----------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                       ----------------------------------

                                  FORM 10-Q


                _X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR
                    15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                    For the Quarterly Period Ended March 31, 1999


                                     OR

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

                    For the transition period from      to

                        Commission File No. 0-15271

                        ---------------------------
                        CISTRON BIOTECHNOLOGY, INC.
           (Exact Name of Registrant as Specified in its Charter)
                        ---------------------------

           Delaware                                      22-2487972
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                        Identification Number)


     10 Bloomfield Avenue, Pine Brook, New Jersey            07058
       (Address of Principal Executive Offices)            (Zip Code)

            Registrant's telephone number, including area code:

                                 (973) 575-1700

	Indicate by check mark whether the Registrant (1) has filed all 
reports required to be filed by Section 13 and 15 (d) of the Securities 
Exchange Act of 1934 during the preceding 12 months and (2) has been 
subject to such filing requirements for the past 90 days.

                                Yes _X_ No ___
    
The aggregate number of Registrant's outstanding shares on May 10, 1999 was 
24,317,020 shares of Common Stock, .01 par value.

                               Page 1 of 16 pages

<PAGE> 2
                          CISTRON BIOTECHNOLOGY, INC.
                          ---------------------------
                         (A DEVELOPMENT STAGE COMPANY)
                          ---------------------------

                                    INDEX
                                    -----
                                                            
                                                                          PAGE
                                                                          ----
PART I -  FINANCIAL INFORMATION

          Item 1. Financial Statements

          Balance sheets as of March 31, 1999 and June 30, 1998.........    3

          Statements of operations for the three months and nine months 
          ended March 31, 1999 and 1998.................................    4

          Statements of cash flows for the nine months ended 
          March 31, 1999 and 1998.......................................    6

          Notes to financial statements.................................    7

          Item 2. Management's discussion and analysis of results of 
          operations and financial condition............................    9


PART II - OTHER INFORMATION.............................................   13

          Item 1. Legal Proceedings.....................................   13

          Item 2. Changes in Securities.................................   13

          Item 3. Defaults upon Senior Securities.......................   13

          Item 4. Submission of Matters to a Vote of Security Holders...   13

          Item 5. Other Information.....................................   14

          Item 6. Exhibits and Report on Form 8-K.......................   15

          Signatures....................................................   16

                                        -2-
<PAGE>3
[CAPTION]
<TABLE>
                              CISTRON BIOTECHNOLOGY,INC.
                              --------------------------
                                     BALANCE SHEETS
                                     --------------

                                                        June 30,          March 31,
ASSETS                                                    1998              1999
------                                                ------------     ------------
                                                                        (unaudited)
CURRENT ASSETS:
 <S>                                                  <C>              <C>
 Cash and equivalents                                 $  5,832,031     $  9,006,038
 Accounts receivable-trade                                 101,859           66,972
 Accounts receivable-other                               2,940,673        2,903,931
 Inventories                                                 3,635            1,399
 Taxes receivable                                          329,024          329,024
 Notes receivable $230,000; reserve $230,000                     -                -
                                                        ----------       ----------
 TOTAL CURRENT ASSETS                                    9,207,222       12,307,364

ACCOUNTS RECEIVABLE - OTHER - Long Term                  3,670,221          918,975
                                                        ----------       ----------
PROPERTY AND EQUIPMENT:					
 Machinery and equipment                                   502,908          505,054
 Furniture and fixtures                                    147,113          147,113
 Leasehold improvements                                     77,674           77,674
                                                        ----------       ----------
                                                           727,695          729,841
 Less: Accumulated depreciation                            701,477          705,363
                                                        ----------       ----------
                                                            26,218           24,478
                                                        ----------       ----------
SECURITY DEPOSITS                                           23,938           23,938
                                                        ----------       ----------
PATENTS, Net of accumulated amortization
of $14,536 and $16,523, respectively                        22,569           20,582
                                                        ----------       ----------
DEFERRED TAXES                                              49,313           49,313
                                                        ----------       ----------
TOTAL ASSETS                                          $ 12,999,481     $ 13,344,650
                                                        ==========       ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------                                 
CURRENT LIABILITIES:					
 Accrued expenses and accounts payable                $    114,894     $     85,373
 Taxes payable                                             348,898          354,520
 Other current liabilities                                 691,058          714,292
                                                        ----------       ----------
TOTAL CURRENT LIABILITIES                                1,154,850        1,154,185
                                                        ----------       ----------
 Other non-current liabilities                             902,174          262,307
                                                        ----------       ----------
SHAREHOLDERS' EQUITY:					
 Common stock, $.01 par value; 50,000,000
  shares authorized; issued and outstanding
  26,930,187 shares and 28,263,520,
  respectively                                             269,302          282,635
 Additional paid-in capital                              8,683,680        9,600,347
 Earnings accumulated during the 
  development stage                                      2,384,125        2,439,826
 Treasury stock 3,946,500 shares at cost                  (394,650)        (394,650)
                                                        ----------       ----------
TOTAL SHAREHOLDERS' EQUITY                              10,942,457       11,928,158
                                                        ----------       ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            $ 12,999,481     $ 13,344,650
                                                        ==========       ==========

                         See accompanying notes to financial statements.

                                          -3-
</TABLE>
<PAGE>4
<TABLE>
<CAPTION>

                             CISTRON BIOTECHNOLOGY, INC.
                             ---------------------------
                              STATEMENTS OF OPERATIONS
                              ------------------------
                                     (UNAUDITED)
                                      ---------
                                                                               February 2, 1982
                                                                               (commencement of
                                               Three Months ended March 31,     operations) to 
                                                    1998            1999       March 31, 1999 
                                               ------------    ------------    ----------------
<S>                                            <C>             <C>             <C>
Sales.......................................   $    160,175    $     86,857    $  9,706,622
Cost of sales...............................         86,484          38,395       4,311,242
                                                 ----------      ----------      ----------
  Gross profit..............................         73,691          48,462       5,395,380
                                                 ----------      ----------      ---------- 
Other income:
  Litigation settlements....................              -               -      14,684,206
  License fees and funded research..........          5,000         783,000       4,963,899
                                                 ----------      ----------      ----------
Expenses:
  Research and development..................         92,863         119,495       8,818,483
  Administrative and marketing..............        237,229         255,071      11,936,464
  Occupancy.................................         52,787          47,913       2,617,673
                                                 ----------      ----------      ----------
Total expenses..............................        382,879         422,479      23,372,620
                                                 ----------      ----------      ----------
  Operating income/(loss)...................       (304,188)        408,983       1,670,865
Interest income/(expense) - net.............        149,177          88,310       1,171,178
Other expense...............................              -               -          59,895
Amortization of deferred financing costs....              -               -         173,079
Acquisition expense.........................              -               -         429,620
                                                 ----------      ----------      ----------
Income/(loss) before income taxes
  and extraordinary credit..................       (155,011)        497,293       2,179,449
Income tax provision (benefit)..............        (82,973)        188,970       1,501,938
                                                 ----------      ----------      ----------
Income/(loss) before extraordinary credit...        (72,038)        308,323         677,511
Extraordinary credit - benefit of tax loss                                           
  carryforward..............................              -               -         262,838
                                                 ----------      ----------      ----------
  Net income/(loss).........................   $    (72,038)   $    308,323    $    940,349
                                                 ==========      ==========      ==========
Net income/(loss) per share.................   $          -    $       0.01
                                                 ==========      ==========
Weighted average shares outstanding.........     22,983,687      24,317,020
                                                 ==========      ==========
Net income/(loss) per share -
  assuming dilution.........................   $          -    $       0.01    
                                                 ==========      ==========
Weighted average shares outstanding -
  assuming dilution.........................     22,983,687      25,859,394 
                                                 ==========      ==========

                              See accompanying notes to financial statements

                                             -4-
</TABLE>
<PAGE>5
<TABLE>
<CAPTION>

                           CISTRON BIOTECHNOLOGY, INC.
                           ---------------------------
                            STATEMENTS OF OPERATIONS
                            ------------------------
                                  (UNAUDITED)
                                   ---------
                                                                               February 2, 1982
                                                                               (commencement of
                                                 Nine Months ended March 31,    operations) to
                                                    1998             1999       March 31, 1999
                                              ------------     -------------   ----------------
<S>                                           <C>              <C>              <C>
Sales.......................................  $    426,010     $     291,637    $  9,706,622
Cost of sales...............................       234,244           193,913       4,311,242
                                                ----------        ----------      ----------
  Gross profit..............................       191,766            97,724       5,395,380
                                                ----------        ----------      ----------
Other revenues:
  Litigation settlement, net................             -                 -      14,684,206
  License fee and funded research...........       205,000           852,750       4,963,899
                                                ----------        ----------      ----------
Expenses:
  Research and development..................       462,770           275,137       8,818,483
  Administrative and marketing..............       839,946           729,402      11,936,464
  Occupancy.................................       146,665           146,708       2,617,673
                                                ----------        ----------      ---------
Total expenses..............................     1,449,381         1,151,247      23,372,620
                                                ----------        ----------      ----------
  Operating income (loss)...................    (1,052,615)         (200,773)      1,670,865
Interest income/(expense) - net.............       434,360           290,614       1,171,178
Other expense...............................             -                 -          59,895
Amortization of deferred financing costs....             -                 -         173,079
Acquisition expense.........................             -                 -         429,620
                                                ----------        ----------      ----------
Income (loss) before income taxes
 and extraordinary credit...................      (618,255)           89,841       2,179,449
Income tax provision (benefit)..............      (234,937)           34,139       1,501,938
                                                ----------        ----------      ----------
Income/(loss) before extraordinary credit...      (383,318)           55,702         677,511
                                                ----------        ----------      ----------
Extraordinary credit - benefit of tax loss
   carryforward.............................             -                 -         262,838
                                                ----------        ----------      ----------
  Net income/(loss).........................  $   (383,318)     $     55,702    $    940,349
                                                ==========        ==========      ==========
Net income/(loss) per share.................  $      (0.01)     $          -
                                                ==========        ==========
Weighted average shares outstanding.........    25,609,643        23,728,212
                                                ==========        ==========
Net income/(loss) per share -
 assuming dilution..........................  $      (0.01)     $          -
                                                ==========        ==========
Weighted average shares outstanding -
  assuming dilution.........................    25,609,643        26,647,226
                                                ==========        ==========

                            See accompanying notes to financial statements

                                             -5-
</TABLE>
<PAGE>6
<TABLE>
<CAPTION>

                           CISTRON BIOTECHNOLOGY, INC.
                           ---------------------------
                            STATEMENTS OF CASH FLOWS
                            ------------------------
                                 (UNAUDITED)
                                  ---------
                                                                                        February 2, 1982
                                                                                        (commencement of
                                                        Nine Months ended March 31,      operations) to
                                                          1998              1999         March 31, 1999
                                                     -------------     -------------    ----------------
<S>                                                  <C>               <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Cash received from customers                       $    394,462      $    333,425     $  11,588,119
  Cash paid to suppliers and employees                 (3,754,082)       (2,206,669)      (33,325,439)
  Interest received                                       228,479           226,114           832,171
  Acquisition expenses paid                                     -                 -          (429,620)
  Royalties, research funding, license fees received      205,000           889,605         3,567,592
  Other receipts                                        3,002,207         3,003,678        18,141,226
                                                        ---------         ---------        ----------
  Net cash provided by operating activities                76,066         2,246,153           374,049
                                                        ---------         ---------        ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Collection of note receivable                                 -                 -            15,097
  Issuance of note receivable                                   -                 -          (230,000)
  Purchase of property and equipment                       (3,926)           (2,146)         (764,618)
                                                        ---------         ---------        ----------
  Net cash used in investing activities                    (3,926)           (2,146)         (979,521)
                                                        ---------         ---------        ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of capital stock and							
   additional contributions                                 2,879           930,000        10,876,398
  Principal payments on notes payable                           -                 -          (870,238)

  Purchase of treasury stock                             (394,650)                -          (394,650)
                                                        ---------         ---------        ----------
  Net cash provided by financing activities              (391,771)          930,000         9,611,510
                                                        ---------         ---------        ----------
  Net change in cash and cash equivalents                (319,631)        3,174,007         9,006,038
CASH AND CASH EQUIVALENTS, beginning of period          6,368,228         5,832,031                 -
                                                        ---------         ---------        ----------
CASH AND CASH EQUIVALENTS, end of period             $  6,048,597      $  9,006,038     $   9,006,038
                                                        ---------         ---------        ----------
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
  Net income (loss)                                  $   (383,318)     $     55,702     $     940,349
  Adjustments to reconcile net income (loss) to                                               
   net cash provided by operating activities:                                                
  Depreciation and amortization                             5,233             5,872           748,737
  Issue of warrants                                        65,000                 -            65,000
  Deferred income taxes                                  (885,090)                -           (49,313)
  Loss on disposal of property and equipment                4,552                 -             8,531
  Increase in reserve for note receivable                       -                 -           230,000
  Amortization of deferred financing costs                      -                 -           195,179
  Decrease (increase) in assets:							
   Accounts receivable                                    (40,680)           34,887           (66,972)
   Inventory                                                  534             2,236            (1,399)
   Taxes receivable                                        (8,525)                -          (329,024)
   Notes and other receivables                          2,728,680         2,787,988        (3,838,606)
   Security deposit                                             -                 -           (23,938)
   Intangible assets                                            -                 -           (37,105)
  Increase (decrease) in liabilities:                                            
   Accounts payable and accrued expenses                 (798,412)          (23,899)        1,556,011
   Other current and non-current liabilities             (611,908)         (616,633)          976,599
                                                        ---------         ---------        ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES            $     76,066      $  2,246,153     $     374,049
                                                        =========         =========        ==========
							
                               See accompanying notes to financial statements           

                                                  -6-
</TABLE>
<PAGE>7
                           CISTRON BIOTECHNOLOGY, INC.
                           ---------------------------
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                                    (Unaudited)
                                     ---------

A.      BASIS OF PRESENTATION
        ---------------------
        The financial statements for the three and nine month periods ended 
        March 31, 1999 and 1998 have been prepared without audit and, in the 
        opinion of management, all adjustments (which include only normal 
        recurring adjustments) necessary to fairly present the Company's 
        financial position, results of operations, and cash flows at March 31,
        1999 and 1998 and for the periods then ended have been made.

        Certain information and footnote disclosures normally included in 
        annual financial statements prepared in accordance with generally
        accepted accounting principles have been omitted.  These financial
        statements should be read in conjunction with the financial statements
        and notes thereto included in the Company's Annual Report on Form 10-K
        for the fiscal year ended June 30, 1998.  The results of operations for
        the periods ended March 31, 1999 and 1998 are not necessarily
        indicative of the operating results for the full year.

        The preparation of financial statements in conformity with generally 
        accepted accounting principles requires management to make estimates
        and assumptions that affect the reported amounts of assets and
        liabilities at the date of the financial statements and the reported
        amounts of revenues and expenses during the reporting period.  Actual
        results could differ from those estimates.

B.      OTHER INCOME
        ------------

        During the nine-month period ended March 31, 1998, the Company received
        non-refundable research and development funding of $200,000, 
        representing the last two of 10 consecutive quarterly research and 
        development payments of $100,000 which another company had agreed to 
        make to Cistron.

        During the three and nine-month periods ended March 31, 1999, the 
        Company received $75,000 and $150,000, respectively, ($139,500 net of 
        amounts due BlueStone Capital Partners, LP ("BlueStone") of funded 
        research under an agreement with Pasteur Merieux Connaught ("PMC")).  
        Also during the three and nine-month periods ended March 31, 1999, the
        Company received $750,000 ($713,250 net of fees due Genome Securities,
        Inc.) from R&D Systems ("RDS") for the sale of the Company's IL-1 
        research product line.


C.      INCOME TAXES
        ------------

        Taxes of $188,970 and $34,139 were recorded in the three and nine-month
        periods ended March 31, 1999, respectively.  

                                       -7-
<PAGE>8

        Tax benefits of $82,973 and $234,937 were recorded in the three and
        nine-month periods ended March 31, 1998, respectively.


D.      ACCOUNTS RECEIVABLE 
        -------------------
        Accounts receivable - other consists of amounts due in November 1999
        (current) and amounts due in November 2000 (long term) pursuant to a
        litigation settlement agreement entered into in 1996.  Long-term
        amounts have been discounted to reflect their present value.


E.      CHANGES IN SHAREHOLDERS' EQUITY
        -------------------------------

        During the nine-month period ended March 31, 1998, shareholders' equity
        decreased $710,089 due to net losses of $383,318, and due to the
        repurchase of approximately 4 million shares of the Company's common
        stock that has been recorded as treasury stock.  During the nine-month
        period ended March 31, 1999, shareholders' equity increased $985,701
        due to the sale of 1,333,333 shares of common stock to Pasteur Merieux
        Serums & Vaccins, S.A. ("PMS&V") for $1 million less $70,000 due to
        BlueStone on the transaction and by net income of $55,702.

F.      EARNINGS PER SHARE CALCULATIONS
        -------------------------------

        The following is a reconciliation of the numerators and denominators
        used to calculate Earnings per Share:
<TABLE>
        <S>                               <C>            <C>           <C>           <C>
                                               Three Months Ended            Nine Months Ended
                                                    March 31,                    March 31, 
                                               1998           1999          1998          1999
                                          -------------------------------------------------------
        Earnings per common share:
        -------------------------
        Net income (loss)(numerator)      $    (72,038)  $    308,323  $   (383,318) $     55,702
        Weighted average shares
         (denominator)                      22,983,687     24,317,020    25,609,643    23,728,212
        Income (loss) per share           $          -  $       0.01  $      (0.01) $           -       
                                            ==========     ==========    ==========    ==========

        Earnings per common share -
         assuming dilution:
        ------------------
        Net income (loss)(numerator)      $    (72,038)  $    308,323  $   (383,318) $     55,702
        Weighted average shares             22,983,687     24,317,020    25,609,643    23,728,212
        Effect of dilutive options                   -      1,542,374             -     2,919,014
                                            ==========     ==========    ==========    ==========

        Weighted average shares -
         assuming dilution (denominator)    22,983,687     25,859,394    25,609,643    26,647,226

        Income (loss) per share           $          -  $       0.01  $      (0.01) $           -
                                            ==========     ==========    ==========    ==========

</TABLE>
                                                 -8-
<PAGE>9

G.      NEW ACCOUNTING PRONOUNCEMENT
        ----------------------------

        In June 1998, The Financial Accounting Standards Board issued SFAS No.
        133 "Accounting for Derivative Instruments and Hedging Activities." 
        This statement is effective for all fiscal quarters of fiscal years 
        beginning after June 15, 1999, thus it becomes effective for the
        Company during the fiscal year ending June 30, 2000 and is applicable
        to interim periods during that fiscal year.  The implementation of
        this standard will have no impact on the Company's financial
        statements.



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

The following discussion should be read in conjunction with and is qualified
in its entirety by the accompanying financial information and notes thereto,
and management's discussion and analysis of results of operations and
financial condition contained in the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1998.

Certain statements in this discussion and analysis constitute forward-looking
statements, are not historical facts, and involve risks and uncertainties
that could cause actual results to differ from those expected and projected.
Such risks and uncertainties include but are not limited to: (i) general
economic conditions; (ii) conditions specific to the biotechnology industry;
(iii) the Company's ability to develop or acquire new technology or products
through licensing, merger or acquisition and to obtain regulatory approval to
commercialize diagnostic or therapeutic products; (iv) the effectiveness and
ultimate market acceptance of any such products; (v) limitations on third
party reimbursements with respect to any such products; and (vi) competition.
The Company does not undertake to update or revise any forward-looking
statements contained herein whether as a result of new information, future
events or otherwise.

Results of Operations
---------------------

The Company sells its products to the research market and has not generated
significant revenues therefrom.  The Company entered into an agreement with 
RDS under which the Company granted RDS an exclusive license to produce and 
sell IL-1 antibodies and assays and a non-exclusive sublicense to 
manufacture and sell IL-1 protein to the research market.  The agreement was
reached in February 1999 and March was the last month in which the Company 
sold IL-1 research market products.  The Company has retained all rights to 
therapeutic and diagnostic applications and will devote its efforts towards 
research and development in these areas.  None of its products have been 
submitted to or received approval from the Food and Drug Administration for 
the sale of such products to the diagnostic or therapeutic markets.

The Company believes it is a development stage enterprise because planned 
principal operations have not yet commenced.  The Company's planned 
principal operations include the development of clinical and therapeutic 
products for distribution through pharmaceutical and diagnostic companies.  
This requires the approval of the Company's products by the Food and Drug 
Administration ("FDA").  At March 31, 1999, none of the Company's products 
had received such approval.  In addition, the Company continues to devote 
most of its efforts to activities such as research and development, 
financial planning and developing markets which are typical activities for 
a development stage enterprise.  Specifically, the Company has expended 
funds relating to the antibody technology, wound healing and vaccine

                             -9-
<PAGE>10
adjuvant programs.  With respect to financial planning, from September 1997 
to September 1998, the Company engaged the services of BlueStone to act as 
Cistron's financial advisor as to corporate strategic and financial 
initiatives.  In October 1998, the Company engaged Genome Securities, Inc. 
("Genome"), to act in this capacity.  In March 1999, the Company extended its
engagement of Genome, under the same terms and conditions, through September
1999. Accordingly, as the Company has not yet commenced principal operations
and is devoting most of its efforts to activities typical of a development
stage enterprise as outlined in Statement of Financial Accounting Standards
No.7, the Company believes that it continues to be in the development stage.

Three Months Ended March 31, 1999 and Three Months Ended March 31, 1998
-----------------------------------------------------------------------

Sales decreased $73,318 (45.8%) in the quarter ended March 31, 1999 versus 
the same period of the prior year due to decreased sales of bulk cytokine 
assay kit components offset, in part, by increased sales of bulk cytokine 
proteins and cytokine assay kits.  In February 1999, the Company reached 
agreement with RDS under which the Company granted RDS an exclusive license
to produce and sell IL-1 antibodies and assays and a non-exclusive license
to manufacture and sell IL-1 protein to the research market.  March 1999 was
the last month in which the Company sold IL-1 research market products.  The
Company has retained all rights to therapeutic and diagnostic applications
and will devote its efforts towards research and development in these areas.

Cost of sales decreased $48,089 (55.6%) from the prior year's quarter due 
to the lower sales volume and reclassification of some manufacturing 
personnel to the research department.

During the quarter ended March 31, 1999, the Company recorded $69,750 of 
nonrefundable research funding under the collaboration agreement with PMC 
($75,000 net of fees due BlueStone Capital Partners) and $713,250 of 
license fees from the agreement with RDS ($750,000 net of fees due Genome). 
These amounts were recorded as other income in the quarter.

Operating expenses increased $39,600 (10.3%) in the quarter ended March 31, 
1999 versus the same quarter of the prior year.  Research expenditures 
increased $26,632 (28.7%) due to higher research salary expenditures as the 
result of reclassifying some manufacturing personnel to research and due to 
increased external research funding in the quarter versus last year's 
quarter. 

Administrative and marketing expenses increased $17,842 (7.5%) due to 
increased travel, audit and meeting expenses offset, in part, by lower 
salary expense.  Occupancy expenses decreased $4,874 (9.2%) due to lower 
utility expenses.

Interest income of $86,810 was earned on the investment of higher cash 
balances.  In addition, net interest income of $1,500 was recognized on 
accounts receivable - other and other non-current liabilities to reflect 
the increase in their present value.

The Company had operating income of $408,983 in the quarter largely as the 
result of an agreement with RDS and there can be no assurance that its
operations will maintain profitability.

                                -10-
<PAGE>11

Nine Months Ended March 31, 1999 and Nine Months Ended March 31, 1998
---------------------------------------------------------------------

Sales decreased $134,373 (31.5%) in the nine-month period ended March 31, 
1999 versus the same period of the prior year due to decreased sales of 
bulk cytokine assay kit components offset, in part, by increased sales of 
bulk cytokine proteins. In February 1999, the Company reached agreement 
with RDS under which the Company granted RDS an exclusive license to produce
and sell IL-1 antibodies and assays and a non-exclusive license to
manufacture and sell IL-1 protein to the research market.  March 1999 was the
last month in which the Company sold IL-1 research market products.  The
Company has retained all rights to therapeutic and diagnostic applications
and will devote its efforts towards research and development in these areas.

Cost of sales decreased $40,331 (17.2%) from the prior year's nine-month 
period due to the lower sales volume and reclassification of some 
manufacturing personnel to the research department.
 
During the nine months ended March 31, 1998, the Company received 
nonrefundable research and development of $200,000, representing the last 
two of 10 consecutive quarterly payments of $100,000 which another company 
had agreed to make to Cistron.  In the nine months ended March 31, 1999, 
the Company received $139,500 of non-refundable research payments ($150,000 
before fees due BlueStone Capital under the PMC agreement and $713,250 of 
license fees ($750,000 before fees due Genome) under the agreement with RDS.
These amounts were recorded as other income in the nine-month period.

Operating expenses decreased $298,134 (20.6%) in the nine months ended 
March 31, 1999 versus the same period of the prior year.  Research expenses 
decreased $187,633 (40.5%) due to lower research material and consulting 
expenses and due to lower external research funding.  The lower external 
research and consulting expenses are primarily due to spending in the prior 
year associated with preclinical periodontal disease studies.

Administrative and marketing expenses decreased $110,544 (13.2%) due to 
lower salary, consulting, legal, and advertising and printing expenses 
offset, in part, by higher audit expenses.  Occupancy expenses were 
unchanged.

Interest income of $226,114 was earned on the investment of higher cash 
balances.  In addition, $64,500 was recognized on accounts receivable - 
other and other non-current liabilities to reflect the increase in their 
present value.

The Company had an operating loss of $200,773 in the nine-month period ended 
March 31, 1999 and there can be no assurance that its operations will reach
profitability.

                                   -11-
<PAGE>12

Liquidity and Capital Resources
-------------------------------

At March 31, 1999, the Company had current assets of $12,307,364 including 
cash and cash equivalents of $9,006,038 and had current liabilities of 
$1,154,185.  Cash used in the nine-month period ended March 31, 1999 was 
largely for operating expenses and payment of fees due the Institutions and 
attorneys on the receipt of funds by Cistron under a litigation settlement 
agreement and fees due BlueStone and Genome as the result of the equity
investment and research payments made by PMC to Cistron and the agreement
with RDS, respectively.

In September 1997, the Company engaged the services of BlueStone to act as 
Cistron's financial advisor as to corporate strategic and financial 
initiatives. The Company's agreement with BlueStone was not renewed at its 
expiration in September 1998.  In October 1998, Cistron engaged
Genome whose Chairman and CEO, Robert Naismith, Ph.D.
is also a member of the Company's Board of Directors, to perform these
services.  In March 1999, the Company extended its engagement of Genome,
under the same terms and conditions, through September 1999.  In this regard,
the Company has held exploratory discussions with several biotechnology and
pharmaceutical companies regarding possible strategic alliances including
joint ventures, mergers or the sale of the Company.  There can be no
assurance that any of these discussions will result in any agreements with
the Company.

Management believes that it will have sufficient assets to fund the 
Company's current programs and plans through fiscal 1999 and beyond.

Year 2000 Impact
----------------

The Company's computers are stand-alone PC's running Microsoft Windows 95 
programs.  Microsoft believes these programs to be Year 2000 (Y2K) 
compatible.  The volume of transactions processed via these programs can be 
handled manually, if need be, to prevent any interruptions in order 
processing.  None of the manufacturing operations are dependent upon 
computer systems.  Additionally, the Company has requested and will receive 
Y2K compliance statements from its major customers and suppliers. Those 
that have responded thus far have not indicated a Y2K problem.  Currently, 
management does not foresee any negative impact from the Y2K event upon 
Cistron's business operations.

                                  -12-
<PAGE>13

PART II - OTHER INFORMATION
---------------------------

Item 1. Legal Proceedings
        -----------------
        Not applicable.


Item 2. Changes in Securities
        ---------------------
        a.  Not applicable
        b.  Not applicable
        c.  Not applicable


Item 3. Defaults upon Senior Securities
        -------------------------------
        Not applicable.


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

        (a)  On Tuesday, February 23, 1999, the shareholders of the 
Company held their annual meeting in New York, NY.  The holders of 
20,956,689 shares of Common Stock were present in person or represented by 
proxy and, accordingly, a quorum was present.

        (b)  Not Applicable

        (c)  
            (i) The following persons were elected directors of the Company:



                                         FOR               WITHHELD
                                         ---               --------
        Frank Iris                    19,109,105          1,847,584
        Thomas P. Carney, Ph.D.       19,109,305          1,847,384
        Frank G. Stout                19,114,005          1,842,684
        Bruce C. Galton               19,106,705          1,849,984
        Robert Naismith, Ph.D.        19,108,705          1,847,984
        ===========================================================

                                      -13-
<PAGE>14

            (ii) The ratification of the appointment of Deloitte & Touche LLP
as independent auditors of the Company for the year ending June 30, 1999 was
approved.  The proposal received  20,522,585 votes in favor, 255,735 against,
65,919 abstained, and 0 broker non-votes.

        (d)  Not Applicable


Item 5. Other Information
        -----------------

        In March 1999, the Company extended its engagement of Genome
Securities, Inc. under the same terms and conditions, through September 1999.

        On May 5, 1999, the Company announced that Bruce C. Galton and 
Thomas P. Carney, Ph.D., had resigned as directors of the Company, that two 
new directors, Isidore S. Edelman, M.D., the Company's co-founder, a former 
board member, and a principal shareholder of the Company, and Jonathan 
Rothschild, another shareholder of the Company, had been appointed to the 
Board and that Franklin J. Iris, a director of the Company, had been 
appointed Chairman of the Board of the Company and Chief Executive Officer-
designate.  Mr. Galton resigned as Chairman and a director but has agreed 
to remain as Chief Executive Officer until May 31, 1999. At that time, Mr. 
Iris will become the Company's Chief Executive Officer.

        Under Mr. Galton's Employment Agreement which had a term that 
expired April 30, 1999, in the event the Company refused to renew his 
Employment Agreement, then upon Mr. Galton's written request, the Company 
had agreed to (i) pay Mr. Galton an amount equal to six months of his 
current salary in equal monthly installments, commencing the month in which 
the termination occurs, (ii) enter into a consulting contract with Mr. 
Galton at full pay and benefits for a minimum of three months, and (iii) 
lend Mr. Galton such amount as may be required to exercise any stock 
options then exercisable by Mr. Galton to purchase shares of the Company's 
Common Stock.

        Mr. Galton and the Company entered into a Separation From Employment
Agreement under which the Employment Agreement was amended to increase the
severance payment to an amount equal to nine months base salary ($157,500),
payable in nine consecutive monthly installments commencing June 15, 1999,
and to eliminate any consulting agreement following the non-renewal of
employment.  These payments are subject to acceleration to one lump sum
payment upon the first to occur of a sale or merger of the Company or its
liquidation or dissolution.  The Employment Agreement was also modified to
modify the payment terms of the nonrecourse loan to require payment of the
note to be paid upon on the earliest of three (3) years following the date
of the loan, receipt of the proceeds of sale of shares securing the loan,
upon the merger or sale of the Company or the liquidation or dissolution of
the Company.

        The Company also agreed to pay Mr. Galton additional severance 
equal to three months base salary ($52,500), payable in three consecutive 
monthly installments commencing June 15, 1999, in consideration for his 
agreement to continue as Chief Executive Officer and Chief Financial 
Officer during May 1999 and for his release of claims against the Company. 
These payments are subject to acceleration to one lump sum payment upon the 
first to occur of a sale or merger of the Company or its liquidation or 
dissolution.

                                  -14-
<PAGE> 15

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

        a.  Exhibit.

            10.20 License Agreement,  dated February 16, 1999, between 
                  Registrant and R&D Systems, Inc.

            10.21 Separation from Employment Agreement, dated May 5, 1999,
                  between Registrant and Bruce C. Galton, including
                  Exhibit A thereto.
      
            27.   Financial Data Schedule

        b.   Reports on Form 8-K.   Not applicable.

                                   -15-
<PAGE>16
                                SIGNATURES
                                ----------


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


Date: May 10, 1999                            CISTRON BIOTECHNOLOGY, INC.
                                                    (Registrant)


                                               /s/BRUCE C. GALTON
                                               ------------------
                                                  Bruce C. Galton
                                                  CEO and CFO

                                -16-