<PAGE>
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549
                                   FORM  10-Q

(Mark One)

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


     For the quarterly period ended    September 30, 1996
                                       ------------------

                                      or


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

     For the transition period from  __________________  to  __________________

Commission File Number                0-6533
                                      ------


                           BOSTON LIFE SCIENCES, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



          Delaware                                             87-0277826
--------------------------------------------------------------------------------
(State or other jurisdiction of                             (IRS Employer
 incorporation or organization)                           Identification No.)



     31 Newbury Street, Suite 300, Boston, Massachusetts               02116
--------------------------------------------------------------------------------
     (Address of principal executive offices)                        (Zip code)



                                 (617) 425-0200
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)



                                 Not Applicable
--------------------------------------------------------------------------------
             (Former name, former address and former fiscal year, 
                         if changed since last report)


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

                   (X)    Yes                     (_)    No

As of November 12, 1996, there were 111,014,120 shares of Common Stock 
outstanding.
<PAGE>
 
                          BOSTON LIFE SCIENCES, INC.

                              INDEX TO FORM 10-Q


                                                                   Page (s)
                                                                   --------

Part I - Financial Information:

  Item 1 - Financial Statements (unaudited)

     Condensed Consolidated Balance Sheets as of                      1
     September 30, 1996 and December 31, 1995
 
     Condensed Consolidated Statements of Operations                  2
     for the three months ended September 30, 1996 and 1995
     and the nine months ended September 30, 1996 and 1995
 
     Condensed Consolidated Statements of Cash Flows                3 - 4
     for the nine months ended September 30, 1996 and 1995
 
     Notes to Condensed Consolidated Financial Statements           5 - 7
 
  Item 2 - Management's Discussion and Analysis of                  8 - 12
         Financial Condition and Results of Operations
 
 
Part II - Other Information
 
  Item 1 - Legal Proceedings                                          13
 
  Item 2 - Changes in Securities                                      13
 
  Item 3 - Defaults Upon Senior Securities                            13
 
  Item 4 - Submission of Matters to a Vote of                         13
           Security Holders
 
  Item 5 - Other Information                                          13
 
  Item 6 - Exhibits and Reports on Form 8-K                           13
 
Signature (s)                                                         14
<PAGE>
 
                          BOSTON LIFE SCIENCES, INC.
                       (A Development Stage Enterprise)

                          Consolidated Balance Sheet
                          --------------------------
                                  (Unaudited)


<TABLE> 
<CAPTION> 

                                                                    September 30, 1996  December 31, 1995
                                                                    ------------------  -----------------
<S>                                                                      <C>              <C> 
Assets
Current Assets:
   Cash and cash equivalents                                             $  11,233,882    $  2,125,838
   Short-term investments                                                   12,515,900         248,320
   Prepaid sponsored research & development expenses                           273,443         117,902
   Other current assets                                                        110,273         321,201
                                                                         -------------    ------------
     Total current assets                                                   24,133,498       2,813,261
 
Fixed assets, net                                                              121,454          52,046
Stock issuance & deferred financing costs                                            0         211,794
Technology acquired                                                          3,500,000       3,500,000
Other assets                                                                   115,674           8,000
                                                                         -------------    ------------
     Total assets                                                        $  27,870,626    $  6,585,101
                                                                         =============    ============
 
 
 
Current liabilities:
   Accounts payable and accrued expenses                                 $     828,349    $  1,026,566
   Accrued merger transaction & stock issuance costs                           475,000         484,605
   Deferred revenue                                                            133,607          83,060
   Notes payable and current portion of long-term debt                          88,806       1,516,333
                                                                         -------------    ------------
     Total current liabilities                                               1,525,762       3,110,564
                                                                         -------------    ------------
 
Long-term liabilities                                                                0         658,735
                                                                         -------------    ------------

Common stock subject to redemption                                                   0       1,630,000
                                                                         -------------    ------------
 
Stockholders' equity:

   Series A Convertible Preferred stock, $.01 par value                         1,353                0
     1,000,000 shares authorized
     No shares outstanding on 12/31/95 and
     135,342 shares outstanding on 9/30/96

   Common stock, $0.01 par value;                                           1,106,708          833,275
     175,000,000 shares authorized
     83,327,474 shares outstanding on 12/31/95 and
     110,670,848 shares outstanding on 9/30/96

   Additional paid-in-capital                                              48,607,422       19,915,199

   Deferred compensation                                                     (305,747)        (266,363)

   Deficit accumulated during development stage                           (23,064,872)     (19,296,309)
                                                                         ------------     ------------
     Total stockholders' equity                                            26,344,864        1,185,802
                                                                         ------------     ------------
     Total liabilities and stockholders' equity                          $ 27,870,626     $  6,585,101
                                                                         ============     ============
</TABLE> 
                See notes to consolidated financial statements

                                       1
<PAGE>
 
                          BOSTON LIFE SCIENCES, INC.
                       (A Development Stage Enterprise)

                     Consolidated Statement of Operations
                     ------------------------------------
                                  (Unaudited)
<TABLE> 
<CAPTION> 
                                                                                                        From inception
                                                   Three Months Ended          Nine Months Ended      (October 16, 1992)
                                                      September 30,              September 30,         to September 30,
                                                  1996         1995           1996            1995           1996
                                              -----------   -----------    -----------    ------------   ------------
<S>                                           <C>           <C>            <C>            <C>            <C> 
Revenues                                      $    50,000   $   300,273    $   149,454    $    366,667   $    566,394

Operating Expenses
 Research and development expenses                614,687       439,677      1,458,973       1,062,901      6,073,119
 Licensing fees                                    30,000        51,250         90,000          71,250        333,683
 THERAFECTIN(R) related expenses                  265,366             0        812,745               0        812,745
 General and administrative expenses              587,871       561,161      1,994,191       1,126,968      5,341,887
 Purchased research and development 
  in-process                                            0             0              0      10,421,544     10,421,544
                                              -----------   -----------    -----------    ------------   ------------
   Loss from operations                        (1,447,924)     (751,815)    (4,206,455)    (12,315,996)   (22,416,584)
 Net interest income (expense)                    328,694      (334,643)       437,892        (653,261)      (648,288)
                                              -----------   -----------    -----------    ------------   ------------
   Net loss                                   $(1,119,230)  $(1,086,458)   $(3,768,563)   $(12,969,257)  $(23,064,872)
                                              ===========   ===========    ===========    ============   ============

   Net loss per common share                       $(0.01)       $(0.01)        $(0.04)         $(0.23)
                                              ===========   ===========    ===========    ============   

   Weighted average shares outstanding        108,233,306    79,524,031     94,769,165      57,075,420
                                              ===========   ===========    ===========    ============   

</TABLE> 

See notes to consolidated financial statements.

                                       2
<PAGE>
 
                          BOSTON LIFE SCIENCES, INC.
                       (A Development Stage Enterprise)

                     Consolidated Statement of Cash Flows
                     ------------------------------------
                                  (Unaudited)
<TABLE> 
<CAPTION> 
                                                                                                                     Period from
                                                                                          Nine Months Ended           inception 
                                                                                             September 30,        (October 16, 1992)
                                                                                       -------------------------       through
                                                                                           1996         1995      September 30, 1996
                                                                                       -----------   ------------ ------------------
<S>                                                                                    <C>           <C>            <C> 
Cash flows from operating activities
 Net loss                                                                              $(3,768,563)  $(12,969,257)  $(23,064,872)
 Adjustments to reconcile net loss to net cash used for operating activities:
  Purchased research and development in-process                                                  0     10,421,544     10,421,544
  Issuance of stock, stock options and warrants for compensation, services and fees        307,441         24,073        438,157
  Amortization and depreciation                                                            255,068        545,002      1,232,866
  Loss on disposal of fixed assets                                                               0              0         15,589
  Changes in assets and liabilities:
   (Increase) in prepaid sponsored research & development expense                         (155,541)       (87,566)      (273,443)
   Decrease (increase) in other assets                                                     103,254        205,635        277,581
   Increase (decrease) in accounts payable and accrued expenses                           (198,218)      (369,563)       365,288
   Increase (decrease) in deferred revenue                                                  50,547       (116,667)       133,607
                                                                                       -----------   ------------   ------------  
   Net cash used for operating activities                                               (3,406,012)    (2,346,799)   (10,453,683)
                                                                                       -----------   ------------   ------------ 
Cash flows from investing activities:
 Net cash provided by acquisition of Greenwich Pharmaceuticals                                   0      1,758,037      1,758,037
 Increase in fixed assets                                                                  (84,372)       (17,315)      (159,679)
 Proceeds from sale of fixed assets                                                              0              0          9,800
 Increase in other assets                                                                        0              0         (8,000)
 Purchase of short-term investments, net                                               (12,267,580)             0    (12,515,900)
                                                                                       -----------   ------------   ------------
   Net cash (used for) provided by investing activities                                (12,351,952)     1,740,722    (10,915,742)
                                                                                       -----------   ------------   ------------ 
Cash flows from financing activities:
 Proceeds from issuance of common stock                                                  5,763,836      1,000,000     13,003,802
 Proceeds from issuance of convertible preferred stock                                  23,991,000              0     23,991,000
 Proceeds from issuance of notes payable                                                         0      2,175,000      2,585,000
 Proceeds from issuance of convertible debt                                                      0              0      1,000,000
 Principal payments of notes payable                                                    (1,601,008)       (22,942)    (2,707,661)
 Payment of note issuance costs                                                                  0       (315,702)      (399,702)
 Payment of stock issuance and merger transaction costs                                 (3,287,820)      (287,760)    (4,869,132)
                                                                                        -----------  ------------   ------------ 
   Net cash provided by financing activities                                            24,866,008      2,548,596     32,603,307
                                                                                       -----------   ------------   ------------
Net increase in cash and cash equivalents                                                9,108,044      1,942,519     11,233,882
Cash and cash equivalents at beginning of period                                         2,125,838        146,832              0
                                                                                       -----------   ------------   ------------
Cash and cash equivalents at end of period                                             $11,233,882   $  2,089,351   $ 11,233,882
                                                                                       ===========   ============   ============ 
</TABLE>



                See notes to consolidated financial statements.


                                       3

                                       
<PAGE>
 
                           Boston Life Sciences, Inc.
                        (a development stage enterprise)



                Consolidated Statement of Cash Flows, Continued



SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During the nine months ended September 30, 1996:

Approximately $387,000 was ascribed to stock options issued to employees,
directors and consultants as partial compensation for services.

The Company issued 472,047 shares of common stock upon the exercise of certain
warrant certificates which were net of 69,793 shares with a market value of
$118,132 surrendered to satisfy the exercise price of such warrants.

The Company issued 18,339,008 shares of common stock resulting from the
conversion of 104,569 shares of preferred stock.

The Company issued 472,741 shares of common stock to the placement agent for
the June 28, 1996 private placement as part of the payment for the placement
agent's services.

                                       4
<PAGE>
 
                           BOSTON LIFE SCIENCES, INC.
                        (a development stage enterprise)

              Notes to Unaudited Consolidated Financial Statements
                              (September 30, 1996)

1.    BASIS OF PRESENTATION

      The accompanying unaudited condensed consolidated financial statements 
      have been prepared in accordance with generally accepted accounting
      principles for interim financial information and pursuant to the rules and
      regulations of the Securities and Exchange Commission. Accordingly, these
      financial statements do not include all of the information and footnotes
      required by generally accepted accounting principles for complete
      financial statements.

      The interim unaudited consolidated financial statements contained herein
      include, in management's opinion, all adjustments (consisting of normal
      recurring adjustments) necessary for a fair presentation of the financial
      position, results of operations, and cash flows for the periods presented.
      The results of operations for the interim periods shown on this report are
      not necessarily indicative of results for a full year.  These financial
      statements should be read in conjunction with the Company's consolidated
      financial statements and notes for the year ended December 31, 1995,
      appearing in the Company's Annual Report on Form 10-K, as amended, for
      such year.


2.    ISSUANCE OF COMMON STOCK, PREFERRED STOCK AND WARRANTS FOR COMMON STOCK

      In January and February 1996, the Company completed an equity private
      placement which raised proceeds of approximately $20.7 million net of
      approximately $3.3 million of issuance costs.  In connection with the
      private placement, the Company issued (i) 239,910 shares of Series A
      Convertible Preferred Stock and (ii) granted warrants to purchase
      5,997,750 shares of common stock at $.6708 per share.  Each share of the
      Series A Convertible Preferred Stock is initially convertible at any time
      at the option of the holder into shares of common stock at a ratio of
      175.3771 shares of common stock for each share of Series A Convertible
      Preferred Stock.  The initial conversion ratio is subject to adjustment in
      February 1997 if the fair market value (as defined in the related
      agreements) of the Company's common stock issuable upon conversion of one
      share of the Series A Convertible Preferred Stock, is less than $130.  The
      warrants may be redeemed at the election of the Company, in whole but not
      in part, one year after issuance under certain conditions as defined in
      the warrant agreements.

      In connection with this financing, the Company granted to the placement
      agent, a related party, options to acquire 23.991 units, each unit
      consisting of 1,000 shares of Series A Convertible Preferred Stock and
      warrants to purchase 25,000 shares of common stock at $.6708 per share, at
      a per unit exercise price of $110,000.  These options expire in February
      2006.  The Series A Convertible Preferred Stock included as part of the
      unit purchase options are subject to the same adjustment mechanism in
      February 1997 as the Series A Convertible Preferred Stock.

      In connection with, and after the completion of, this private placement,
      the Company filed a Registration Statement on Form S-3 to register 
      approximately 48 million shares of the Company's

                                       5
<PAGE>
 
                           BOSTON LIFE SCIENCES, INC.
                        (a development stage enterprise)

              Notes to Unaudited Consolidated Financial Statements
                              (September 30, 1996)



      common stock as well as warrants to purchase approximately 6 million
      shares of common stock. This Registration Statement was declared effective
      by the Securities and Exchange Commission on May 10, 1996. The amount of
      common stock registered equals the number of shares into which the Series
      A Convertible Preferred Stock is convertible plus the number of shares
      issuable upon the exercise of the approximately 6 million warrants issued
      in January and February 1996. The Preferred Stock and warrants are owned
      by certain Selling Shareholders who may convert the Preferred Stock or
      exercise the warrants and sell the common stock received. The net proceeds
      from the sale of these securities will be received, and any commissions,
      discounts or other fees incurred in connection with any such sale will be
      borne, by the Selling Stockholders. The Company will not receive any
      proceeds from the sale of these securities although the Company will
      receive the proceeds of any cash exercise of the warrants.

      On June 28, 1996, the Company completed a private placement of 5,000,000
      shares of common stock which raised approximately $5 million in net
      proceeds.

      On July 26, 1996, the Company filed a Registration Statement on Form S-3 
      to register approximately 11 million shares of the Company's common stock
      as well as warrants to purchase approximately 600,000 shares of common
      stock. The registered securities include the 5 million shares issued in
      conjunction with the June 28, 1996 private placement, the commission
      shares issued to the placement agent in connection therewith, and the
      shares and warrants underlying units issued to the placement agent in the
      January - February 1996 equity private placement. This Registration
      Statement was declared effective by the Securities and Exchange Commission
      on August 14, 1996. The common stock and warrants covered by this
      Registration Statement are owned by certain Selling Shareholders who may
      sell the common stock or exercise the warrants and sell the common stock
      received. The net proceeds from the sale of these securities will be
      received, and any commissions, discounts or other fees incurred in
      connection with any such sale will be borne, by the Selling Stockholders.
      The Company will not receive any proceeds from the sale of these
      securities although the Company will receive the proceeds of any cash
      exercise of the warrants.

3. CONVERSION OF CONVERTIBLE DEBENTURES

      In February 1996, the holder of the Company's 7% convertible debentures
      elected to convert them into shares of the Company's common stock. As a
      result, the Company issued 1,566,047 shares of common stock and recorded
      the carrying value of the related debentures of $578,000 (including
      accrued interest expense and net of unamortized discount attributable to
      the conversion feature and unamortized deferred financing fees) as par
      value of the stock issued and additional paid-in-capital.

                                       6
<PAGE>
 
                           BOSTON LIFE SCIENCES, INC.
                        (a development stage enterprise)

              Notes to Unaudited Consolidated Financial Statements
                              (September 30, 1996)



4.    REPAYMENT OF SENIOR BRIDGE NOTES

      During the first quarter of 1996, the Company repaid accrued interest and
      $1,400,000 in principal of the $1,525,000 of notes payable.  On April 1,
      1996, the Company paid the remaining principal of $125,000 and associated
      accrued interest.

5.    COMMON STOCK SUBJECT TO REDEMPTION

      During the nine month period ended September 30, 1996, an aggregate value 
      of $1,630,000 of the amount previously recorded as common stock subject to
      redemption was no longer subject to possible repayment and was
      reclassified as common equity. The Company has received or will receive
      approximately $169,000 in additional proceeds from the investors in such
      common stock due to the expiration of certain valuation periods as defined
      in the investment agreements.

6.    NET LOSS PER SHARE

      Net loss per share has been calculated by dividing net loss by the
      weighted average number of common shares outstanding during the period.
      All common stock equivalents have been excluded from the calculation of
      weighted average common shares outstanding since their inclusion would be
      anti-dilutive.

                                       7
<PAGE>
 
ITEM 2.               MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                             (September  30, 1996)


     This Quarterly Report on Form 10-Q contains forward-looking statements.
Specifically, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements.  Without
limiting the foregoing, the words "believes," "anticipates," "plans," "expects,"
and similar expressions are intended to identify forward-looking statements.
There are a number of meaningful factors that could cause the Company's actual
results to differ materially from those indicated by any such forward-looking
statements.  These factors include, without limitation, the duration and results
of clinical trials and their effect on the FDA regulatory process, uncertainties
regarding receipt of approvals for any possible products and any commercial
acceptance of such products, possible difficulties with obtaining necessary
patent protection, and uncertainties regarding the outcome of any of the
Company's collaborations or alliances with third parties.  Other factors include
those set forth under the caption "Forward-Looking Statements" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995 and the
documents referred to under such caption.

RESULTS OF OPERATIONS

 Overview
 --------

     On June 15, 1995, Greenwich Pharmaceuticals Incorporated ("Greenwich")
acquired all of the outstanding common stock of Boston Life Sciences, Inc. ("Old
BLSI") and Greenwich and Old BLSI merged.  Effective June 15, 1995, the merged
company was renamed "Boston Life Sciences, Inc." (the "Company") and management
and the Board of Directors of Old BLSI assumed management of the Company.  The
acquisition of Old BLSI by Greenwich has been treated as a recapitalization of
Old BLSI with Old BLSI as the acquiror (reverse acquisition).  The historical
financial statements prior to June 15, 1995 are those of Old BLSI.

     The Company is a biotechnology company engaged in the research and
development of novel therapeutic and diagnostic products to treat chronic
debilitating diseases such as cancer, central nervous system disorders and
autoimmune diseases.  The Company expects that its (i) research and development
and (ii) general and administrative costs will continue to increase as the
Company attempts to gain regulatory approval for commercial introduction of its
proposed products.  At September 30, 1996, the Company is considered a
"development stage enterprise" as defined in Statement of Financial Accounting
Standards No. 7.


 Three Months Ended September 30, 1996 and 1995
 ----------------------------------------------

     The Company's operating loss was $1,447,924 during the three month period
ended September 30, 1996 as compared with $751,815 during the three month period
ended September 30, 1995.  Net loss per common share equaled $.01 per share for
each of the three month periods ended September 30, 1996 and 1995.  The higher
loss in the 1996 period was primarily due to (i) lower revenues, as further
described in the next paragraph, (ii) costs associated with the Phase III
clinical trial for THERAFECTIN(R) (amiprilose HCl) which began in March 1996,
(iii) an increase in the number of personnel supporting the Company's research
and development activities and, (iv) the initiation of Company-sponsored
research contracts with its collaborators for the development of the Company's
recent programs licensed to the Company by these partners,  including one
related to a recently discovered transcription factor, C-Maf.

                                       8
<PAGE>
 
     Revenue was $50,000 during the three month period ended September 30, 1996
as compared with $300,273 during the comparable 1995 period.  Revenue for both
periods includes approximately $50,000 attributable to a research and
development agreement entered into with Zeneca Pharmaceuticals, Ltd. ("Zeneca
Pharmaceuticals") in 1995.  Revenue for the three months ended September 30,
1996 also includes the recognition of $250,000 of revenue which had previously
been deferred until the conclusion of negotiations regarding the treatment of
such amounts with a potential corporate partner.

     Research and development expenses were $614,687 during the three month
period ended September 30, 1996 as compared with $439,677 during the comparable
1995 period.  This increase was primarily due to (i) an increase in the number
of personnel supporting the Company's research and development activities, and
(ii) the initiation of Company-sponsored research contracts with its
collaborators for the development of the Company's recent programs licensed to
the Company by these partners, including one related to a recently discovered
transcription factor, C-Maf, which the Company believes may have significant
value in the treatment of autoimmune diseases and allergies.  The majority of
the Company's research and development expenses were sponsored research
obligations paid to Harvard University and its affiliated hospitals.  The
Company expects to incur research and development costs in excess of $2.3
million during 1996 as the Company pursues the continued advancement of its
licensed technologies.

     Licensing fees were $30,000 during the three month period ended September
30, 1996 as compared with $51,250 during the comparable 1995 period.  This
decrease was due to the Company executing certain licensing agreements during
the three months ended September 30, 1995 as compared to no such agreements
having been executed during the comparable 1996 period.  During the three months
ended September 30, 1996, the Company made a $30,000 milestone payment under an
existing licensing agreement.  Under its current licensing agreements, the
Company is obligated to remit certain amounts to its licensors in connection
with the recognition of technology specific revenue.  The Company expects to pay
future licensing fees, the timing and amounts of  which will depend upon the
terms of agreements which may be executed for technologies currently being
developed or which may be developed in the future.  There can be no assurance
regarding the likelihood or materiality of any such future licensing agreements.

     THERAFECTIN(R) (amiprilose HCl) related expenses were $265,366 during the
three month period ended September 30, 1996 as compared with zero during the
comparable 1995 period.  This increase was primarily due to the Company
incurring costs associated with the Phase III clinical trial for THERAFECTIN(R)
which began in March 1996.

  Before any commercially viable product from Therafectin(R) could possibly be
developed to the point where any revenue would be generated if any product were
to be approved, the Company expects that at least $1.3 million dollars of
additional future expense will be necessary.  There can be no assurance,
however, that the expenditure of an additional $1.3 million dollars will result
in the approval of any compounds or that approval will ever be able to be
obtained by the Company.

     General and administrative expenses were $587,871 during the three month
period ended September 30, 1996 as compared with $561,161 during the comparable
1995 period.  This increase was primarily due to the Company expanding its
operations including the number of its personnel.

                                       9
<PAGE>
 
     Net interest income was $328,694 during the three month period ended
September 30, 1996 as compared with net interest expense of $334,643 during the
comparable 1995 period.  The net interest income recognized during the 1996
period primarily related to higher cash balances associated with the Company
raising net proceeds of approximately $25.7 million from two private placements
completed in 1996.  In addition, the Company paid the remaining principal on its
notes payable at the beginning of the second quarter.  The net interest expense
incurred during the 1995 period related to the issuance of $2.175 million of
notes payable during the first quarter of 1995 as well as the amortization of
the debt issuance costs thereon.

     At September 30, 1996, the Company has net deferred tax assets for which a
full valuation allowance has been established.  As a result of its concentrated
efforts on research and development, and Therafectin(R) related expenses, the
Company has a history of incurring net operating losses and anticipates
incurring additional net operating losses for the foreseeable future.
Accordingly, management believes that it is more likely than not that the future
benefits related to the deferred tax assets will not be realized and, therefore,
has provided a full valuation allowance for these assets.

 Nine Months Ended September 30, 1996 and 1995
 ---------------------------------------------

     The Company's operating loss was $4,206,455 during the nine month period
ended September 30, 1996 as compared with $12,315,996 during the nine month
period ended September 30, 1995.  Net loss per common share decreased to $.04
per share during the nine month period ended September 30, 1996 as compared with
$.23 per share during the nine month period ended September 30, 1995.  The
operating loss for the 1995 period included approximately $10.4 million of
purchased research and development in-process which was expensed in conjunction
with the Company's merger with Greenwich on June 15, 1995.  Exclusive of the
purchased research and development in-process, the Company's operating loss
increased from approximately $1.9 million for the nine months ended September
30, 1995 to approximately $4.2 million for the nine months ended September 30,
1996.  The higher loss in the 1996 period was primarily due to (i) lower
revenues, as further described in the next paragraph, (ii) costs associated with
the preparation and initiation of the Phase III clinical trial for
THERAFECTIN(R) (amiprilose HCl) which began in March 1996, (iii) costs
associated with the Company's Phase I/II clinical trial for Altropane(TM) and, 
(iv) higher costs associated with being a publicly traded company during the
entire nine month period ended September 30, 1996 as compared to only a portion
of the comparable period during 1995.

     Revenue was $149,454 during the nine month period ended September 30, 1996
as compared with $366,667 during the comparable 1995 period.  Revenue for both
periods includes approximately $150,000 and $117,000, respectively, attributable
to the research and development agreement entered into by the Company and Zeneca
Pharmaceuticals in 1995. Revenue for the nine months ended September 30, 1995
also includes the recognition of $250,000 of revenue which had previously been
deferred until the conclusion of negotiations regarding the treatment of such
amounts with a potential corporate partner.

     Research and development expenses were $1,458,973 during the nine month
period ended September 30, 1996 as compared with $1,062,901 during the
comparable 1995 period.  This increase was primarily due to the Company (i)
incurring additional clinical development expenses in 1996 for the Company's
Altropane(TM) product which were not incurred in 1995, (ii) an increase in the
number of personnel supporting the Company's research and development
activities, and (iii) the initiation of Company-sponsored research contracts
with its collaborators for the development of the Company's recent programs
licensed to the Company by these partners, including one related to a recently
discovered transcription factor, C-Maf, which the Company believes may have
significant value in the treatment of autoimmune diseases and allergies.  The
majority of the Company's research and development expenses were sponsored
research obligations paid to Harvard University and its affiliated hospitals.
The Company expects to incur increased research and development costs in excess
of $2.3 million during 1996 as the Company pursues the continued advancement of
its licensed technologies.

                                       10
<PAGE>
 
     Licensing fees were $90,000 during the nine month period ended September
30, 1996 as compared with $71,250 during the comparable 1995 period.  This
increase was primarily due to the Company making a $30,000 milestone payment
under an existing licensing agreement.  Under its current licensing agreements,
the Company is obligated to remit certain amounts to its licensors in connection
with the recognition of technology specific revenue.  The Company expects to pay
future licensing fees, the timing and amounts of which will depend upon the
terms of agreements which may be executed for technologies currently being
developed or which may be developed in the future.  There can be no assurance
regarding the likelihood or materiality of any such future licensing agreements.

     THERAFECTIN(R) (amiprilose HCl) related expenses were $812,745 during the
nine month period ended September 30, 1996 as compared with zero during the
comparable 1995 period.  The Company commenced its Phase III clinical trial for
THERAFECTIN(R) in March 1996.

     Before any commercially viable product from Therafectin(R) could possibly 
be developed to the point where any revenue would be generated if any product
were to be approved, the Company expects that at least $1.3 million dollars of
additional future expense will be necessary. There can be no assurance, however,
that the expenditure of an additional $1.3 million dollars will result in the
approval of any compounds or that approval will ever be able to be obtained by
the Company.

     General and administrative expenses were $1,994,191 during the nine month
period ended September 30, 1996 as compared with $1,126,968 during the
comparable 1995 period.  This increase was primarily due to the Company (i)
incurring $175,000 of contractual obligations associated with the employment
contract with its Chief Executive Officer, (ii) expanding its operations,
including its headcount, and (iii) incurring higher costs associated with being
a publicly traded company during the entire nine month period ended September
30, 1996 as compared with only a portion of the comparable 1995 period.

     Net interest income was $437,892 during the nine month period ended
September 30, 1996 as compared with net interest expense of $653,261 during the
comparable 1995 period.  The net interest income recognized during the 1996
period primarily related to higher cash balances associated with the Company
raising net proceeds of approximately $25.7 million from two private placements
completed in 1996.  In addition, the Company paid the remaining principal on its
notes payable on April 1, 1996.  The net interest expense incurred during the
1995 period related to the issuance of $2.175 million of notes payable during
the first quarter of 1995 as well as the amortization of the debt issuance costs
thereon.

     At September 30, 1996, the Company has net deferred tax assets for which a
full valuation allowance has been established.  As a result of its concentrated
efforts on research and development, and Therafectin(R) related expenses, the
Company has a history of incurring net operating losses and anticipates
incurring additional net operating losses for the foreseeable future.
Accordingly, management believes that it is more likely than not that the future
benefits related to the deferred tax assets will not be realized and, therefore,
has provided a full valuation allowance for these assets.

                                       11
<PAGE>
 
LIQUIDITY AND CAPITAL RESOURCES

     Since its inception, the Company has satisfied its working capital
requirements from the sale of the Company's securities through private
placements.  In January and February 1996, the Company raised approximately
$20.7 million of net proceeds by completing a private placement of units
consisting of (i) shares of its Series A Convertible Preferred Stock and (ii)
warrants to purchase shares of the Company's common stock (See Note 10 and Note
15 of Notes to the Consolidated Financial Statements in the Company's Annual
Report for the year ended December 31, 1995 filed on Form 10-K, as amended).  In
June 1996, the Company raised approximately $5 million of net proceeds by
completing a private placement of 5 million shares of common stock.  In the
future, the Company's ability to meet, and the level of, its working capital and
capital requirements will depend on numerous factors, including the progress of
the Company's research and development activities, the level of resources that
the Company devotes to the developmental, clinical, and regulatory aspects of
its products, and the extent to which the Company enters into collaborative
relationships with pharmaceutical and biotechnology companies.

          At September 30, 1996, the Company had available cash, cash
equivalents and short term investments of $23.7 million and working capital of
$22.6 million.  The Company believes that the level of financial resources
available at September 30, 1996 will provide sufficient working capital to meet
its anticipated expenditures for more than the next twelve months.  The Company
may raise additional capital in the future through collaboration agreements with
other pharmaceutical or biotechnology companies, debt financings and equity
offerings.  There can be no assurance, however, that the Company will be
successful in such efforts or that additional funds will be available on
acceptable terms, if at all.

                                       12
<PAGE>
 
                          PART II -- OTHER INFORMATION
                          ----------------------------


ITEM 1:  LEGAL PROCEEDINGS.
         ----------------- 

         None.


ITEM 2:  CHANGES IN SECURITIES.
         --------------------- 

         None.


ITEM 3:  DEFAULTS UPON SENIOR SECURITIES.
         ------------------------------- 

         None.


ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
         --------------------------------------------------- 

         None.


ITEM 5:  OTHER INFORMATION.
         ----------------- 

         None.


ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K.
         -------------------------------- 

         (a)   Exhibits.

         None.

         (b) Reports on Form 8-K:  The Registrant filed the following reports on
             Form 8-K during the quarter ended September 30, 1996 and through
             November 13, 1996.
 

                       Date of Report                      Item Reported
              ---------------------------------            -------------
 
       1      Form 8-K filed July 9, 1996                        5
 
       2      Form 8-K filed July 16, 1996                       5
 
       3      Form 8-K filed July 19, 1996                       5
 
       4      Form 8-K filed July 26 ,1996                       5
 
       5      Form 8-K filed September 16, 1996                  5
 
       6      Form 8-K filed October 15, 1996                    5

                                       13
<PAGE>
 
                                   SIGNATURE
                                   ---------


     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.


                                      Boston Life Sciences, Inc.
                                      --------------------------
                                         (Registrant)


DATE:    November 13, 1996            /s/ S. David Hillson
                                      --------------------
                                      S. David Hillson
                                      President and Chief Executive Officer
 

                                      /s/ Joseph Hernon
                                      ------------------
                                      Joseph Hernon
                                      Chief Financial Officer

                                       14