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 September 30, 2005.o
            
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934
              For
                the transition period from ________________________ to
                ____________________________





Commission
      file number 0-26476





GLYCOGENESYS,
      INC.


(Exact
      name of Registrant as specified in its charter.)


Nevada
            
            33-0231238(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer Identification No.)


Park
      Square Building


31
      St.
      James Avenue, 8th Floor


Boston,
      Massachusetts 02116


(Address
      of principal executive offices, including zip code.)





(617) 422-0674


Registrant’s
      telephone number, including area code.





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





Yes
            
            x
            
            No
            
            o





Indicate
      by checkmark whether the Registrant is an accelerated filer (as defined in
      Rule 12b-2 of the Exchange Act).





Yes
            
            o
            
            No
            
            x





The
      number of shares outstanding of the Registrant’s common stock, $.01 par value
      per share, at November 15, 2005 was 14,087,899 shares.












GLYCOGENESYS,
      INC.





INDEX





**Page**Part
                I—Financial InformationItem 1.
                Financial Statements
                (Unaudited)Condensed
                Consolidated Balance Sheets as of September 30, 2005
                and December 31, 2004
            
            3-4Condensed
                Consolidated Statements of Operations for the Three
                and Nine Months Ended September 30, 2005 and 2004
            
            5Condensed
                Consolidated Statements of Cash Flows for the Nine
                Months Ended September 30, 2005 and 2004
            
            6Notes
                to Unaudited Condensed Consolidated Financial
                Statements
            
            7-13Item 2.
                Management’s Discussion and Analysis of
                Financial Condition and Results of Operations
            
            14-18Item 3.
                Quantitative and Qualitative Disclosures About
                Market Risk
            
            18-29Item 4.
                Disclosure Controls and
                Procedures
            
            29Part
                II—Other InformationItem
                1. Legal Proceedings
            
            29Item 6.
                Exhibits
            
            30Signatures
            
            31











-2-
 **Table
          of Contents**





PART
      I - FINANCIAL INFORMATION




ITEM
      1. FINANCIAL STATEMENTS (UNAUDITED)





GLYCOGENESYS,
      INC.


CONDENSED
      CONSOLIDATED BALANCE SHEETS





ASSETS





(Unaudited)


**September
                  30,**
              
              **December
                  31,****2005**
              
              **2004**Current
                  assets:Cash
                  and cash equivalents
              
              $
              1,999,374
              
              $
              2,245,790Prepaid
                  expenses and other current assets
              
              
              554,951
              
              
              341,981Total
                  current assets
              
              
              2,554,325
              
              
              2,587,771Property
                  and equipment, at cost:Computer,
                  office and laboratory equipment
              
              
              879,119
              
              
              860,744Furniture
                  and fixtures
              
              
              294,291
              
              
              294,2911,173,410
              
              
              1,155,035Less
                  accumulated depreciation
              
              
              (880,250
              )
              
              (797,428
              )Property
                  and equipment, net
              
              
              293,160
              
              
              357,607Other
                  assets:Restricted
                  cash
              
              
              148,128
              
              
              148,128Other
              
              
              11,670
              
              
              11,670Total
                  other assets
              
              
              159,798
              
              
              159,798Total
                  assets
              
              $
              3,007,283
              
              $
              3,105,176


The
      accompanying notes are an integral part of these unaudited condensed
      consolidated financial statements.








-3-
 **Table
          of Contents**





GLYCOGENESYS,
      INC.


CONDENSED
      CONSOLIDATED BALANCE SHEETS





LIABILITIES
      AND STOCKHOLDERS’ EQUITY





(Unaudited)


**September
                  30,**
              
              
              **December
                  31,****2005**
              
              
              **2004**Current
                liabilities:Accounts
                  payable
              
              $
              2,088,251
              
              $
              1,313,196Accrued
                  liabilities
              
              
              392,073
              
              
              445,970Total
                  current liabilities
              
              
              2,480,324
              
              
              1,759,166Commitments
                  and contingenciesStockholders’
                  equity:Preferred
                  stock, $0.01 par value; authorized - 5,000,000; issued and outstanding
                  -
                  12,721.51 and 9,624.66 shares at September 30, 2005 and December
                  31, 2004,
                  respectively (liquidation value $25,503,477 and $21,929,692 as
                  of
                  September 30, 2005 and December 31, 2004, respectively)
              
              
              127
              
              
              97Common
                  stock, $0.01 par value; Authorized - 75,000,000 shares; Issued
                  and
                  outstanding - 13,587,590and
                  10,084,354 shares at September 30, 2005 and December 31,
                  2004,
                  respectively
              
              
              135,876
              
              
              100,844Additional
                  paid-in capital
              
              
              101,692,565
              
              
              95,794,745Accumulated
                  deficit
              
              
              (101,301,609
              )
              
              (94,549,676
              )Total
                  stockholders’ equity
              
              
              526,959
              
              
              1,346,010Total
                  liabilities and stockholders’ equity
              
              $
              3,007,283
              
              $
              3,105,176


The
      accompanying notes are an integral part of these unaudited condensed
      consolidated financial statements.








-4-
 **Table
          of Contents**





GLYCOGENESYS,
      INC.


CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS





(Unaudited)


Three
                    Months Ended September 30,
                
                Nine
                    Months Ended September 30,2005
                
                2004
                
                2005
                
                2004Operating
                    expenses:Research
                    and development
                
                $
                1,167,963
                
                $
                1,360,047
                
                $
                3,561,713
                
                $
                3,956,740General
                    and administrative
                
                
                982,709
                
                
                1,337,566
                
                
                3,200,894
                
                
                4,073,008Total
                    operating expenses
                
                
                2,150,672
                
                
                2,697,613
                
                
                6,762,607
                
                
                8,029,748Operating
                    loss
                
                
                (2,150,672
                )
                
                (2,697,613
                )
                
                (6,762,607
                )
                
                (8,029,748
                )Other
                    income:Interest
                    income
                
                
                20,112
                
                
                12,967
                
                
                38,317
                
                
                26,677Other
                    (expense) income
                
                
                (28,891
                )
                
                91
                
                
                (27,643
                )
                
                57,510Total
                    other (expense) income
                
                
                (8,779
                )
                
                13,058
                
                
                10,674
                
                
                84,187Net
                    loss
                
                
                (2,159,451
                )
                
                (2,684,555
                )
                
                (6,751,933
                )
                
                (7,945,561
                )Preferred
                    stock dividends accreted or accrued
                
                
                (187,678
                )
                
                (115,021
                )
                
                (517,037
                )
                
                (342,564
                )Net
                    loss applicable to common stock
                
                $
                (2,347,129
                )
                $
                (2,799,576
                )
                $
                (7,268,970
                )
                $
                (8,288,125
                )Basic
                    and diluted net loss per common share
                
                $
                (0.18
                )
                $
                (0.28
                )
                $
                (0.64
                )
                $
                (0.93
                )Weighted
                    average number of common shares outstanding
                
                
                13,165,422
                
                
                10,084,096
                
                
                11,292,215
                
                
                8,934,032
 The
      accompanying notes are an integral part of these unaudited condensed
      consolidated financial statements.








-5-
 **Table
          of Contents**





GLYCOGENESYS,
      INC.


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS





(Unaudited)


**Nine
                  Months Ended****September
                  30,****2005**
              
              **2004**Cash
                  flows from operating activities:Net
                  loss
              
              $
              (6,751,933
              )
              $
              (7,945,561
              )Adjustments
                  to reconcile net loss to net cash used in operating and discontinued
                  activities:Stock-based
                  compensation expense to non-employees
              
              
              13,837
              
              
              17,753Depreciation
                  and amortization
              
              
              82,822
              
              
              89,161Changes
                  in assets and liabilities:Prepaid
                  expenses and other current assets
              
              
              (212,970
              )
              
              71,878Accounts
                  payable
              
              
              775,055
              
              
              649,079Accrued
                  liabilities
              
              
              (53,897
              )
              
              (65,920
              )Net
                  liabilities of discontinued operations
              
              
              –
              
              
              (57,698
              )Net
                  cash used in operating and discontinued activities
              
              
              (6,147,086
              )
              
              (7,241,308
              )Cash
                  flows from investing activities:Purchase
                  of property and equipment
              
              
              (18,375
              )
              
              (173,689
              )Net
                  cash used in investing activities
              
              
              (18,375
              )
              
              (173,689
              )Cash
                  flows from financing activities:Proceeds
                  from sale of securities, net of issuance costs
              
              
              5,919,045
              
              
              8,801,345Proceeds
                  from exercise of warrants and stock options
              
              
              –
              
              
              6,342Net
                  cash provided by financing activities
              
              
              5,919,045
              
              
              8,807,687Net
                  increase (decrease) in cash and cash equivalents
              
              
              (246,416
              )
              
              1,392,690Cash
                  and cash equivalents, beginning balance
              
              
              2,245,790
              
              
              3,193,575Cash
                  and cash equivalents, ending balance
              
              $
              1,999,374
              
              $
              4,586,265Supplemental
                  disclosure of non-cash financing activities:Conversion
                  of Series C preferred stock to common stock
              
              $
              –
              
              $
              1,861Conversion
                  of Series D preferred stock to common stock
              
              $
              34,631
              
              $
              –Conversion
                  of Series D preferred stock dividends to common stock
              
              $
              401
              
              $
              –Dividends
                  accreted on Series B preferred stock
              
              $
              365,271
              
              $
              342,564Dividends
                  accrued on Series D preferred stock
              
              $
              151,766
              
              $
              –




The
      accompanying notes are an integral part of these unaudited condensed
      consolidated financial statements.








-6-
 **Table
          of Contents**





GLYCOGENESYS,
      INC.


NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


September
      30, 2005




(1) 
      Basis of Presentation





The
      accompanying unaudited condensed consolidated financial statements of
      GlycoGenesys, Inc. (together with its subsidiaries, the “Company”), have been
      prepared by the Company in accordance with accounting principles generally
      accepted in the United States of America applicable to interim periods, and
      with
      the rules and regulations of the Securities and Exchange Commission. In the
      opinion of management, such financial statements reflect all adjustments,
      consisting of only normal recurring adjustments, which are necessary for a
      fair
      presentation of the results of the interim periods presented. The results of
      operations for the interim periods shown in this report are not necessarily
      indicative of results expected for the full year. These financial statements
      do
      not include disclosures associated with the annual financial statements and,
      accordingly, should be read in conjunction with the Management’s Discussion and
      Analysis of Financial Condition and Results of Operations and the financial
      statements and footnotes for the year ended December 31, 2004, included in
      the
      Company’s Annual Report on Form 10-K.





The
      financial statements do not include any adjustments relating to the
      recoverability and classification of recorded asset amounts or the amounts
      and
      classification of liabilities that might be necessary should the Company be
      unable to continue as a going concern. The Company's continuation as a going
      concern depends on its ability to obtain additional financing, to consummate
      a
      strategic transaction, or to make alternative arrangements to fund its
      operations. There can be no assurance that the Company will be able to obtain
      necessary additional financing, to consummate a strategic transaction, or to
      make alternative arrangements to fund its operations, as there are currently
      no
      commitments, other than pursuant to the common stock purchase agreement with
      Fusion Capital Fund II, LLC dated October 21, 2005 which the Company must
      supplement with additional funds.





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 and disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of operating expenses during the period. Actual results
      could differ from those estimates.




(2) 
      Operations





As
      of
      September 30, 2005, the Company had an accumulated deficit of $(101,301,609).
      Despite this accumulated deficit, the Company had a net working capital position
      (current assets less current liabilities) of $74,001 at September 30, 2005.
      The
      Company believes that its existing funds have the potential to fund its
      operations through November 2005, consistent with prioritizing research and
      development and other expenditures. The Company intends to raise additional
      capital through equity and/or debt financings or partnering with a large
      biotechnology or pharmaceutical company to support its current and planned
      clinical trials and continued operations. Since inception, the Company has
      funded its operations primarily through the proceeds from the sale of equity
      securities. From the inception of the Company through September 30, 2005, the
      Company has been successful in raising $82.7 million from the sales of equity
      securities.





The
      Company’s future is dependent upon its ability to quickly obtain financing to
      fund its operations. As of November 15, 2005, other than the common stock
      purchase agreement with Fusion Capital, the Company has not obtained commitments
      from existing or potential investors to provide additional financing. The
      Company will need to raise significant additional funding. To the extent that
      the Company is unable to raise additional capital prior to the end of November
      2005, it may be required to cease operations. The Company is working with an
      investment bank to secure additional funds likely through the issuance of
      convertible debt securities which we will sell solely to qualified institutional
      buyers and select larger institutional accredited investors and has a number
      of
      potential sources in various stages of development. There can be no assurances
      that the Company will successfully raise additional funds. The Company expects
      to incur substantial additional operating costs, including costs related to
      ongoing research and development activities, preclinical studies and clinical
      trials.





While
      on
      October 21, 2005 the Company entered into a common stock purchase agreement
      with
      Fusion Capital (“Fusion Agreement”) to sell Fusion Capital up to $20 million of
      common stock over a 25 month period (See Note 6), the Company must maintain
      the
      effectiveness of the registration statement covering the shares that may be
      sold
      to Fusion Capital, which was filed on Form S-1 on November 4, 2005 and declared
      effective on November 14, 2005, in order to issue stock and receive proceeds
      under the Fusion Agreement. **** In
      addition to the funds raised from the sale of common stock to Fusion Capital,
      if
      any, the Company must raise additional funds in both the near and long
      term.





In
      its
      Annual Report on Form 10-K for the year ended December 31, 2004, the Company
      reported that there is substantial doubt that the Company will have the ability
      to continue as a going concern and, therefore, may be unable to realize its
      assets and discharge its liabilities in the normal course of business. The
      accompanying financial statements do not include any adjustments relating to
      the
      recoverability and classification of recorded asset amounts or to amounts and
      classification of liabilities that may be necessary should the Company be unable
      to continue as a going concern.







-7-
 **Table
          of Contents**





GLYCOGENESYS,
      INC.


NOTES
      TO
      UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


September
      30, 2005








Principal
      risks to the Company include the need to obtain adequate financing to fund
      future operations, the successful development and marketing of pharmaceutical
      products, dependence on collaborative partners, United States Food and Drug
      Administration approval, dependence on key individuals and competition from
      similar products and larger companies.




(3) 
      Net Loss Per Common Share





Basic
      loss per share is computed using the weighted-average number of common shares
      outstanding. The dilutive effect of the potential common shares consisting
      of
      outstanding stock options and warrants is determined using the treasury stock
      method. Diluted weighted average shares outstanding for the three month and
      nine
      month periods ended September 30, 2005 and 2004 excluded the potential common
      shares from convertible preferred stock, warrants and stock options because
      their inclusion would be anti-dilutive. At September 30, 2005 and 2004, there
      were 10,249,320 and 3,595,312 warrants outstanding, respectively, 4,842,232
      and
      1,698,296 shares, respectively, issuable upon conversion of outstanding shares
      of preferred stock and 674,514 and 316,628 stock options outstanding,
      respectively, which were omitted from the net loss per common share
      calculations.




(4) 
      Equity





(a) Issuance
        of Preferred Stock





In
      the
      nine months ended September 30, 2005, the Company issued 6,500 shares of Series
      D convertible preferred stock (which consisted of 2,000 shares issued in March
      2005 and 4,500 shares issued in May 2005) for gross consideration of
      $6,500,000.




(b) 
      Issuance of Common Stock





During
      the three months ended September 30, 2005, the Company issued 1,875,837 shares
      of common stock upon conversion of 1,858.132 shares of Series D preferred stock,
      including 17,705 shares of common stock issued as payment of dividends on such
      converted Series D preferred stock.





In
      the
      nine months ended September 30, 2005, the Company issued 3,503,236 shares of
      common stock upon conversion of 3,463.132 shares of Series D preferred stock,
      including 40,099 shares of common stock issued as payment of dividends on such
      converted Series D preferred stock.




(c) 
      Stock, Stock Options, and Warrants





The
      Company has authorized 5,000,000 shares of preferred stock, $0.01 par value.
      Such preferred stock consists of:





•
            
            Series A
                convertible preferred stock, 7,500 shares authorized; 6,153.51 shares
                issued and outstanding as of September 30, 2005 and December 31,
                2004
                (liquidation value $14,953,030).•
            
            Series B
                convertible preferred stock, 6,000 shares authorized; 3,471.15 shares
                issued and outstanding as of September 30, 2005 and December 31,
                2004
                (liquidation value $7,341,933 and $6,976,662,
                respectively).•
            
            Series C
                convertible preferred stock, 1,117 shares authorized; no shares issued
                and
                outstanding as of September 30, 2005 and December 31,
                2004.•
            
            Series
                D convertible preferred stock, 10,000 shares authorized, 3,096.848
                issued
                and outstanding as of September 30, 2005 (liquidation value
                $3,208,514).





The
      Company has authorized 75,000,000 shares of common stock, $0.01 par value.
      At
      September 30, 2005 and December 31, 2004, there were 13,587,590 and 10,084,354
      shares issued and outstanding, respectively.







-8-
 **Table
          of Contents**





GLYCOGENESYS,
      INC.


NOTES
      TO
      UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


September
      30, 2005








During
      the three months ended September 30, 2005, the Company granted no options to
      purchase shares of common stock. During the three months ended September 30,
      2004, the Company granted options to purchase 1,500 shares of common stock
      at a
      weighted average exercise price of $2.70 per share to employees and others.
      No
      options were exercised during the three months ended September 30, 2005 or
      2004.
      During the three months ended September 30, 2005 and 2004, 3,864 and 1,500
      options to purchase common stock expired.





During
      the nine months ended September 30, 2005 and 2004, the Company granted options
      to purchase 361,814 and 63,185 shares of common stock, respectively, at a
      weighted average exercise price of $1.04 and $7.57, respectively, per share
      to
      employees and others. During the nine months ended September 30, 2004 options
      to
      purchase 183 shares of common stock were exercised at a weighted average
      exercise price of $1.62 for proceeds of $296. During the nine months ended
      September 30, 2005 no options were exercised. During the nine months ended
      September 30, 2005 and 2004, 8,097 and 4,835 options to purchase common stock
      expired.





During
      the three months ended September 30, 2004, the Company issued warrants to
      purchase 1,394,337 shares at a weighted average exercise price of
      $6.00 **** per
      share. During the three months ended September 30, 2005, the Company issued
      no
      warrants. No warrants to purchase shares were exercised during the three months
      ended September 30, 2005 and 2004. No warrants expired during the three months
      ended September 30, 2005 and 2004.





During
      the nine months ended September 30, 2005 and 2004, the Company issued warrants
      to purchase 6,715,000 and 1,841,428 shares, respectively, at a weighted average
      exercise price of $1.23 and $7.16 per share, respectively. During the nine
      months ended September 30, 2004, warrants to purchase 25,765 shares were
      exercised for consideration of $6,047. No warrants were exercised during the
      nine month period ended September 30, 2005. During the periods ended September
      30, 2005 and 2004, warrants to purchase 60,993 and **** 286,671
      shares expired, respectively.





Total
      non-cash expense related to stock, stock option and warrant grants recorded
      in
      the accompanying condensed consolidated statements of operations for the nine
      months ended September 30, 2005 and 2004 amounted to $13,837 and $17,753,
      respectively.





(d) Stock-based
      compensation plans





The
      Company has stock-based employee compensation plans that are described more
      fully in Note 4 to the Company’s consolidated financial statements included in
      its Annual Report on Form 10-K for the year ended December 31, 2004. The Company
      accounts for these plans under the recognition and measurement principles of
      APB
      Opinion No. 25, “Accounting for Stock Issued to Employees”, and related
      interpretations. No stock-based employee compensation cost is reflected in
      the
      Consolidated Statements of Operations, as all options granted under these plans
      had an exercise price equal to or greater than the market value of the
      underlying common stock on the dates of grant. The following table illustrates
      the effect on net loss and net loss per common share if the Company had applied
      the fair value recognition provisions of SFAS No. 123, “Accounting for
      Stock-Based Compensation” to stock-based employee compensation.








-9-
 **Table
          of Contents**





GLYCOGENESYS,
      INC.


NOTES
      TO
      UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


September
      30, 2005





Had
      the
      compensation cost for the plans been determined based on the fair value at
      the
      grant dates for awards under the plans consistent with the method described
      in
      SFAS No. 123, the Company’s net loss and basic and diluted net loss per common
      share on a pro forma basis would have been:




**Three
                  Months Ended September 30,**
              
              **Nine
                  Months Ended September 30,****2005**
              
              **2004**
              
              **2005**
              
              **2004**Net
                  loss applicable to common stock, as reported
              
              $
              (2,347,129
              )
              $
              (2,799,576
              )
              $
              (7,268,970
              )
              $
              (8,288,125
              )Less:
                  stock-based employee compensation expense determined under fair
                  value
                  based method for all awards
              
              
              (47,873
              )
              
              (109,057
              )
              
              (212,462
              )
              
              (413,648
              )Pro
                  forma net loss applicable to common stock
              
              $
              (2,395,002
              )
              $
              (2,908,633
              )
              $
              (7,481,432
              )
              $
              (8,701,773
              )Basic
                  and diluted net loss per common share, as reported
              
              $
              (0.18
              )
              $
              (0.28
              )
              $
              (0.64
              )
              $
              (0.93
              )Pro
                  forma basic and diluted net loss per common share
              
              $
              (0.18
              )
              $
              (0.29
              )
              $
              (0.66
              )
              $
              (0.97
              )


The
      preceding pro forma results were calculated using the Black-Scholes
      option-pricing model. The following assumptions were used for options granted
      during the three months ended September 30, 2005 and 2004, respectively: (1)
      risk-free interest rates of 4.2% and 5.0%, respectively; (2) dividend yields
      of
      0.0%; (3) expected lives of **** 7.8
      and
      7.0 years; and (4) volatility of 87.8% and 76.0%, respectively. There were
      no
      options granted during the three months ended September 30, 2005. The weighted
      average fair value of options granted during the three months ended September
      30, 2004 was $2.22. ****





The
      preceding pro forma results were calculated using the Black-Scholes
      option-pricing model. The following assumptions were used for options granted
      during the nine months ended September 30, 2005 and 2004, respectively: (1)
      risk-free interest rates of 4.2% and 4.8%, respectively; (2) dividend yields
      of
      0.0%; (3) expected lives of **** 7.8
      and
      7.0years; and (4) volatility of 109.8.% and 86.7%, respectively. The weighted
      average fair value of options granted during the nine months ended September
      30,
      2005 and 2004 was $0.75 and $6.31, respectively. ****





Stock
      or
      other equity-based compensation for non-employees is accounted for under the
      fair value-based method as required by SFAS No. 123 and Emerging Issues
      Task Force (“EITF”) Issue No. 96-18, “Accounting for Equity Instruments
      That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
      Selling, Goods or Services” and other related interpretations. Under this
      method, the equity-based instrument is valued at either the fair value of the
      consideration received or the equity instrument issued on the date of grant.
      The
      resulting compensation cost is recognized and charged to operations over the
      service period, which is usually the vesting period.





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards No. 123R, *“Share-Based
      Payment”* (“SFAS
      No. 123R”). This Statement is a revision of SFAS No. 123, “ *Accounting
      for Stock-Based Compensation”,* and
      supersedes Accounting Principles Board Opinion No. 25, “Accounting for
      Stock Issued to Employees”, and its related implementation guidance. SFAS
      No. 123R focuses primarily on accounting for transactions in which an
      entity obtains employee services in share-based payment transactions. The
      Statement requires entities to recognize stock compensation expense for awards
      of equity instruments to employees based on the grant-date fair value of those
      awards (with limited exceptions). SFAS No. 123R is effective for the
      Company on January 1, 2006.







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GLYCOGENESYS,
      INC.


NOTES
      TO
      UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


September
      30, 2005





The
      Company is evaluating the two methods of adoption allowed by SFAS No. 123R;
      the
      modified-prospective transition method and the modified-retrospective transition
      method and, accordingly, has not yet determined the impact of adoption of SFAS
      No. 123R on its financial statements.




(5)
      Legal
      Proceedings and Contingencies





*Platt
      Litigation* —On
      January 29, 2004, David Platt commenced suit against the Company and certain
      current and former directors of the Company in the Massachusetts Superior Court,
      Suffolk County. In his Complaint, Platt seeks damages for alleged breach of
      his
      severance agreement with the Company, including the failure to pay approximately
      $180,000 in severance benefits and alleged breaches in connection with
      maintenance by the Company of certain restrictions on Platt’s sale of stock. The
      Complaint further asserts claims against certain current and former directors
      of
      the Company for alleged breaches of fiduciary duty in failing to assist in
      the
      removal of restrictive legends on David Platt’s shares. Platt also purports to
      state claims for double or treble damages, as well as attorney fees, under
      General Laws Chapter 93A, Section 11, the Massachusetts Unfair Trade Practice
      Act. The case has been assigned under case number 04-0398 and will be heard
      in
      the Business Litigation Session of the Suffolk County Superior Court. The
      Company believes these claims are without merit.





On
      February 23 2004, the Company filed its answer and counterclaimed against David
      Platt for breach of his severance agreement, against Pro-Pharmaceuticals, Inc.
      for tortious interference with the severance agreement, and against Platt and
      Pro-Pharmaceuticals, Inc. for misappropriation of proprietary rights and for
      unfair and deceptive acts. The Company seeks monetary damages and injunctive
      relief to prevent David Platt and Pro-Pharmaceuticals from engaging in certain
      competitive activities relating to the use of polysaccharides to treat cancer
      and further seeks the assignment by David Platt and Pro-Pharmaceuticals of
      certain intellectual property, including Davanat ® ,
      to the
      Company. Under the counterclaim for unfair and deceptive acts, the Company
      is
      seeking treble damages as well as attorneys’ fees.





On
      June
      21, 2004, the Company added a supplemental counterclaim against David Platt
      and
      Pro-Pharmaceuticals for injurious falsehood, unfair competition and unfair
      and
      deceptive acts relating to statements made by Pro-Pharmaceutical regarding
      certain patent applications the Company discontinued prosecuting and
      contractually returned to David Platt. The Company seeks injunctive relief
      and
      monetary damages.




Discovery
      is proceeding in this matter. A trial is not expected until the second half
      of
      2006.





*Re-examination.* On
      January 28, 2005, the Company was informed that Pro-Pharmaceuticals made a
      request to the U.S. Patent and Trademark Office, or USPTO, to re-examine its
      U.S. Patent No. 6,680,306 “Method for Enhancing the Effectiveness of Cancer
      Therapies” (the “‘306 Patent”) issued in January 2004 to challenge the claims of
      that patent. On April 12, 2005, the USPTO issued an office action in connection
      with the re-examination with questions regarding the validity of the claims.
      The
      Company responded to the issues raised in the office action on June 13, 2005
      amending the claims so that they cover modified citrus pectin and other
      polymeric carbohydrates that bind to galectins. On July 13, 2005,
      Pro-Pharmaceuticals filed a counter response to the Company’s response as is
      their right. On October 18, 2005, the USPTO issued a non-final office action
      in
      which it no longer adopts many of the bases for questioning the validity of
      the
      claims of the ‘306 Patent but which still maintains some bases for questioning
      the validity of the claims. The Company has until December 18, 2005 to address
      the issues raised in the October 18 th office
      action. Pro-Pharmaceuticals may respond within 30 days after the Company’s
      response. This re-examination does not affect the Company’s plans for
      development or commercialization of GCS-100, regardless of its outcome, as
      the
      Company has additional patents and patent applications that it believes would
      cover the use of GCS-100 when combined with other therapies.





Re-examinations
      can be requested by any party and are frequently requested by parties who
      believe their ability to commercialize a product may be adversely affected
      by an
      issued patent and who wish to challenge claims in the patent. The ‘306 Patent,
      as amended, broadly claims the use of polymeric carbohydrates with side chains
      that bind to galectins, including GCS-100, prior to or in combination with
      chemotherapy or surgery for the treatment of cancer. Pro-Pharmaceuticals, Inc.
      has publicly stated that its lead drug candidate, Davanat® is a polymeric
      carbohydrate with side chains, binds to galectins and is used in combination
      with chemotherapy.





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GLYCOGENESYS,
      INC.


NOTES
      TO
      UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


September
      30, 2005





*Nasdaq
      Listing -* On
      April
      20, 2005, the Company received a letter from Nasdaq indicating that the bid
      price of its common stock had been below $1.00 for 30 consecutive business
      days
      and that it had a 180-day grace period, until October 17, 2005, to achieve
      a bid
      price of at least $1.00 for a period of at least 10 consecutive business days
      or
      face delisting. On June 30, 2005, the Company received a letter from Nasdaq
      indicating that it had regained compliance by maintaining a closing bid price
      above $1.00 for at least 10 consecutive days and the matter is now
      closed.





On
      April
      7, 2005, the Company received a letter from Nasdaq indicating that as of
      December 31, 2004, it did not comply with Nasdaq Marketplace Rule 4310(c)(2)(B),
      which requires listed companies to have (i) a minimum of $2,500,000 in
      stockholders’ equity, (ii) $35,000,000 or more in market value of listed
      securities or (iii) $500,000 of net income from continuing operations for the
      most recently completed fiscal year or two of the three most recently completed
      fiscal years. In the letter, Nasdaq indicated it is reviewing the Company’s
      eligibility for continued listing and requested that the Company provide its
      specific plan to achieve and sustain compliance with Nasdaq Capital Market
      listing requirements. Based on the review of the plan submitted by the Company,
      Nasdaq agreed to permit our continued listing but is continuing to monitor
      the
      Company’s ongoing compliance with the listing requirements and could delist the
      Company. As of September 30, 2005, it had $0.5 million in stockholders’ equity.
      The Company’s market capitalization was $14.0 million on September 30, 2005 and
      was $10.8 million on November 15, 2005. Nasdaq will continue to monitor the
      Company’s ongoing compliance with the listing requirements and if the Company
      does not meet these requirements, it could become subject to delisting. It
      is
      unlikely that the Fusion Agreement and additional funding, if any, that we
      secure would enable the Company to comply with the stockholders’ equity and
      market capitalization listing rquirements and thus our ability to continue
      listing our common stock on the Nasdaq Capital Market is quite
      uncertain.





(6)
      Subsequent Events





*Interference.* On
      November 2, 2005, the Company received notice from the United States Patent
      and
      Trademark Office that an interference had been declared between U.S. Patent
      Application No. 08/024,487 “Modified Pectin” (the “’487 Application”), and U.S.
      Patent No. 5,895,784 “Method for Treatment of Cancer by Oral Administration of
      Modified Pectin” (the “’784 Patent”). The declaration of interference indicates
      that the U.S. Patent and Trademark Office has made a preliminary determination
      that the ‘784 Patent and the ‘487 Application claim the same invention. The ‘487
      Application covers the use of modified pectin to treat or inhibit metastasis.
      The ‘784 Patent covers the oral administration of modified pectin to treat
      cancer and metastasis among other things. The Company is the exclusive licensee
      to both the ‘487 Application and the ‘784 Patent. Therefore, the declaration of
      the interference and the outcome of the proceeding will not affect the Company’s
      efforts to commercialize GCS-100, both in its current intravenous formulation
      or
      as an orally-delivered drug.





The
      Company intends to comply with its obligations and responsibilities under the
      respective license agreements for the ‘487 Application and ‘784 Patent,
      including taking all steps necessary to perfect and maintain the '487
      Application. The Company will cooperate with the ‘487 Application inventor in
      the interference to make sure that the claims of the ‘487 Application are not
      reduced or eliminated. Under Section 5.1(b) of the Company’s license agreement
      for the ‘784 Patent, in the event of an interference, the Company has the right
      to direct the inventors to amend the ’784 Patent, or take any further action the
      Company deems reasonably necessary to avoid, overcome, or terminate any
      interference proceeding.





As
      is
      standard in interference proceedings, the Board of Patent Appeals and
      Interferences will first examine whether the claims of the ‘487 Application and
      the ‘784 Patent that are subject to the interference are in fact the same
      invention or are patentably distinct (i.e., separate inventions). If
      the
      claims are determined to be patentably distinct then the interference is ended
      and the ‘487 Application and the ‘784 Patent will each retain their full scope
      of claims.





If
      the
      claims are determined to be the same invention then the Company will utilize
      its
      ability to modify the ‘784 Patent so that there is no longer any interference
      between the ‘487 Application and the ‘784 Patent. This would allow the broader
      claims of the ‘487 Application, which are not limited to oral administration, to
      issue as a patent in full. Even if the claims of the ‘784 Patent were amended or
      reduced, the ‘487 Application would still cover the oral administration of
      GCS-100. Therefore, regardless of the outcome of the interference, as exclusive
      licensee of the ‘487 Application and the ‘784 Patent, the Company will still
      have the exclusive rights to commercialize GCS-100, both in its current
      intravenous formulation and as an orally delivered drug. The Company’s plans for
      commercializing GCS-100 are not affected by the interference.











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GLYCOGENESYS,
      INC.


NOTES
      TO
      UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


September
      30, 2005








*Common
      Stock Purchase Agreement.* On
      October 21, 2005, the Company entered into a common stock purchase agreement
      (the “Purchase Agreement”) with Fusion Capital Fund II, LLC (“Fusion Capital”).
      Pursuant to the terms of the Purchase Agreement, Fusion Capital has agreed
      to
      purchase from the Company up to $20,000,000 of its common stock over a period
      of
      up to 25 months, subject to earlier termination at the Company's discretion.
      Pursuant to the terms of a registration rights agreement, dated as of October
      21, 2005, the Company has filed a registration statement with the U.S.
      Securities and Exchange Commission on November 4, 2005 covering up to 9,355,276
      shares that may be sold to Fusion Capital under the Purchase Agreement. This
      registration statement was declared effective on November 14, 2005.





So
      long
      as the registration statement remains effective and other conditions are met,
      each trading day during the term of the Purchase Agreement the Company has
      the
      right to sell to Fusion Capital up to $40,000 of the Company's common stock
      at a
      purchase price based upon the recent market price of the Company’s common stock
      at the time of sale. The amount sold to Fusion Capital may be increased by
      the
      Company based upon increases in the price of the Company’s common stock. The
      Company has the right to control the timing and amount of shares sold to Fusion
      Capital. The Company also has the right to terminate the Purchase Agreement
      at
      any time without cost. Fusion Capital does not have the right or the obligation
      to purchase shares of the Company's common stock in the event that the price
      of
      the common stock is less than $0.25 per share. Under the Purchase Agreement,
      Fusion Capital is prohibited from engaging in any direct or indirect short
      selling or hedging resulting in a net short position.











-13-
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ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS





The
      following discussion should be read in conjunction with the consolidated
      financial statements and the notes thereto.





The
      following contains certain forward-looking statements within the meaning of
      Section 27A of the Securities Act of 1933, as amended, and Section 21E
      of the Securities Exchange Act of 1934, as amended, which are intended to be
      covered by the safe harbors created thereby. All forward-looking statements
      involve risks and uncertainty. Although we believe that the assumptions
      underlying the forward-looking statements contained herein are reasonable,
      any
      of the assumptions could be inaccurate, and therefore, there can be no assurance
      that the forward-looking statements included in this report will prove to be
      accurate. Our actual results may differ materially from the results anticipated
      in the forward-looking statements. Any statements contained in this Quarterly
      Report on Form 10-Q that relate to future plans, events or performance are
      forward-looking statements that involve risks and uncertainties, including
      but
      not limited to the results of financing efforts, risks of product development
      (such as failure to demonstrate efficacy or safety), risk related to FDA and
      other regulatory procedures, market acceptance risks, the impact of competitive
      products and pricing, the results of current and future licensing, joint
      ventures and other collaborative relationships, litigation risks, developments
      regarding intellectual property rights and litigation, and other risks
      identified in the section titled “Quantitative and Qualitative Disclosures about
      Market Risk—Certain Factors that May Affect Future Results” included herein
      which discuss factors that could contribute to such material differences. In
      light of the significant uncertainties inherent in the forward-looking
      statements included herein, the inclusion of such information should not be
      regarded as a representation by the Company or any other person that the
      objectives and plans of the Company will be achieved. We undertake no obligation
      to publicly release the results of any revisions to these forward-looking
      statements that may be made to reflect events or circumstances after the date
      hereof or to reflect the occurrence of unanticipated events.





Overview





GlycoGenesys,
      Inc. (together with its subsidiaries, as the context requires, the “Company”) is
      a biotechnology company developing novel drug candidates primarily based on
      carbohydrate compounds and related technologies. The Company's lead drug
      candidate GCS-100®, a potential treatment for multiple forms of solid tumors and
      bloodborne cancers, completed Phase II(a) clinical trials for colorectal and
      pancreatic cancer using a 20 mg/m 2 dose of
      the former high ethanol formulation.





The
      Company’s near-term objectives are to continue to proceed through the various
      phases of United States Food and Drug Administration (“FDA”) clinical trials for
      GCS-100LE, a low ethanol formulation of GCS-100, and to secure the necessary
      financial resources to conduct such trials, through raising funds in the capital
      market and repartnering with a large biotechnology or pharmaceutical company.





GCS-100
      is a complex carbohydrate intended to fight bloodborne and solid tumor cancers
      and their metastases, either as a monotherapy or in combination with approved
      chemotherapies.  In addition to the intellectual property the Company
      owns
      relating to GCS-100, it has exclusive licenses from David Platt and Wayne State
      University and the Barbara Ann Karmanos Cancer Institute relating to
      GCS-100.





In
      pursuing these objectives, in May 2004, the Company initiated a Phase I dose
      escalation trial in multiple solid tumor indications evaluating GCS-100LE which
      is being conducted at Sharp Memorial Hospital, Clinical Oncology Research in
      San
      Diego and the University of Arizona Cancer Center at Tucson and at Scottsdale,
      AZ. In September 2005, the Company announced preliminary results establishing
      the maximum tolerated dose, or MTD, in this trial as 160 mg/m 2 and
      provided safety and pharamcokinetic data. Response data available for 14
      patients with advanced disease showed that 11 experienced periods of stable
      disease; three of these patients achieved stable disease despite being
      non-responsive to any prior therapies. In addition, a Phase I/II trial testing
      GCS-100LE in multiple myeloma at Dana-Farber Cancer Institute, Boston, MA was
      initiated in March 2005 and initiated at the Roswell Park Cancer Institute,
      Buffalo, NY in November 2005; a Phase II trial in multiple myeloma is expected
      to begin in the third quarter of 2006. The Company plans to begin a Phase I/II
      trial testing GCS-100LE in chronic lymphocytic leukemia (CLL) in the fourth
      quarter 2005 and to initiate a Phase II/III pivotal (assuming sufficient results
      from the Phase I/II trial) trial in CLL in the fourth quarter of 2006. A Phase
      II solid tumor trial with GCS-100LE is planned to begin in the second half
      of
      2006, which will be designed based on a review of all clinical and preclinical
      data.





The
      Company continues to pursue its goal of consummating a strategic funding through
      a partnership with a biotechnology or pharmaceutical company or a relationship
      with fundamental, long term investors in order to provide long-term funding.
      Several have expressed interest in a potential strategic relationship and want
      to review the interim data from our bloodborne cancer trials expected in the
      second quarter of 2006 before committing to negotiating an alliance. We continue
      to pursue these activities as well as additional funding opportunities to
      supplement the common stock purchase agreement with Fusion Capital announced
      on
      October 24, 2005.





The
      Company’s business was founded in 1992 as IGG International, Inc. to pursue
      carbohydrate-based pharmaceutical research for cancer therapeutics. In 1995,
      the
      Company merged with Alvarada Inc., a publicly-traded corporation having no
      active operations. In 1998 the Company changed its name to SafeScience, Inc.
      and
      in October 2001 the Company changed its name to GlycoGenesys, Inc. The Company’s
      principal executive offices are located at 31 St. James Avenue, 8th Floor,
      Boston, MA 02116 and the telephone number is (617) 422-0674. The Company’s
      home page is located on the worldwide web at
      http://www.glycogenesys.com.




-14-
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          of Contents**





GlycoGenesys
      has two wholly-owned subsidiaries, International Gene Group, Inc. (“IGG”), and
      SafeScience Products, Inc. (“SafeScience Products”). These subsidiaries are
      currently non-operating subsidiaries.





Critical
      Accounting Policies





Our
      significant accounting policies are described in the Notes to the Consolidated
      Financial Statements included in our Annual Report on Form 10-K for
      the
      year ended December 31, 2004. The accounting policies used in preparing
      our
      interim consolidated financial statements for the nine months ended September
      30, 2005 are the same as those described in our


Annual
      Report on Form 10-K.





The
        Company’s critical accounting policies are those that are important to the
        portrayal of the Company’s financial condition and operating results and require
        management’s most difficult, subjective or complex judgments, often as a result
        of the need to make estimates about the effect of matters that are inherently
        uncertain. The Company believes that its most critical accounting policy
        relates
        to its basis of accounting. Pending the outcome of management's efforts to
        secure additional financing or a decision to cease operations and liquidate,
        the
        Company will continue to prepare its financial statements on the assumption
        that
        it will continue as a going concern, which contemplates the realization of
        assets and liquidation of liabilities in the normal course of business.
        Consequently, the financial statements do not include any adjustments to
        reflect
        possible future effects of the recoverability and classification of assets
        or
        the amounts and classification of liabilities that may result if management
        and
        the Board of Directors were to determine that additional financing was not
        available on favorable terms, and that the Company should cease operations
        and
        liquidate. In this event, the financial statements would be prepared and
        presented on the liquidation basis of accounting, whereby assets are valued
        at
        their estimated net realizable values and liabilities are stated at their
        estimated settlement amounts. There can be no assurance that, in the event
        of a
        liquidation, there will be any assets remaining to be distributed to
        shareholders. The Company believes that its second most critical accounting
        policy relates to the accounting for its accrued liabilities, specifically
        clinical research organization costs. While the Company bases its judgments
        and
        estimates on historical experience and other assumptions that management
        believes are appropriate and reasonable under current circumstances, actual
        results may differ from those estimates.




Results
      of Operations: Three Months Ended September 30, 2005 versus September 30, 2004





We
      incurred a net loss applicable to common stock of $2,347,129 for the three
      months ended September 30, 2005 versus $2,799,576 for the three months ended
      September 30, 2004.





*Research
      and Development Expenses* —
      Developing carbohydrate-based therapeutic compounds is our primary business
      focus and to a lesser extent, we previously developed agricultural products.
      The
      explanations of the changes in these research and development areas from
      quarter-to-quarter are described in this section.





Our
      research and development expenses for the three months ended September 30,
      2005
      and 2004 were as follows:




**Three
                  Months Ended September 30,****2005**
              
              **2004**GCS-100
                  - R&D
              
              $
              1,171,130
              
              $
              1,349,002Other
                  Products - R&D
              
              
              (3,167
              )
              
              11,045Total
                  Research & Development Expenses
              
              $
              1,167,963
              
              $
              1,360,047


Total
      research and development expenses of $1,167,963 for the three months ended
      September 30, 2005 decreased $192,084, or 14%, from $1,360,047 of expenses
      for
      the three months ended September 30, 2004.





Other
      products development expense decreased to a $(3,167) credit for the three months
      ended September 30, 2005 from an expense of $11,045 for the three months ended
      September 30, 2004, a decrease of $14,912. This decrease was primarily
      attributable to the cancellation of accrued liabilities for license fees payable
      on the Company’s agricultural product line which has been sold and the
      elimination of substantially all other expenses related to this product
      line.





Total
      GCS-100 development expenses of $1,171,130 for the three months ended September
      30, 2005 decreased $177,872, or 13%, from $1,349,002 of expenses for the three
      months ended September 30, 2004. This decrease is primarily due to decreased
      (a)
      GCS-100 production costs of $161,000, (b) clinical trial expenses of $120,000,
      (c) preclinical expenses of $53,000, (d) payroll expenses of $25,000, (e)
      laboratory operation expenses of $19,000 and (f) travel expenses of $13,000.
      These decreases were partially offset by increases in (a) analytical methods
      of
      $94,000, (b) consulting expenses of $82,000, (c) patent fees of $29,000 and
      (d)
      expenses related to our scientific advisory board of $15,000.




-15-
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          of Contents**





Research
      and development expenses for our previously developed agricultural compounds,
      which consisted primarily of registration and license fees, were reduced as
      the
      Company’s agricultural products have either been sold or are no longer being
      developed.





We
      may
      seek to expand our drug compound pipeline under development. Any new product
      candidates will either be developed or licensed by us. The cost related to
      the
      development of new product candidates during the twelve months following
      consummating a strategic relationship could vary significantly based on the
      actual product candidates and availability of funds.





General
      and administrative expenses decreased to $982,709 for the three months ended
      September 30, 2005 from $1,337,566 for the three months ended September 30,
      2004, a decrease of $354,857, or 27%. This decrease is primarily attributable
      to
      decreases of approximately (a) $247,000 for legal expenses and (b) $168,000
      for
      consulting expenses. This decrease was partially offset by increases in (a)
      rent
      of $33,000, (b) public relation activities of $15,000 and (c) payroll expenses
      of $12,000.





Interest
      income increased to $20,112 for the three months ended September 30, 2005 from
      $12,967 for the three months ended September 30, 2004, an increase of $7,145,
      or
      55%. This increase is attributable to an increase in cash available for
      investment and higher rates of return on those investments.





Other
      expense increased to $28,891 for the three months ended September 30, 2005
      from
      an income of $91 for the three months ended September 30, 2004, an increase
      of
      $28,800. This increase was primarily attributable to recording a liability
      of
      $28,548 for sales and use taxes assessed by the Commonwealth of Massachusetts
      as
      the result of an audit of the period from January 1, 1997 through December
      31,
      2003.





Results
      of Operations: Nine Months Ended September 30, 2005 versus September 30, 2004





We
      incurred a net loss applicable to common stock of $7,268,970 for the nine months
      ended September 30, 2005 versus $8,288,125 for the nine months ended September
      30, 2004.





*Research
      and Development Expenses* —





Our
      research and development expenses for the nine months ended September 30, 2005
      and 2004 were reported as follows:


**Nine
                  Months Ended September 30,****2005**
              
              **2004**GCS-100
                  - R&D
              
              $
              3,586,532
              
              $
              3,903,156Other
                  Products - R&D
              
              
              (24,819
              )
              
              53,584Total
                  Research & Development expenses
              
              $
              3,561,713
              
              $
              3,956,740


Total
      research and development expenses of $3,561,713 for the nine months ended
      September 30, 2005 decreased $395,027, or 10%, from $3,956,740 of expenses
      for
      the nine months ended September 30, 2004.





Other
      products development expense decreased to a $(24,819) credit for the nine months
      ended September 30, 2005 from an expense of $53,584 for the nine months ended
      September 30, 2004, a decrease of $78,403. This decrease was primarily
      attributable to the cancellation of accrued liabilities for license fees payable
      on the Company’s agricultural product line which has been sold and the
      elimination of substantially all other expenses related to this product
      line.





Total
      GCS-100 development expenses of $3,586,632 for the nine months ended September
      30, 2005 decreased $316,524, or 8%, from $3,903,156 of expenses for the nine
      months ended September 30, 2004. This decrease is primarily due to decreases
      in
      (a) GCS-100 production costs of $828,000, (b) preclincial expenses of $60,000,
      (c) regulatory expenses of $46,000, (d) recruitment expenses of $46,000 and
      (e)
      travel expenses of $22,000. These decreases were partially offset by increases
      in (a) consulting expenses of $270,000, (b) analytical methods expenses of
      $110,000, (c) payroll expenses of $78,000, (d) laboratory operation expenses
      of
      $64,000, (e) patent fees of $59,000, (f) expenses related to our scientific
      advisory board of $50,000 and (g) clinical trial expenses of
      $35,000.




-16-
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          of Contents**





Research
      and development expenses for our previously developed agricultural compounds,
      which consisted primarily of registration and license fees, were offset by
      the
      cancellation of an accrued license fee of $25,000, resulting in a decrease
      in
      expenses of $78,403, or 146%, to a credit of $(24,819) for the nine months
      ended
      September 30, 2005 from $53,584 of charges for the nine months ended September
      30, 2004. The Company’s agricultural products have either been sold or are no
      longer being developed.





General
      and administrative expenses decreased to $3,200,894 for the nine months ended
      September 30, 2005 from $4,073,008 for the nine months ended September 30,
      2004,
      a decrease of $872,114, or 21%. This decrease is primarily attributable to
      decreases of approximately (a) $564,000 in legal expenses, (b) $144,000 in
      consulting fees, (c) $138,000 in payroll expenses, (d) $44,000 in accounting
      fees, (e) 37,000 in insurance expenses and (f) $12,000 in rent expenses. These
      decreases were partially offset by an increase in annual meeting expenses of
      $91,000 largely due to the special stockholders meeting held in May
      2005.





Interest
      income increased to $38,317 for the nine months ended September 30, 2005 from
      $26,677 for the nine months ended September 30, 2004, an increase of $11,640,
      or
      44%. This increase is attributable to an increase in cash available for
      investment and higher rates of return on those investments.





Other
      expense increased to $27,643 for the nine months ended September 30, 2005 from
      an income of $57,510 for the nine months ended September 30, 2004, an increase
      of $85,153. This increase was primarily attributable to recording a liability
      in
      2005 of $28,548 for sales and use taxes assessed by the Commonwealth of
      Massachusetts as the result of an audit of the period from January 1, 1997
      through December 31, 2003 compared with recording income in 2004 of $50,000
      from
      the sale of the Company’s Elexa product line in June 2004.





Liquidity
      and Capital Resources





For
      the
      nine months ended September 30, 2005, our operations utilized cash of $6,147,086
      which, together primarily with increases in accounts payable, funded our
      operating loss. We intend to raise additional funds through sales of our
      securities and/or partnering with a larger pharmaceutical or biotechnology
      company.





As
      of
      September 30, 2005, our accumulated deficit was $101,301,609 and as of November
      14, 2005, our cash balances were $1,231,042. As of September 30, 2005 we had
      $0.5 million in stockholders' equity and $74,001 in working capital and as
      of
      November 15, 2005 we had a stockholders' deficit and a working capital deficit
      because we have not raised additional capital.





Our
      future is dependent upon our ability to quickly obtain financing to fund our
      operations. As of November 15, 2005, other than the common stock purchase
      agreement with Fusion Capital Fund II, LLC (the “Fusion Agreement”), we have not
      obtained commitments from existing or potential investors to provide additional
      financing. We believe that our existing funds have the potential to maintain
      our
      operations through November 2005, consistent with prioritizing research and
      development and other expenditures and continuing to manage our accounts
      payable. To the extent that we are unable to raise additional capital prior
      to
      the end of November 2005, we may be required to cease operations. We are working
      with an investment bank to secure additional funds likely through the issuance
      of convertible debt securities which we will sell solely to qualified
      institutional buyers and select larger institutional accredited investors and
      have multiple potential sources in various stages of development. There can
      be
      no assurances that we will successfully raise additional funds. Our future
      is
      dependent upon our ability to obtain financing to fund our operations. As of
      November 15, 2005, we have not obtained commitments from existing or potential
      investors to provide additional funding other than through the Fusion Agreement.
      We expect to incur substantial additional operating costs, including costs
      related to ongoing research and development activities, preclinical studies
      and
      clinical trials.





While
      on
      October 21, 2005, we entered into the Fusion Agreement to sell to Fusion Capital
      up to $20 million of common stock over a 25 month period. We filed a
      registration statement covering the shares that may be sold to Fusion Capital
      on
      November 4, 2005 and this registration statement was declared effective by
      the
      SEC on November 14, 2005 enabling us to commence sales to Fusion Capital. We
      must maintain the effectiveness of the registration statement covering the
      shares that may be sold to Fusion Capital in order to issue stock and receive
      proceeds under the Fusion Agreement. The extent to and manner on which we will
      rely on Fusion Capital as a source of funding will depend on a number of factors
      including, the prevailing market price and volume of our common stock and the
      extent to which we are able to secure working capital from other sources. We
      expect that given the current market price and volume of our common stock we
      will not sell the allowed full daily purchase amount to Fusion Capital at this
      time. If obtaining sufficient financing from Fusion Capital were to prove
      unavailable or prohibitively dilutive, we will need to secure a larger amount
      of
      additional funding in order to satisfy our working capital needs. Even if we
      are
      able to access the full $20.0 million under the Fusion Agreement, we will still
      need additional capital both short term and long term to fully implement our
      business, operating and development plans. We are continuing to pursue
      additional funding opportunities to supplement the Fusion Agreement. Should
      the
      financing we require to sustain our working capital needs be unavailable or
      prohibitively expensive when we require it, the consequences would be a material
      adverse effect on our business, operating results, financial condition and
      prospects.




-17-
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          of Contents**





In
      the
      event that under the Fusion Agreement, we decide to issue more than 2,716,159
      shares, i.e., greater than 19.99% of our outstanding shares of common stock
      as
      of the date of the Fusion Agreement and we are listed on the Nasdaq Capital
      Market, we would first be required to seek shareholder approval. If our common
      stock was not listed on the Nasdaq but rather traded through another service
      such as the OTC Bulletin Board, then we would not be limited by the 19.99%
      Nasdaq Rule nor need a special stockholder meeting to approve the transaction.





Pursuant
      to the Fusion Agreement, we have the right to receive $40,000 per trading day
      unless our stock price equals or exceeds $1.25, in which case the daily amount
      may be increased under certain conditions as the price of our common stock
      increases.  Fusion Capital shall not have the right nor the obligation
      to
      purchase any shares of our common stock on any trading days that the market
      price of our common stock is less than $0.25. Fusion Capital may not
      purchase shares of our common stock under the Fusion Agreement if Fusion
      Capital, together with its affiliates, would beneficially own more than 9.9%
      of
      our common stock outstanding at the time of purchase by Fusion Capital. Fusion
      Capital has the right at any time to sell any shares purchased under the Fusion
      Agreement which would allow it to avoid the 9.9% limitation. Therefore, we
      do
      not believe it is likely that Fusion Capital will reach the 9.9%
      limitation. Since we initially registered 8,000,000 (in addition to
      1,355,276 shares issued or issuable to Fusion Capital as commitment shares)
      shares for sale by Fusion Capital pursuant to the registration statement filed
      on November 4, 2005 with the SEC, the selling price of our common stock to
      Fusion Capital will have to average at least $2.50 per share for us to receive
      the maximum proceeds of $20.0 million without registering additional shares
      of
      common stock.  Assuming a purchase price of $0.77 per share (the closing
      sale price of the common stock on November 15, 2005) and the purchase by Fusion
      Capital of 8,000,000 shares under the Fusion Agreement, proceeds to us would
      be
      $6,160,000. Subject to approval by our board of directors, we have the right
      but
      not the obligation to issue additional shares to Fusion Capital.  In
      the
      event we elect to issue additional shares, we will be required to file a new
      registration statement and have it declared effective by the SEC.





Our
      ability to raise additional capital may be harmed if we do not maintain our
      listing with Nasdaq. On April 20, 2005, we received a letter from Nasdaq
      indicating that the bid price of our common stock had been below $1.00 for
      30
      consecutive business days and that we had until October 17, 2005 to achieve
      a
      bid price of at least $1.00 for a period of at least 10 consecutive days or
      face
      delisting. On June 30, 2005, we received a letter from Nasdaq indicating that
      we
      had regained compliance by maintaining a closing bid price above $1.00 for
      at
      least 10 consecutive days and the matter is now closed. On April 7, 2005, we
      received a letter from Nasdaq indicating that as of December 31, 2004, we did
      not comply with the Nasdaq rules, which requires listed companies to have (i)
      a
      minimum of $2,500,000 in stockholders’ equity, (ii) $35,000,000 or more in
      market value of listed securities or (iii) $500,000 of net income from
      continuing operations for the most recently completed fiscal year or two of
      the
      three most recently completed fiscal years. In the letter, Nasdaq indicated
      it
      is reviewing our eligibility for continued listing and requested that we provide
      a specific plan to achieve and sustain compliance with Nasdaq Capital Market
      listing requirements. Based on the review of the plan submitted by us, Nasdaq
      will continue to monitor our ongoing compliance with the listing requirements
      and if we do not meet these requirements, we could become subject to delisting.
      It is unlikely that the Fusion Agreement and additional funding, if any, that
      we
      secure would enable us to comply with the stockholders’ equity and market
      capitalization listing requirements and thus our ability to continue listing
      our
      common stock on the Nasdaq Capital Market is quite uncertain.





ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Market
      Risk





We
      are
      not exposed to significant market risk related to changes in currency exchange
      rates as measured against the U.S. dollar. As of September 30, 2005, we have
      evaluated our risk and determined that any exposure to currency exchange is
      not
      significant to our overall consolidated financial results. There can be no
      assurance that our exposure will remain at these levels, especially in the
      event
      of significant and sudden fluctuations in the value of local currencies. We
      do
      not use derivative financial instruments for speculative or trading purposes.





Interest
      Rate Sensitivity





We
      maintain short-term investments in an overnight money market account comprised
      of U.S. treasury bills. If market interest rates were to increase immediately
      and uniformly by 10% from levels that existed at September 30, 2005, the fair
      value of the portfolio would change by an immaterial amount.





Certain
      Factors That May Affect Future Results





You
      should carefully consider the risks described below before making an investment
      decision. If any of the following risks actually occur, our business, financial
      condition or results of operations could be materially and adversely affected.
      In such case, the trading price of our common stock could decline, and you
      may
      lose all or part of your investment.




-18-
 **Table
          of Contents**





IF
      WE ARE
      NOT ABLE TO OBTAIN ADDITIONAL FUNDING WITHIN WEEKS, WE COULD BE REQUIRED TO
      CEASE OPERATIONS.





We
      believe that our existing funds will be sufficient to fund our operations
      through November 2005. We must quickly raise additional capital through the
      sale
      of equity or debt securities, in addition to sales to Fusion Capital to support
      our clinical trials and continued operations. To the extent we are unable to
      raise sufficient funding for our clinical trials in the capital markets or
      through partnering with a large biotechnology or pharmaceutical company, we
      will
      need to curtail our development efforts or cease operations.





We
      only
      have the right to receive $40,000 per trading day under the agreement with
      Fusion Capital, unless our stock price equals or exceeds $1.35, in which case
      the daily amount may be increased under certain conditions as the price of
      our
      common stock increases.  In addition the registration statement
      filed
      on November 4, 2005 must remain effective in order for us to make sales of
      our
      common stock under the agreement. Fusion Capital shall not have the right or
      the
      obligation to purchase any shares of our common stock on any trading days that
      the market price of our common stock is less than $0.25.  Since we
      initially registered 9,355,276 for sale by Fusion Capital, of which 8,000,000
      may be sold to Fusion Capital under the common stock purchase agreement, the
      selling price of our common stock to Fusion Capital will have to average at
      least $2.50 per share for us to receive the maximum proceeds of $20.0 million
      without registering additional shares of common stock.  Assuming a purchase
      price of $0.77 per share (the closing sale price of the common stock on November
      15, 2005) and the purchase by Fusion Capital of 8,000,000 shares under the
      common stock purchase agreement, proceeds to us would be $6,560,000.
       Subject to approval by our board of directors, we have the right but
      not
      the obligation to issue more than 8,000,000 shares to Fusion Capital.  In
      the event we elect to issue more than 9,355,276 shares offered under the
      registration statement filed on November 4, 2005, we will be required to file
      a
      new registration statement and have it declared effective by the U.S. Securities
      & Exchange Commission. In the event that we decide to issue more than
      2,716,159 shares of common stock (19.99% of our outstanding shares of common
      stock on the date of our agreement with Fusion Capital), we would be required
      to
      seek shareholder approval if we are listed on the Nasdaq Capital
      Market.





Specifically,
      Fusion Capital does not have the right or the obligation to purchase any shares
      of our common stock on any trading days that the market price of our common
      stock is less than $0.25. In addition, pursuant to the terms of the common
      stock
      purchase agreement, Fusion Capital may not own more than 9.9% of our outstanding
      shares of common stock. Even if we are able to access the full $20.0
      million under the common stock purchase agreement with Fusion Capital, we will
      still need additional capital to fully implement our business, operating and
      development plans. The extent we rely on Fusion Capital as a source of funding
      will depend on a number of factors including, the prevailing market price and
      trading volume of our common stock and the extent to which we are able to secure
      working capital from other sources, including other debt and equity financings.





The
      Fusion Capital transaction alone will not be sufficient to sustain our
      operations, therefore, our future is dependent on our ability to quickly obtain
      additional financing to fund our operations. We expect to incur substantial
      additional operating costs, including costs related to ongoing research and
      development activities, manufacturing, preclinical studies and clinical trials.
      Additional equity financing may result in dilution to our stockholders. At
      our
      current stock price or if the market price of our common stock declines, some
      potential investors may either refuse to offer us any financing or will offer
      financing at unacceptable rates or on unfavorable terms. If we are unable to
      obtain financing necessary to fund our operations, we may have to sell or
      liquidate GlycoGenesys or significantly reduce, curtail or cease our operations.





WE
      HAVE
      EXPERIENCED SIGNIFICANT LOSSES THROUGHOUT OUR HISTORY, WE EXPECT THESE LOSSES
      TO
      CONTINUE AND WE MAY NOT ACHIEVE PROFITABILITY IN THE FUTURE.





We
      began
      operations in 1993 and have not generated revenue from human therapeutic
      products. We do not expect to generate product revenue for several years, if
      at
      all. We will not generate significant funds unless we receive payments in
      connection with any potential licensing, marketing or other partnering
      arrangement with other pharmaceutical or biotechnology companies, or we bring
      pharmaceutical products to market. As of September 30, 2005, we have incurred
      approximately $105.8 million of losses since our inception, which includes
      $4.5
      million of dividends accreted to preferred stock, approximately $10.6 million
      for the year ended December 31, 2004 and $7.3 million in the first nine months
      of 2005. Extensive losses can be expected to continue for the foreseeable
      future.





We
      also
      expect to continue to incur significant operating expenses and capital
      expenditures and anticipate that our expenses will increase substantially in
      the
      foreseeable future as we:





- conduct
          additional and/or larger clinical trials in the U.S. and foreign
          countries;
- conduct
          research and development on existing and new product
          candidates;
- make
          milestone and royalty payments;
- seek
          regulatory approvals for our product candidates;
- commercialize
          our product candidates, if approved;
- prosecute
          and maintain existing and future patent applications and
          patents;
- hire
          additional clinical, scientific and management personnel;
- add
          operational, financial and management information systems and personnel;
          and
- identify
          and potentially in-license additional compounds or product
          candidates.

-19-
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          of Contents**




THERE
      IS
      SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.





Our
      consolidated financial statements included in our Annual Report on Form 10-K
      for
      the year ended December 31, 2004 have been prepared on the assumption that
      we
      will continue as a going concern. Deloitte & Touche LLP issued a report
      dated March 29, 2005 that includes an explanatory paragraph stating that our
      recurring losses from operations, accumulated deficit of $94.5 million as of
      December 31, 2004, and our expectation that we will incur substantial additional
      operating costs for the foreseeable future, including costs related to ongoing
      research and development activities, preclinical studies and clinical trials,
      among other things, raise substantial doubt about our ability to continue as
      a
      going concern.





THE
      SALE
      OF OUR COMMON STOCK TO FUSION CAPITAL MAY CAUSE DILUTION AND THE SALE OF THE
      SHARES OF COMMON STOCK ACQUIRED BY FUSION CAPITAL COULD CAUSE THE PRICE OF
      OUR
      COMMON STOCK TO DECLINE.




The
      sale
      of shares pursuant to our common stock purchase agreement with Fusion Capital
      or
      any other future equity financing transaction will have a dilutive impact on
      our
      stockholders. As a result, the market price of our common stock could decline.
      In addition, the lower our stock price is, the more shares of common stock
      we
      will have to issue under the common stock purchase agreement with Fusion Capital
      in order to draw down the full amount or a portion thereof. If our stock price
      were lower, then our existing stockholders would experience greater dilution.
      We
      cannot predict the actual number of shares of common stock that will be issued
      pursuant to the agreement with Fusion Capital or any other future equity
      financing transaction, in part, because the purchase price of the shares will
      fluctuate based on prevailing market conditions and we do not know the exact
      amount of funds we will need. If Fusion Capital purchases the full $20 million
      under the common stock purchase agreement in addition to those shares sold
      to
      Fusion Capital, we will issue a total of 1,355,276 commitment shares to Fusion
      Capital, of which 338,819 shares have already been issued.





The
      purchase price for the common stock to be sold to Fusion Capital pursuant to
      the
      common stock purchase agreement will fluctuate based on the price of our common
      stock. All shares sold will be freely tradable. Fusion Capital may sell none,
      some or all of the shares of common stock purchased from us at any time. We
      expect that the shares sold to Fusion Capital will be sold over a period of
      up
      to 25 months from the date of the common stock purchase agreement. To the extent
      sales by Fusion Capital cause the price of our common stock to decline, future
      sales to Fusion Capital will be more dilutive. This dilutive effect may cause
      us
      not to be able to draw down on the entire $20 million available under the common
      stock purchase agreement without registering shares in addition to the 9,355,276
      shares (including the 1,355,276 commitment shares) included in the registration
      statement filed on November 4, 2005. The sale of a substantial number of shares
      of our common stock to Fusion Capital, or anticipation of such sales, could
      make
      it more difficult for us to sell equity or equity-related securities in the
      future at a time and at a price that we might otherwise wish to effect
      sales.





In
      addition, the sale of shares to Fusion Capital may result in further dilution
      as
      a result of the anti-dilution provisions of our Series D preferred stock. The
      Series D preferred stock has anti-dilution provisions known as “full ratchet”
      where if we issue securities, including the shares of common stock purchasable
      by Fusion Capital, at a price below the then conversion price of the Series
      D
      preferred stock (currently $1.00), the conversion price of the Series D
      preferred stock automatically adjusts to this lower price. The lowering of
      the
      conversion price would then result in the issuance of more shares of common
      stock upon conversion of the Series D preferred stock. For example, if we sold
      shares to Fusion Capital at $0.77, the closing sale price of our common stock
      on
      November 15, 2005, our 2,998.662 outstanding shares of Series D preferred stock
      would convert into 3,894,366 shares instead of the 2,998,662 shares they
      currently convert into.





OUR
      FUTURE PROSPECTS ARE DEPENDENT ON THE RESULTS OF GCS-100 AND IF WE ARE
      UNSUCCESSFUL IN DEVELOPING GCS-100, WE DO NOT HAVE OTHER PRODUCTS WHICH ARE
      IN
      ACTIVE DEVELOPMENT.





While
      we
      plan to increase our portfolio of potential products, currently all of our
      attention and resources are directed to the development of GCS-100. If GCS-100
      is ultimately ineffective in treating cancer, does not receive the necessary
      regulatory approvals or does not obtain commercial acceptance, we will be
      materially harmed.





WE
      ARE
      DEPENDENT ON THE SUCCESSFUL OUTCOME OF CLINICAL TRIALS FOR GCS-100 AND WILL
      NOT
      BE ABLE TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE GCS-100 IF CLINICAL TRIALS
      ARE
      NOT SUCCESSFUL.





GCS-100
      is not currently approved for sale by the FDA or by any other regulatory agency
      in the world, and GCS-100 may never receive approval for sale or become
      commercially viable. We may seek but not receive Fast Track Drug Designation,
      Accelerated Approval, or Priority Review status by the FDA. Before obtaining
      regulatory approval for sale, GCS-100 will be subjected to extensive preclinical
      and clinical testing to demonstrate safety and efficacy for a particular
      indication for humans in addition to meeting other regulatory standards. Our
      success will depend on the successful outcome of our clinical trials with
      GCS-100.




-20-
 **Table
          of Contents**




There
      are
      a number of difficulties and risks associated with clinical trials. The
      possibility exists that:




·
            we
                may discover that GCS-100 may cause, alone or in combination with
                another
                therapy, harmful side effects;


·
              we
                  may discover that GCS-100, alone or in combination with another
                  therapy,
                  does not exhibit the expected therapeutic results in
                  humans;


·
                results
                    from early trials may not be statistically significant or predictive
                    of
                    results that will be obtained from large-scale, advanced clinical
                    trials;


·
              we,
                  the FDA, other similar foreign regulatory agencies or an institutional
                  review board may suspend the clinical trials of
                  GCS-100;


·
            patient
                recruitment may be slower than
                expected;


·
              patients
                  may drop out of our clinical trials;
                  and


·
                we
                    may be unable to produce sufficient supplies in a timely fashion
                    of
                    GCS-100 for clinical
                    trials.




Given
      the
      uncertainty surrounding the regulatory and clinical trial process, we may not
      be
      able to develop safety, efficacy or manufacturing data necessary for approval
      of
      GCS-100. In addition, even if we receive approval, such approval may be limited
      in scope and hurt the commercial viability of such product. If we are unable
      to
      successfully obtain approval of and commercialize GCS-100, this would materially
      harm our business, impair our ability to generate revenues and adversely impact
      our stock price.





OUR
      ABILITY TO DEVELOP GCS-100 MAY BE HARMED IF WE ARE UNABLE TO FIND A DEVELOPMENT
      PARTNER.





On
      December 18, 2002, we and Elan International Services, Ltd. (“EIS”) mutually
      terminated our joint venture and we acquired all of the outstanding capital
      stock of SafeScience Newco. SafeScience Newco received a total of approximately
      $7.3 million of research funds over the course of our joint venture with EIS
      for
      the development of GCS-100. We must either fund the development of GCS-100
      ourselves or with a new development partner. We have met with many
      pharmaceutical and large biotechnology companies for purposes of seeking a
      development partner. Several have expressed interest in reviewing the interim
      data from our bloodborne cancer trials expected in the second quarter of 2006
      before committing to negotiating an alliance. If the data from these bloodborne
      cancer trials is not sufficiently positive or is significantly delayed, our
      ability to find a development partner would be materially harmed. If we are
      unable to find a development partner, our ability to develop and commercialize
      GCS-100, and our prospects as a whole, may be materially harmed.





WE
      MAY BE
      DELISTED FROM THE NASDAQ CAPITAL MARKET IN THE NEAR TERM AND IF WE ARE OUR
      COMMON STOCK MAY DECLINE AND THE LIQUIDITY OF AN INVESTMENT IN OUR SECURITIES
      WOULD DECREASE.





Our
      common stock could be delisted from The Nasdaq Capital Market for the following
      reasons, among others:




·
            if
                the closing bid price of our common stock falls below $1.00 per share
                for
                thirty (30) consecutive business days;


·
                  if
                      our market capitalization falls below $35 million and we have
                      less than
                      $2,500,000 in stockholders’ equity; or


·
                if
                    the value of our common stock held by our stockholders (other
                    than our
                    directors, executive officers and 10% stockholders) is less than
                    $1,000,000.




There
      are
      other quantitative and qualitative criteria of the Nasdaq Capital Market which
      if violated could lead to delisting of our common stock.




We
      have
      had difficulty maintaining our compliance with Nasdaq continued listing
      requirements in the past. We received a letter from Nasdaq on August 8, 2003
      that the bid price of our common stock had been below $1.00 for 30 consecutive
      days and that we had a 180-day grace period to achieve a bid price of at least
      $1.00 for a period of at least 10 consecutive business days or face delisting.
      In September 2003, we received a letter from Nasdaq that we complied with the
      minimum bid price requirement. We have on several previous occasions received
      notice from Nasdaq that we failed to meet certain of its listing requirements.
      We have been successful in regaining compliance on those occasions. On May
      17,
      2004, we received a letter from Nasdaq that the bid price of our common stock
      had been below $1.00 for 30 consecutive business days and that we had a 180-day
      grace period, until November 15, 2004 to achieve a bid price of at least $1.00
      for a period of at least 10 consecutive business days or face delisting. We
      received a Nasdaq Staff Determination on November 16, 2004, that our securities
      are subject to delisting. On December 21, 2004, we effected a 1-for-6 reverse
      stock split. On January 6, 2005, we received a letter from Nasdaq stating that
      we complied with the minimum bid price requirement and all other continued
      listing requirements. On April 20, 2005, we received a letter from Nasdaq
      indicating that the bid price of our common stock had been below $1.00 for
      30
      consecutive business days and that we had a 180-day grace period, until October
      17, 2005, to achieve a bid price of at least $1.00 for a period of at least
      10
      consecutive business days or face delisting. On June 30, 2005, we received
      a
      letter from Nasdaq indicating that we had regained compliance by maintaining
      a
      closing bid price above $1.00 for at least 10 consecutive days and the matter
      is
      now closed.




-21-
 **Table
          of Contents**





On
      April 7, 2005, we received a letter from Nasdaq indicating that as of December
      31, 2004, we did not comply with Nasdaq Marketplace Rule 4310(c)(2)(B), which
      requires listed companies to have (i) a minimum of $2,500,000 in stockholders’
      equity, (ii) $35,000,000 or more in market value of listed securities or (iii)
      $500,000 of net income from continuing operations for the most recently
      completed fiscal year or two of the three most recently completed fiscal years.
      In the letter, Nasdaq indicated it is reviewing our eligibility for continued
      listing and requested that we provide our specific plan to achieve and sustain
      compliance with Nasdaq Capital Market listing requirements. Based on the review
      of the plan we submitted, Nasdaq agreed to permit our continued listing but
      is
      continuing to monitor our ongoing compliance with the listing requirements
      and
      could delist us.





As
      of
      September 30, 2005, we had $0.5 million in stockholders’ equity and as of the
      date hereof is now in deficit as we have not raised additional capital. Our
      market capitalization was $14.0 million on September 30, 2005 and was $10.8
      million on November 15, 2005. As of November 15, 2005, our closing bid price
      had
      been below $1.00 for 28 consecutive trading days. It is very unlikely that
      funding under the common stock purchase agreement with Fusion Capital and
      additional funding, if any, that we secure would enable us to comply with the
      stockholders’ equity and market capitalization requirements and thus, even if
      our stock price rises, our ability to maintain our listing with Nasdaq is quite
      unsure.





If
      Nasdaq
      delisted our common stock, we would likely seek to list our common stock for
      quotation on a regional stock exchange. However, if we were unable to obtain
      listing or quotation on such market or exchange, trading of our common stock
      would occur in the over-the-counter market on an electronic bulletin board
      for
      unlisted securities, known as the OTC Bulletin Board, or in what are commonly
      known as the “pink sheet”. In addition, delisting from Nasdaq and failure to
      obtain listing or quotation on such market or exchange would subject our common
      stock to so-called “penny stock” rules. These rules impose additional sales
      practice and market making requirements on broker-dealers who sell and/or make
      a
      market in such securities, such as disclosing offer and bid prices and
      compensation received from a trade to a purchaser and sending monthly account
      statements to purchasers. Consequently, broker-dealers may be less willing
      or
      able to sell and/or make a market in our common stock. These rules also require
      that purchasers be accredited investors, which would reduce the number of
      investors who could purchase our shares. Additionally, an investor would find
      it
      more difficult to dispose of, or to obtain accurate quotations for the price
      of,
      our common stock. As a result of delisting, it may become more difficult for
      us
      to raise funds through the sale of our securities.





OUR
      FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY OR OUR INFRINGEMENT ON THE PROPERTY
      RIGHTS OF OTHERS MAY IMPEDE OUR ABILITY TO OPERATE FREELY.





We
      rely
      significantly upon proprietary technology and protect our intellectual property
      through patents, copyrights, trademarks and contractual agreements as
      appropriate. We own or exclusively license 14 issued U.S. patents having
      expiration dates ranging from 2013 to 2022. Six of these 14 issued patents
      relate to GCS-100. We own or exclusively license eight foreign patents having
      expiration dates ranging from 2015 to 2017. Five of these eight **** foreign
      patents relate to GCS-100. We own or exclusively license 13 pending U.S. patent
      applications, of which 12 relate to GCS-100 and 60 pending foreign patent
      applications, of which 48 relate to GCS-100. As we develop GCS-100, we may
      discover more about it which will require additional patent prosecution. Thus,
      we continually evaluate our technology to determine whether to make further
      patent filings.




To
      the
      extent aspects of our technology may be unpatentable, we may decide to maintain
      such technology as trade secrets or we may protect such unpatented technology
      by
      contractual agreements. Our unpatented technology or similar technology could
      be
      independently developed by others. In addition, the contractual agreements
      by
      which we protect our unpatented technology and trade secrets may be breached.
      If
      technology similar to ours is independently developed or our contractual
      agreements are breached, our technology will be less valuable and our business
      will be harmed.





There
      is
      always a risk that issued patents may be subsequently invalidated, either in
      whole or in part, and this could diminish or extinguish our patent protection
      for key elements of our technology. Other than the re-examination of our U.S.
      Patent 6,680,306 “Method for Enhancing the Effectiveness of Cancer Therapies”
      and the interference between our exclusively licensed U.S. Patent Application
      No. 08/024,487 “Modified Pectin” and our exclusively licensed U.S. Patent No.
      5,895,784 “Method for Treatment of Cancer by Oral Administration of Modified
      Pectin”, we are not involved in any such litigation or proceedings, nor are we
      aware of any basis for such litigation or proceedings. We cannot be certain
      as
      to the scope of patent protection, if any, which may be granted on our patent
      applications, or which may remain intact following the re-examination of U.S.
      Patent 6,680,306.





On
      November 2, 2005, we received notice from the United States Patent and Trademark
      Office that an interference had been declared between U.S. Patent Application
      No. 08/024,487 “Modified Pectin” (the “’487 Application”), and U.S. Patent No.
      5,895,784 “Method for Treatment of Cancer by Oral Administration of Modified
      Pectin” (the “’784 Patent”), both of which the Company exclusively licenses. The
      declaration of interference indicates that the U.S. Patent and Trademark Office
      has made a preliminary determination that the ‘784 Patent and the ‘487
      Application claim the same invention. The ‘487 Application covers the use of
      modified pectin to treat or inhibit metastasis. The ‘784 Patent covers the oral
      administration of modified pectin to treat cancer and metastasis among other
      things. We are the exclusive licensee to both the issued patent and the patent
      application.




-22-
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We
      intend
      to comply with our obligations and responsibilities under the respective license
      agreements for the ‘487 Application and ‘784 Patent, including taking all steps
      necessary to perfect and maintain the '487 Application. We will cooperate with
      the ‘487 Application inventor in the interference to make sure that the claims
      of the ‘487 Application are not reduced or eliminated. Under our license
      agreement for the ‘784 Patent, in the event of an interference, we have the
      right to direct the inventors to amend the ’784 Patent, or take any further
      action we deem reasonably necessary to avoid, overcome, or terminate any
      interference proceeding.





As
      is
      standard in interference proceedings, the Board of Patent Appeals and
      Interferences will first examine whether the claims of the ‘487 Application and
      the ‘784 Patent that are subject to the interference are in fact the same
      invention or are patentably distinct (i.e., separate inventions). If the claims
      are determined to be patentably distinct then the interference is ended and
      the
‘487 Application and the ‘784 Patent will each retain their full scope of
      claims.





If
      the
      claims are determined to be the same invention then we will utilize our ability
      to modify the ‘784 Patent so that there is no longer any interference between
      the ‘487 Application and the ‘784 Patent. This would allow the broader claims of
      the ‘487 Application, which are not limited to oral administration, to issue as
      a patent in full. Even if the claims of the ‘784 Patent were amended or reduced,
      the ‘487 Application would still cover the oral administration of GCS-100.




We
      have
      the right to control the prosecution of the the patent applications and patents
      that we own or exclusively license except that under our license with David
      Platt, he has the right to prosecute the patent applications covered by the
      license and therefore we do not have ultimate control over the scope of claims
      that may issue from those patent applications.




Our
      potential products or business activities could be determined to infringe
      intellectual property rights of third parties despite our issued patents. Any
      claims against us or any purchaser or user of our potential products, including
      GCS-100, asserting that such product or process infringes intellectual property
      rights of third parties, if determined adversely to us, could have a material
      effect on our business, financial condition or future operations. Any asserted
      claims of infringement, with or without merit, could be time consuming, result
      in costly litigation, divert the efforts of our technical and management
      personnel, or require us to enter into royalty or licensing agreements, any
      of
      which could materially adversely affect our operating results. Such royalty
      or
      licensing agreements, if required, may not be available on terms acceptable
      to
      us, if at all. In the event a claim is successful against us and we cannot
      obtain a license to the relevant technology on acceptable terms, license a
      substitute technology or redesign our products to avoid infringement, our
      business, financial condition and operating results would be materially
      adversely affected.





WE
      DEPEND
      ON TECHNOLOGY LICENSED TO US BY THIRD PARTIES AND IF WE ARE UNABLE TO CONTINUE
      LICENSING THIS TECHNOLOGY OUR FUTURE PROSPECTS MAY BE MATERIALLY ADVERSELY
      AFFECTED.





We
      license technology, including technology related to GCS-100, from third parties.
      We anticipate that we will continue to license technology from third parties
      in
      the future. To maintain our license with David Platt we must pay an annual
      license fee equal to the greater of $50,000 or 2% of product sales. To maintain
      our license with Wayne State University and the Barbara Ann Karmanos Cancer
      Institute we must, among other things, pay Wayne State University and the
      Barbara Ann Karmanos Cancer Institute up to $3 million in milestone payments,
      $10,000 per month until FDA approval (which payments are offset against future
      royalties), 2% royalties on product sales, or 15% of certain non-royalty or
      R&D payments received from sublicensees and receive FDA or equivalent agency
      approval to sell GCS-100 by January 1, 2008, unless we exercise our option
      to
      extend such date to January 1, 2009 or 2010. If we exercise such option, we
      are
      obligated to pay Wayne State University and the Barbara Ann Karmanos Cancer
      Institute an amount within 30 days of FDA approval equal to the number of months
      from the date such option is exercised until FDA approval times $10,000.





The
      technology we license from third parties would be difficult to replace and
      the
      loss of this technology would materially adversely affect our future prospects.





**** WE
      ARE
      ENGAGED IN LITIGATION WITH DAVID PLATT AND PRO-PHARMACEUTICALS, INC. AND IF
      WE
      ARE UNSUCCESSFUL, WE MAY BE HARMED.





On
      January 29, 2004, David Platt commenced suit against us and certain of our
      current and former directors in the Massachusetts Superior Court in Suffolk
      County. In his Complaint, Platt seeks damages for alleged breach of his
      severance agreement with us, including the failure to pay approximately $180,000
      in severance benefits and alleged breaches in connection with the maintenance
      by
      us of certain restrictions on Platt’s sale of stock. The Complaint further
      asserts claims against some of our current and former directors for alleged
      breaches of fiduciary duty in failing to assist in the removal of restrictive
      legends on David Platt’s shares. David Platt also purports to state claims for
      double or treble damages, as well as attorney fees, under the Massachusetts
      Unfair Trade Practice Act.




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On
      February 23, 2004, we filed our Answer and counterclaimed against David Platt
      for breach of his severance agreement, against Pro-Pharmaceuticals, Inc. for
      tortious interference with the severance agreement, and against David Platt
      and
      Pro-Pharmaceuticals for misappropriation of proprietary rights and for unfair
      and deceptive acts. We are seeking monetary damages and injunctive relief to
      prevent David Platt and Pro-Pharmaceuticals from engaging in certain competitive
      activities relating to the use of polysaccharides to treat cancer and we are
      further seeking the assignment by David Platt and Pro-Pharmaceuticals of certain
      intellectual property to us. Under the counterclaim for unfair and deceptive
      acts, we are seeking treble damages as well as attorney fees.





On
      June
      21, 2004, we added a supplemental counterclaim against David Platt and
      Pro-Pharmaceuticals for injurious falsehood, unfair competition and unfair
      and
      deceptive acts relating to statements made by Pro-Pharmaceuticals regarding
      certain patent applications we discontinued prosecuting and contractually
      returned to David Platt. We seek injunctive relief and monetary damages.





If
      we are
      unsuccessful in defending against David Platt’s claims or in prosecuting our
      counterclaims, we could be materially adversely affected.





WE
      EXPECT
      TO REMAIN DEPENDENT ON THIRD PARTIES FOR RESEARCH AND DEVELOPMENT ACTIVITIES
      NECESSARY TO COMMERCIALIZE OUR PRODUCTS.




We
      utilize the services of several scientific and technical consultants to oversee
      various aspects of our protocol design, clinical trial oversight and other
      research and development functions. We contract out most of our research and
      development operations for GCS-100, utilizing third-party contract manufacturers
      such as Hyaluron, Inc. and Johnson Matthey Pharma Services, Inc. to manufacture
      GCS-100, Fisher Clinical Services, Inc. for drug inventory and shipping
      services, Incell Corporation, LLC, Cambrex Bio Science Walkersville, Inc.,
      TGA
      Sciences, Inc. and PPD Development, LP for assay and other development work
      and
      third-party contract research organizations, such as Quest Pharmaceutical
      Services, LLC, Veristat, Inc. and Medelis, Inc. in connection with preclinical
      and/or clinical studies in accordance with our designed protocols, as well
      as
      conducting research at medical and academic centers, such as Barts and The
      London, Queen Mary’s School of Medicine, and the Dana-Farber Cancer
      Institute.





Because
      we rely on third parties for much of our research and development work, we
      have
      less direct control over our research and development. We face risks that these
      third parties may not be appropriately responsive to our time frames and
      development needs and could devote resources to other customers. In addition,
      certain of these third parties may have to comply with FDA regulations or other
      regulatory requirements in the conduct of this research and development work,
      which they may fail to do.





IF
      THE
      THIRD PARTIES WE RELY ON FOR MANUFACTURING ARE UNABLE TO PRODUCE THE NECESSARY
      AMOUNTS OF GCS-100, DO NOT MEET OUR QUALITY NEEDS OR TERMINATE THEIR
      RELATIONSHIPS WITH US, OUR BUSINESS WILL SUFFER.





We
      do not
      presently have our own manufacturing operations, nor do we intend to establish
      any unless and until, in the opinion of management, the size and scope of our
      business so warrants. While we have established a manufacturing relationship
      with Hyaluron, Inc. and Johnson Matthey Pharma Services, Inc. to provide us
      with
      GCS-100 that we believe will provide the capability to meet our anticipated
      requirements for the foreseeable future, we have not entered into any long-term
      arrangements for manufacturing and such arrangements may not be obtained on
      desirable terms. For the foreseeable future, we will be dependent upon third
      parties to manufacture GCS-100.




Our
      reliance on independent manufacturers involves a number of risks, including
      the
      absence of adequate capacity, the unavailability of, or interruptions in, access
      to necessary manufacturing processes and reduced control over delivery
      schedules. Because our manufacturing process is still in a development stage,
      any changes made to a final commercial manufacturing process may present
      technical problems to an independent manufacturer. Third-party manufacturers
      may
      not comply with FDA regulations, or other regulatory requirements relating
      to
      the manufacturing of GCS-100, including compliance with current good
      manufacturing practice, or cGMP. We do not have control over, other than through
      contract, third-party manufacturers’ compliance with these regulations and
      standards. If our manufacturers are unable or unwilling to continue
      manufacturing GCS-100 in required volumes, we will have to identify acceptable
      alternative manufacturers. If we need to change manufacturers, these new
      manufacturers must meet FDA and foreign regulatory standards. The use of a
      new
      manufacturer may cause significant expense and interruptions in supply if the
      new manufacturer has difficulty manufacturing GCS-100 to our specifications.
      Further, the introduction of a new manufacturer may increase the variation
      in
      the quality of GCS-100.





MANY
      OF
      OUR COMPETITORS HAVE SUBSTANTIALLY GREATER RESOURCES THAN WE DO AND MAY BE
      ABLE
      TO DEVELOP AND COMMERCIALIZE PRODUCTS THAT MAKE OUR POTENTIAL PRODUCTS
      NON-COMPETITIVE.





We
      face
      significant competition from firms currently engaged in the pharmaceutical
      and
      biotechnology industries. GCS-100, our lead drug candidate, being developed
      for
      the treatment of various forms of cancer, addresses large markets, which are
      already populated with several biotechnology and large pharmaceutical companies.
      These companies utilize different drug discovery platforms, including but not
      limited to small molecules, protein-based drugs, liposome technology, and
      genomics. The drug development industry is intensely competitive. According
      to
      industry surveys, there are approximately 400 new drug candidates in development
      to treat various types of cancer, many of them for multiple indications.
      According to the PhRMA, approximately **** 170
      pharmaceutical and biotechnology companies and the National Cancer Institute
      are
      conducting these efforts. It is estimated that 100 biotechnology companies
      have
      more than 100 drug candidates in later stages of clinical development than
      GCS-100 for acute, life threatening disease, and late stage disease, and that
      over forty percent of these drug candidates are being developed to treat various
      types of cancer. Many of our actual or potential competitors have significantly
      greater financial resources and/or drug development experience than we have.
      There is no assurance that other carbohydrate-based or non-carbohydrate-based
      drugs with similar clinical effects to GCS-100 may not already be in development
      by other companies or that other companies may not successfully develop such
      drugs in the future.




-24-
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A
      biotechnology company such as ours must keep pace with rapid technological
      change and faces intense competition. We compete with biotechnology and
      pharmaceutical companies for funding, access to new technology, research
      personnel and in product research and development. Many of these companies
      have
      greater financial resources and more experience than we do in developing drugs,
      obtaining regulatory approvals, manufacturing and marketing. We also face
      competition from academic and research institutions and government agencies
      pursuing alternatives to our products and technologies. We expect that GCS-100
      and other product candidates will face intense competition from existing or
      future drugs. In addition, our product candidates may face increasing
      competition from generic formulations or existing drugs whose active components
      are no longer covered by patents. These generic formulations or drugs would
      present lower-priced competition.




In
      the
      two cancer types in which we have conducted Phase II(a) clinical trials,
      pancreatic and colorectal, there are many drugs being developed. We believe,
      based on industry studies there are, including GCS-100, approximately 6 drugs
      in
      Phase I, 11 drugs in Phase II, 7 drugs in Phase III or pre-registration for
      treatment of pancreatic cancer. In addition, GCS-100, if it receives FDA
      approval for pancreatic cancer, will face competition from existing drugs
      approved or used to treat pancreatic cancer. These drugs are fluorouracil
      (5-FU), Eli Lilly’s gemcitabine (Gemzar) and Supergens’ Mitozytrex. Recently,
      OSI Pharmaceuticals received a positive vote by the FDA’s ODAC panel for a
      recommendation to approve Tarceva® in combination with Gemzar for treatment of
      advanced pancreatic cancer in patients who have not received previous
      chemotherapy. Combination studies utilizing new drug candidates and Gemzar
      are
      ongoing and combination therapies of new drug candidates and Gemzar may present
      future competition.




We
      believe, based on industry studies, there are, including GCS-100, approximately
      11 drugs in Phase I, 12 drugs in Phase II, and 10 drugs in Phase III or in
      pre-registration for treatment of colorectal cancer. In addition, GCS-100,
      if it
      receives FDA approval for colorectal cancer, will face competition from existing
      drugs approved or used to treat colorectal cancer. These drugs include
      Genenetech’s Avastin, Roche Pharmaceuticals’ capecitabine (Xeloda), fluorouracil
      (Adrucil or 5-FU), leucovorin in combination with 5-FU, Janssen’s levamisole
      (Ergamisol) in combination with 5-FU, Pharmacia’s irinotecan (Camptosar) and
      Imclone’s Erbitux.




We
      initiated a Phase I/II trial in multiple myeloma in March 2005. We believe,
      based on industry studies, there are, including GCS-100, approximately 6 drugs
      in Phase I, 11 in Phase II and 7 in Phase III or in pre-registration for the
      treatment of multiple myeloma. In addition, GCS-100, if it receives FDA approval
      for treatment of multiple myeloma, will face competition from existing drugs
      approved or used to treat multiple myeloma. These drugs include vincristine,
      dexamethasone, prednisone, doxorubicin (Adriamycin), melphalan, etoposide,
      cytarabine, cisplatin, carmustine, cyclophosphamide, Celgene’s Thalomid and
      Millennium’s Velcade. The majority of the drugs are used in combination therapy
      in a variety of regimens.





In
      the
      fourth quarter of 2005, we also plan to initiate a Phase I/II clinical trial
      in
      chronic lymphocytic leukemia, or CLL. We believe based on industry studies,
      there are, other than GCS-100, approximately 4 drugs in Phase I, 7 drugs in
      Phase II and 2 drugs in Phase III or in pre-registration for the treatment
      of
      CLL. In addition, there are a number of clinical trials ongoing using a variety
      of approved chemotherapy agents in combination. If GCS-100 gains FDA approval
      for the treatment of CLL, it will face competition from approved therapies.
      Three commonly used chemotherapeutic drugs to treat CLL are chlorambucil,
      fludarabine and cyclophosphamide. In addition, a number of new approaches to
      treating CLL are being developed by competitors, including development of gene
      therapies, or DNA damage repair, tumor vaccines and monoclonal antibodies.
      Alemtuzumab (Campath®), a monoclonal antibody therapy, is the first of these new
      approaches to receive FDA approval for the treatment of CLL patients who have
      failed chemotherapy. Recently, Genta filed a New Drug Application with the
      FDA
      for accelerated approval of Genasense in CLL. Rituximab, another monoclonal
      antibody approved for use in certain types of non-Hodgkins lymphoma, also shows
      promise to be useful in treating CLL patients. As in many cancers, drugs to
      treat CLL are also being used and evaluated in combination which may provide
      them with a competitive advantage.





Our
      competitors may:




·
            successfully
                identify drug candidates or develop products earlier than we
                do;


·
              obtain
                  approvals from the FDA or foreign regulatory bodies more rapidly
                  than we
                  do;


·
            develop
                products that are more effective, have fewer side effects or cost
                less
                than our products; or


·
              successfully
                  market products that may compete with our product
                  candidates.




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The
      success of our competitors in any of these efforts would adversely affect our
      ability to develop, commercialize and market our product
      candidates.





OUR
      BUSINESS IS SUBJECT TO SIGNIFICANT GOVERNMENT REGULATION AND FAILURE TO ACHIEVE
      REGULATORY APPROVAL OF OUR DRUG CANDIDATES WOULD HARM OUR BUSINESS.





The
      FDA
      regulates the development, testing, manufacture, distribution, labeling and
      promotion of pharmaceutical products in the United States pursuant to the
      Federal Food, Drug, and Cosmetic Act and related regulations. We must receive
      pre-market approval by the FDA prior to any commercial sale of GCS-100 or any
      other drug candidate. Before receiving such approval we must provide preclinical
      data and proof in human clinical trials of the safety and efficacy of GCS-100
      or
      any other drug candidates, which trials can take several years. In addition,
      we
      must show that we can produce GCS-100 or any other drug candidates consistently
      at quality levels sufficient for administration in humans. Pre-market approval
      is a lengthy and expensive process. We may not be able to obtain FDA approval
      for any commercial sale of any drug candidate. By statute and regulation, the
      FDA has 180 days to review an application for approval to market a drug
      candidate; however, the FDA frequently exceeds the 180-day time period, at
      times
      taking up to 18 months. In addition, based on its review, the FDA or other
      regulatory bodies may determine that additional clinical trials or preclinical
      data are required. Except for any potential licensing or marketing arrangements
      with other pharmaceutical or biotechnology companies, we will not generate
      any
      revenues in connection with GCS-100 or any other drug candidates unless and
      until we obtain FDA approval to sell such products in commercial quantities
      for
      human application. In order to sell GCS-100 in countries outside the U.S.,
      similar regulatory approval as required by the FDA will be required by that
      country’s regulatory body.





REIMBURSEMENT
      PROCEDURES AND FUTURE HEALTHCARE REFORM MEASURES ARE UNCERTAIN AND MAY ADVERSELY
      IMPACT OUR ABILITY TO SUCCESSFULLY SELL OR LICENSE ANY PHARMACEUTICAL
      PRODUCT.





Our
      ability to successfully sell or license any pharmaceutical product will depend
      in part on the extent to which government health administration authorities,
      private health insurers and other organizations will reimburse patients or
      providers for the costs of our future pharmaceutical products and related
      treatments. In the United States, government and other third-party payers have
      sought to contain healthcare costs by limiting both coverage and the level
      of
      reimbursement for new pharmaceutical products approved for marketing by the
      FDA.
      In some cases, these payers may refuse to provide any coverage for uses of
      approved products to treat medical conditions even though the FDA has granted
      marketing approval. Healthcare reform may increase these cost containment
      efforts. We believe that managed care organizations and government health
      insurance programs may seek to restrict the use of new products, delay
      authorization to use new products or limit coverage and the level of
      reimbursement for new products. For example, the Medicare Prescription Drug
      Improvement and Modernization Act of 2003 together with rule making by the
      Center for Medicare and Medicaid Services could affect drug coverage and
      payments by Medicare. Internationally, where national healthcare systems are
      prevalent, little if any funding may be available for new products, and cost
      containment and cost reduction efforts can be more pronounced than in the United
      States.





IF
      WE ARE
      UNABLE TO ENTER INTO AGREEMENTS WITH THIRD PARTIES TO PROVIDE SALES, MARKETING
      AND DISTRIBUTION CAPABILITIES, OR TO CREATE THESE FUNCTIONS OURSELVES, WE WILL
      NOT BE ABLE TO COMMERCIALIZE GCS-100 OR ANY OTHER PRODUCT
      CANDIDATES.





We
      do not
      have any sales, marketing or distribution capabilities. In order to
      commercialize GCS-100 or other product candidates, if any are approved, we
      must
      either make arrangements with third parties to provide sales, marketing and
      distribution capabilities or acquire or internally develop these functions
      ourselves. If we obtain FDA approval for GCS-100 or any other product candidate,
      we intend to rely on relationships with one or more pharmaceutical or
      biotechnology companies or other third parties with established distribution
      systems and/or direct sales forces to market GCS-100 or any other product
      candidate. If we decide to market any of our product candidates directly, we
      must either acquire or internally develop a marketing and sales force with
      technical expertise and with supporting distribution capabilities. The
      acquisition or development of a sales and distribution infrastructure would
      require substantial resources, which may divert the attention of our management
      and key personnel, and negatively impact our product development efforts.
      Moreover, we may not be able to establish in-house sales and distribution
      capabilities or relationships with third parties. To the extent we enter into
      co-promotion or other licensing agreements, our product revenues are likely
      to
      be lower than if we directly marketed and sold our product candidates, and
      any
      revenue we receive will depend upon the efforts of third parties, which may
      not
      be successful.





OUR
      GROWTH MAY BE LIMITED IF WE ARE UNABLE TO RETAIN AND HIRE ADDITIONAL QUALIFIED
      PERSONNEL AS NECESSARY.





Our
      success will depend on our ability to retain key employees and our continuing
      ability to attract and retain highly qualified scientific, technical and
      managerial personnel. Under our current clinical trial and business plan, we
      may
      add over 15 employees during the course of the next two years, primarily
      technical or scientific personnel, as needs develop. Competition for such
      personnel is intense and we may not be able to retain existing personnel or
      attract qualified employees in the future. Our current financial position,
      limited drug pipeline and small size make it more difficult to compete for
      such
      personnel against larger, more diversified companies. At present, we employ
      15
      full-time employees. We depend upon the personal efforts and abilities of our
      officers and directors, including Bradley J Carver, our President, CEO and
      Interim Chairman of the Board and John W. Burns, our Senior Vice President,
      Chief Financial Officer and a director and would be materially adversely
      affected if their services ceased to be available for any reason and comparable
      replacement personnel were not employed.




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THE
      BIOTECHNOLOGY BUSINESS HAS A RISK OF PRODUCT LIABILITY, AND IN THE EVENT OF
      A
      SUIT AGAINST US, OUR BUSINESS COULD BE SEVERELY HARMED.





The
      testing, marketing and sale of biotechnology products entails a risk of product
      liability claims by patients and others. While we currently maintain product
      liability insurance, such insurance may not be available at reasonable cost
      and
      in the event of a significant adverse event with a patient such insurance would
      likely be insufficient to cover the full amount of the liability incurred.
      In
      the event of a successful suit against us, payments and damage to our reputation
      could have a material adverse effect on our business and financial condition.
      Even if such a suit is unsuccessful, our reputation could be damaged and
      litigation costs and expenditures of management time on such matters could
      adversely affect our business and financial condition.





WE
      ARE
      CONTRACTUALLY OBLIGATED TO ISSUE SHARES IN THE FUTURE, INCLUDING SHARES TO
      BE
      ISSUED UPON THE CONVERSION OF OUTSTANDING PREFERRED STOCK AND WARRANTS HELD
      BY
      EIS, WHICH WILL CAUSE SUBSTANTIAL DILUTION OF YOUR INTEREST IN US.





As
      of
      October 31, 2005, there were outstanding options to purchase **** 661,178 **** shares
      of
      common stock, at a weighted average exercise price of $5.86 per share and
      warrants to purchase 10,249,319 **** shares
      of
      common stock at a weighted average exercise price of $3.93 per share. Certain
      of
      these warrants have weighted average or full ratchet anti-dilution provisions
      which may result in the lowering of their exercise prices. Moreover, we may
      in
      the future issue additional shares to raise capital, acquire other companies
      or
      technologies, to pay for services, or for other corporate purposes. Any such
      issuances will have the effect of further diluting the interest of shareholders.




Elan
      International Services, Ltd., or EIS, owns 6,153.51 shares of our Series A
      preferred stock and 3,471.15 shares of our Series B preferred stock. Each share
      of our Series A preferred stock and Series B preferred stock is convertible
      into
      approximately 166.67 shares of our common stock, subject to anti-dilution
      adjustments. The Series B preferred stock bears a 7% dividend payable in Series
      B preferred stock, which compounds annually. Any accrued but unissued Series
      B
      preferred stock dividends would be converted into common stock upon conversion
      of the Series B preferred stock. As of September 30, 2005, there were 847.63
      shares of accrued but unpaid Series B preferred dividends. Accordingly, EIS
      could acquire upon exercise of warrants held by it and the conversion into
      common stock of all shares of Series A and Series B preferred stock held by
      it,
      including accrued dividends as of September 30, 2005 on the Series B preferred
      stock but no future dividends, a total of 1,883,645 shares of common stock.
      This
      amount of shares represents 13.9% of our common stock outstanding as of
      September 30, 2005. Pursuant to provisions in our agreement with EIS, if the
      exercise or conversion of any of our securities held by EIS would result in
      EIS
      owning more than 9.9% of our common stock at any time, EIS may opt to receive
      non-voting securities instead of common stock.





As
      of
      October 31, 2005, we have 2,998.662 shares of Series D preferred stock
      outstanding, which includes shares issued as dividends. The Series D preferred
      stock bears a cumulative 8% dividend payable quarterly in arrears in cash or
      shares of Series D preferred stock, at our option. Each share of Series D
      preferred stock currently converts into 1,000 shares of common stock, subject
      to
      full ratchet anti-dilution protection. Under such anti-dilution protection
      in
      the event of the issuance of common stock or securities convertible into common
      stock at a price per share below the Series D conversion price (currently
      $1.00), the Series D conversion price would automatically be lowered to the
      price at which such securities were issued. Certain issuances do not result
      in
      any adjustment of the Series D conversion price, including exercise or
      conversion of existing securities, issuance or exercise of options from our
      current equity compensation plans, securities issued in connection with
      strategic partnering transactions and securities not classified as capital
      stock.




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BECAUSE
      THE CURRENT AND POTENTIAL MEMBERS OF OUR BOARD OF DIRECTORS COULD CONTROL A
      SIGNIFICANT PERCENTAGE OF OUR COMMON STOCK, THEY COULD EXERCISE SUBSTANTIAL
      CONTROL OVER US.




The
      holders of the common stock do not have cumulative voting rights. Our directors,
      two of whom are executive officers of GlycoGenesys, own approximately 3.2%
      collectively of our common stock outstanding as of October 31, 2005. One of
      the
      conditions of the transactions between us, Elan and EIS required that we expand
      our board of directors at our 2002 annual stockholder’s meeting at which time
      EIS could appoint one director. EIS decided not to appoint a director at our
      2002 annual stockholders’ meeting but may choose to do so in the future as long
      as they own at least 10% of our common stock (assuming exercise or conversion
      of
      convertible or exercisable securities held by EIS). If EIS appoints a director,
      members of the board of directors and their affiliates would own approximately
      3.2% of our common stock outstanding as of October 31, 2005, assuming EIS has
      not converted or exercised any of our securities held by it, and the same number
      of shares are outstanding at such time as are currently outstanding. If EIS
      and
      our directors were to have converted or exercised all of our securities held
      by
      them, the members of our board of directors and their affiliates would own
      approximately 15.8% **** of
      the
      common stock outstanding as of October 31, 2005, assuming the number of shares
      outstanding at such time equals the number of shares currently outstanding
      plus
      the number of shares issued on exercise or conversion of securities held by
      EIS
      and our directors. This concentration of ownership would allow these
      stockholders to substantially influence all matters requiring stockholder
      approval and could have the effect of delaying or preventing a change in control
      or otherwise discouraging a potential acquirer from attempting to obtain control
      of us, which in turn could materially adversely affect our stock
      price.





OUR
      STOCK
      PRICE COULD DECLINE IF A SIGNIFICANT NUMBER OF SHARES BECOME AVAILABLE FOR
      SALE.




As
      of
      November 14, 2005, approximately 1,559,063 shares of common stock presently
      issued and outstanding are “Restricted Securities” as that term is defined in
      Rule 144 promulgated under the Act. In general, a person (or persons whose
      shares are aggregated) who has satisfied a one year holding period may sell,
      within any three month period, an amount of restricted securities which does
      not
      exceed the greater of 1% of the then outstanding shares of common stock or
      the
      average weekly trading volume during the four calendar weeks prior to such
      sale.
      Restricted securities can be sold, under certain circumstances, without any
      quantity limitation, by persons who are not affiliates of GlycoGenesys and
      who
      have beneficially owned the shares for a minimum period of two years. The sale
      of these restricted shares as well as the shares registered under our twelve
      effective registration statements, shall increase the number of free-trading
      shares and may have a depressive effect on the price of our securities.
      Moreover, such sales, if substantial, might also adversely affect our ability
      to
      raise additional equity capital.





THE
      PRICE
      OF OUR COMMON STOCK HAS BEEN VOLATILE AND OUR COMMON STOCK IS THINLY TRADED,
      AND
      THIS COULD RESULT IN SUBSTANTIAL LOSSES BEING INCURRED BY YOU.




The
      market price of our common stock, which is traded on the National Association
      of
      Securities Dealers Automated Quotation system (Nasdaq Capital Market) has been,
      and may continue to be, highly volatile. During the twelve months ending October
      31, 2005, our common stock has traded at prices ranging from $0.63 to $3.78
      per
      share, after giving retroactive effect to the 1-for-6 reverse stock split we
      effected on December 21, 2004. Factors such as announcements of clinical trial
      results, financings, legal proceedings, technological innovations or new
      products, either by us or by our competitors or third parties, as well as market
      conditions within the biotechnology and pharmaceutical industries, may have
      a
      significant impact on the market price of our common stock.




In
      addition, the stock market has from time to time, and especially in the last
      few
      years, experienced extreme price and volume fluctuations, particularly in the
      biotechnology sector, which have often been unrelated to the operating
      performance of particular companies. Current market conditions are particularly
      unstable and there is a large degree of uncertainty at this time. In general,
      biotechnology stocks tend to be volatile even during periods of relative market
      stability because of the high rates of failure and substantial funding
      requirements associated with biotechnology companies. Market conditions and
      conditions of the biotechnology sector could negatively impact the price of
      our
      common stock.





Shares
      of
      our common stock have historically been "thinly-traded", meaning that the number
      of persons interested in purchasing our common shares at or near ask prices
      at
      any given time may be relatively small or non-existent. As of November 15,
      2005,
      our average trading volume per day for the past three months was approximately
      166,000 shares a day with a high of 1,232,300 shares traded and a low of 19,300
      shares traded. This situation is attributable to a number of factors, including
      the fact that we are a small company which may be relatively unknown to stock
      analysts, stock brokers, institutional investors and others in the investment
      community, and that even if we came to the attention of such persons, they
      tend
      to be risk-averse and would be reluctant to follow a small developing company
      such as ours or purchase or recommend the purchase of our shares until such
      time
      as we became more seasoned and viable. As a consequence, there may be periods
      of
      several days or more when trading activity in our shares is minimal, as compared
      to a seasoned issuer which has a large and steady volume of trading activity
      that will generally support continuous sales without an adverse effect on share
      price. We cannot give you any assurance that a broader or more active public
      trading market for shares of our common stock will develop or be sustained,
      or
      that current trading levels will be sustained.





Fusion
      Capital's purchase of up to $40,000 of our common stock as often as each trading
      day which would be available for sale into the market could cause our common
      stock price to decline due to the additional shares available in the market,
      particularly in light of the relatively thin trading volume of our common stock.
      Using the closing price on November 15, 2005, of $0.77 as an example, Fusion
      Capital would be issued approximately 51,950 shares each trading day
      if we
      elected to have them purchase the daily purchase amount, and the average trading
      volume for the prior three months is 166,000 per day. The market price of our
      common stock could decline given our average trading volume compared to the
      number of shares potentially issuable to Fusion Capital and the voting power
      and
      value of your investment would be subject to continual dilution if Fusion
      Capital purchases the shares and sells those shares into the market, although
      there is no obligation for Fusion Capital to sell such shares. Any adverse
      affect on the market price of our common stock would increase the number of
      shares issuable to Fusion Capital each trading day which would increase the
      dilution of your investment. Although we have the right to reduce or suspend
      Fusion Capital purchases at any time, our financial condition at the time may
      require us to waive our right to suspend purchases even if there is a decline
      in
      the market price.




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Contractual
      9.9% beneficial ownership limitations prohibit Fusion Capital, together with
      its
      affiliates, from beneficially owning more than 9.9% of our outstanding common
      stock. This 9.9% limitation does not prevent Fusion Capital from purchasing
      shares of our common stock and then reselling those shares in stages over time
      where Fusion Capital and its affiliates do not, at any given time, beneficially
      own shares in excess of the 9.9% limitation. Consequently, these limitations
      will not necessarily prevent substantial dilution of the voting power and value
      of your investment.





ITEM
      4. DISCLOSURE CONTROLS AND PROCEDURES





(a)
      Evaluation of Disclosure Controls and Procedures





The
      Company’s management carried out an evaluation, under the supervision and with
      the participation of the Company’s President and Chief Executive Officer and
      Senior Vice President and Chief Financial Officer, of the effectiveness of
      the
      design and operation of the Company’s disclosure controls and procedures (as
      such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)
      as
      of September 30, 2005, pursuant to Exchange Act Rule 13a-15. Based upon that
      evaluation, the Company’s President and Chief Executive Officer along with the
      Company’s Senior Vice President and Chief Financial Officer concluded that the
      Company’s disclosure controls and procedures as of September 30, 2005 are
      effective in timely alerting them to material information relating to the
      Company (including its consolidated subsidiaries) required to be included in
      the
      Company’s periodic filings under the Exchange Act.





(b)
      Changes in Internal Control Over Financial Reporting





No
      changes in the Company’s internal control over financial reporting have come to
      management’s attention that have materially affected, or are reasonably likely
      to materially affect, the Company’s internal control over financial reporting.





PART
      II-OTHER INFORMATION





ITEM
      1. LEGAL PROCEEDINGS





*Platt
      Litigation*




The
      Company and certain of its directors are engaged in a lawsuit with David Platt,
      its former CEO and Chairman, which is described in the Company’s Annual Report
      on Form 10-K for the year ending December 31, 2004. A trial is not expected
      until the second half of 2006. There have been no other material changes in
      the
      status of the suit.





*Re-examination*





The
      Company’s U.S. Patent No. 6,680,306 “Method for Enhancing the Effectiveness of
      Cancer Therapies” is the subject of a re-examination proceeding at the U.S.
      Patent and Trademark Office. This re-examination does not affect the Company’s
      plans for development or commercialization of GCS-100 regardless of its outcome.
      The re-examination is more fully described in the Company’s registration
      statement on Form S-1 filed with the SEC on November 4, 2005.





*Interference*





A
      patent
      application (U.S. Patent Application No. 08/024,487 “Modified Pectin”) and a
      patent (U.S. Patent No. 5,895,784 “Method for Treatment of Cancer by Oral
      Administration of Modified Pectin”) each of which the Company exclusively
      licenses,  are
      the
      subject of an interference proceeding. The declaration of the interference
      and
      the outcome of the proceeding will not affect the Company’s efforts to
      commercialize GCS-100. The interference is more fully described in the Company’s
      registration statement on Form S-1 filed with the SEC on November 4,
      2005.




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ITEM
      6.
      EXHIBITS


10.1.
                  Amendment
                      No. 4 dated September 30, 2005 to the License Agreement dated
                      January 26,
                      2001 between GlycoGenesys, Inc., Wayne State University and
                      the Barbara
                      Ann Karmanos Cancer Institute. (Incorporated herein by reference
                      from the
                      Company’s Form 8-K filed on October 6,
                      2005).


31.1
                Certification
                    of Chief Executive Officer Pursuant to Section 302 of the Sarbanes
                    Oxley
                    Act of 2003.


31.2
              Certification
                  of Chief Financial Officer Pursuant to Section 302 of the Sarbanes
                  Oxley
                  Act of 2003.


32.1
                Certification
                    of Chief Executive Officer and Chief Financial Officer Pursuant
                    to Section
                    906 of the Sarbanes Oxley Act of
                    2003.








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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.





Dated
      this 16th day of November 2005.





**GLYCOGENESYS,
                INC.**
              (the “Registrant”)By:
            /s/ Bradley
              J. CarverBradley
              J. Carver, Chief Executive Officer, President and
              Treasurer




By:
                /s/ John
                  W. BurnsJohn
                    W. Burns, Senior Vice President, Chief Financial Officer
                  and
                    Secretary
  By:
                    /s/ Patrick
                      J. JoycePatrick
                        J. Joyce, Principal Accounting
                        Officer


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