
Principal
                         Financial Officer)




<PAGE>