UNITED STATES
               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 quarter 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:   0-10379


                    INTERFERON SCIENCES, INC.
     (Exact Name of Registrant as Specified in its Charter)


Delaware                                            22-2313648
(State or other jurisdiction of                  (I.R.S. Employer
incorporation or organization)                 Identification No.)


783 Jersey Avenue, New Brunswick, New Jersey             08901
(Address of principal executive offices)               (Zip code)

                                                                 
(908) 249 - 3250
(Registrant's telephone number, including area code)

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.  

                     Yes  [X]       No   [ ]

Number of shares outstanding of each of issuer's classes of common
stock as of November 1, 1996: 

     Common Stock                   43,001,517 shares

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            INTERFERON SCIENCES, INC. AND SUBSIDIARY

                        TABLE OF CONTENTS

                                                         Page No.

Part I.  Financial Information:

   Consolidated Condensed Balance Sheets--September 30, 1996
     and December 31, 1995                                      1

   Consolidated Condensed Statements of Operations--Three 
     Months and Nine Months Ended September 30, 1996 and 1995  2-3

   Consolidated Condensed Statement of Changes in 
     Stockholders' Equity--Nine Months Ended 
     September 30, 1996                                         4

   Consolidated Condensed Statements of Cash Flows--Nine
     Months Ended September 30, 1996 and 1995                   5

   Notes to Consolidated Condensed Financial Statements       6-7

   Management's Discussion and Analysis of Financial
     Condition and Results of Operations                     8-13

   Qualification Relating to Financial Information             14

Part II.  Other Information                                    15

Signatures                                                     16

<PAGE>
                 PART I.  FINANCIAL INFORMATION
            INTERFERON SCIENCES, INC. AND SUBSIDIARY
              CONSOLIDATED CONDENSED BALANCE SHEETS

                                     September 30,   December 31,
                                         1996             1995
                                      (Unaudited)          *
ASSETS                               ------------   ------------
Current assets
  Cash and cash equivalents          $ 10,594,547   $  7,221,108 
  Accounts and other receivables          311,447         47,351 
  Inventories                           3,664,334        815,978 
  Receivables from NPDC and  
    affiliated companies, net             142,491         27,211 
  Prepaid expenses and other 
    current assets                        198,524         76,000 
                                     ------------   ------------
Total current assets                   14,911,343      8,187,648 
                                     ------------   ------------
Property, plant and equipment, 
  at cost                              12,377,256     11,894,176 
Less accumulated depreciation and 
  amortization                         (7,319,004)    (6,760,181)
                                     ------------   ------------
                                        5,058,252      5,133,995 
                                     ------------   ------------
Intangible assets, net of 
  amortization                            319,270        341,596 
Other assets                              173,900        289,343 
                                     ------------   ------------
Total assets                         $ 20,462,765   $ 13,952,582 
                                     =============   ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Accounts payable and 
    accrued expenses                 $  1,613,010   $  1,125,806 
                                     -------------  -------------
Total current liabilities               1,613,010      1,125,806 
                                     -------------  -------------
Commitments and contingencies
Stockholders' equity
Preferred stock, par value $.01 per share;
 authorized-5,000,000 shares; none issued 
 and outstanding
Common stock, par value $.01 per share; 
 authorized-55,000,000 shares; issued 
 and outstanding-43,001,517 and 
 34,448,768 shares                        430,015        344,488 
Capital in excess of par value         98,026,314     82,641,859 
Accumulated deficit                   (79,606,574)   (70,159,571)
                                     -------------  -------------
Total stockholders' equity             18,849,755     12,826,776 
                                     -------------  -------------
Total liabilities and stockholders' 
  equity                             $ 20,462,765   $ 13,952,582 
                                     =============  =============

*The condensed balance sheet as of December 31, 1995 has been
summarized from the Company's audited balance sheet as of that
date.
 The accompanying notes are an integral part of these consolidated 
condensed financial statements.

<PAGE>
            INTERFERON SCIENCES, INC. AND SUBSIDIARY
         CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                           (Unaudited)
                                     
                                           Three Months Ended
                                              September 30,    
                                       --------------------------
                                           1996          1995
                                       ------------   -----------
Revenues
Sales
 Alferon N Injection                   $   409,924  $   189,536 
 Research products and other revenues      135,646       22,039 
                                       ------------ ------------
Total revenues                             545,570      211,575 
                                       ------------ ------------
Costs and expenses
Cost of goods sold and excess/idle 
 production costs                          125,884      678,542 
Research and development
 (net of $64,746 and $45,498 of 
 rental income received from NPDC)       1,302,894      963,555 
General and administrative 
 (includes $113,141 and $349,415
 of payments to NPDC for management 
 fees and reimbursements of certain
 salaries and operating expenses; net
 of $107,927 received from NPDC for 
 the three months ended September 30,
 1996 for reimbursements of certain 
 salaries)                                 840,477      552,218 
                                       ------------ ------------
Total costs and expenses                 2,269,255    2,194,315 
                                       ------------ ------------
Loss from operations                    (1,723,685)  (1,982,740)

 Interest and other income                 131,811       58,625 
 Interest expense (includes $34,889
  for the three months ended 
  September 30, 1995 to NPDC)                           (47,897)
                                       ------------ ------------

Net loss                               $(1,591,874) $(1,972,012)
                                       ============ ============

Net loss per share                     $      (.04) $      (.07)
                                       ============ ============

Weighted average number of
shares outstanding                      42,752,906   28,281,638 


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

<PAGE>
            INTERFERON SCIENCES, INC. AND SUBSIDIARY
         CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                           (Unaudited)
 
                                            Nine Months Ended
                                              September 30,    
                                       --------------------------
                                           1996          1995
                                       ------------   -----------
Revenues
Sales
 Alferon N Injection                   $   815,212  $   810,433 
 Research products and other revenues      149,695       33,168 
                                       ------------ ------------
Total revenues                             964,907      843,601 
                                       ------------ ------------
Costs and expenses
Cost of goods sold and excess/idle 
 production costs                        1,152,199    2,032,754 
Research and development
 (net of $194,238 and $136,494 of 
 rental income received from NPDC)       3,627,087    2,708,024 
General and administrative 
 (includes $355,630 and $928,593 
 of payments to NPDC for management 
 fees and reimbursements of certain
 salaries and operating expenses; net
 of $258,262 received from NPDC for 
 the nine months ended September 30,
 1996 for reimbursements of certain
 salaries)                               2,640,951    1,401,904 
Cost of reacquisition of marketing
 rights                                  3,313,705 
                                       ------------ ------------
Total costs and expenses                10,733,942    6,142,682 
                                       ------------ ------------
Loss from operations                    (9,769,035)  (5,299,081)

 Interest and other income                 322,032       69,190 
 Interest expense (includes $34,889
  for the nine months ended
  September 30, 1995 to NPDC)                           (80,511)
                                       ------------ ------------

Net loss                               $(9,447,003) $(5,310,402)
                                       ============ ============

Net loss per share                     $      (.24) $      (.22)
                                       ============ ============

Weighted average number of
shares outstanding                      38,570,423   24,306,019 


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

<PAGE>
            INTERFERON SCIENCES, INC. AND SUBSIDIARY
         CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN
                      STOCKHOLDERS' EQUITY 
              NINE MONTHS ENDED SEPTEMBER 30, 1996
                           (Unaudited)


                                                                     Total
                                      Capital in      Accumu-        Stock-
                    Common Stock      Excess of        lated        holders'
                Shares      Amount    par value       Deficit        Equity
                ------      ------    ----------     --------       --------


Balance at
 Dec. 31,
 1995         34,448,768  $344,488   $82,641,859   $(70,159,571) $12,826,776


Net proceeds
 from the 
 public sale
 of common
 stock        8,000,000     80,000    14,373,458                  14,453,458

Net proceeds
 from the sale 
 of common
 stock to
 Fujimoto
 Diagnostics,
 Inc.           287,223      2,872       497,128                     500,000

Other issuances
 of common
 stock          265,526      2,655       513,869                     516,524

Net loss                                             (9,447,003)  (9,447,003)
              ---------------------------------------------------------------


Balance at
 Sept. 30,
 1996          43,001,517  $430,015   $98,026,314  $(79,606,574)  $18,849,755















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

<PAGE>
               INTERFERON SCIENCES, INC. AND SUBSIDIARY
            CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                              (Unaudited)
                                                Nine Months Ended
                                                  September 30,
                                             -----------------------
                                                1996          1995
                                            ------------  ------------
Cash flows used for operations:
 Net loss                                   $(9,447,003)  $(5,310,402)
 Adjustments to reconcile net loss to net
  cash used for operating activities:
   Depreciation and amortization                581,791       579,377 
   Compensation paid with common stock          516,524 
   Change in operating assets and liabilities:
   Inventories                               (2,848,356)       71,911 
   Consignment inventory                                      220,410 
   Receivables from NPDC and affiliated 
     companies                                 (115,280)              
   Accounts and other receivables              (264,096)     (722,437)
   Prepaid expenses and other current assets   (122,524)       (2,286)
   Accounts payable and accrued expenses        487,204      (203,904)
                                            ------------  ------------
   Net cash used for operations             (11,211,740)   (5,367,331)
                                            ------------  ------------
Cash flows from investing activities:
 Additions to property, plant and equipment    (274,027)              
 Additions to intangible and other assets       (94,252)       (3,052)
                                            ------------  ------------
 Net cash used for investing activities        (368,279)       (3,052)
                                            ------------  ------------
Cash flows from financing activities:
 Net proceeds from sale of common stock
  and warrants                               14,953,458    14,719,035 
 Decrease in advances from NPDC                               (73,821)
 Reduction of long-term debt                                 (409,275)
 Loans from principal stockholders                          1,870,000 
 Repayment of loans from principal 
  stockholders                                             (1,870,000)
 Proceeds from exercise of common 
   stock options                                               20,000 
                                            ------------  ------------
 Net cash provided by financing activities   14,953,458    14,255,939 
                                            ------------  ------------
Net increase in cash and cash equivalents     3,373,439     8,885,556 

Cash and cash equivalents at beginning 
 of period                                    7,221,108       330,617 
                                            ------------  ------------
Cash and cash equivalents at end of period  $10,594,547   $ 9,216,173 
                                            ============  ============
Cash paid for interest expense              $             $    79,166 
                                            ============  ============
Noncash investing and financing activities:
 Offset of receivables in settlement of 
   obligation to repurchase stock           $             $   550,000 
                                            ============  ============
 Termination of commitment to repurchase
   common stock                             $             $ 2,479,976 
                                            ============  ============
The accompanying notes are an integral part of these consolidated
condensed financial statements. 

<PAGE>
            INTERFERON SCIENCES, INC. AND SUBSIDIARY
      NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           (Unaudited)


Note 1.  Agreements with Purdue 

       In 1988, the Company entered into exclusive marketing and
distribution agreements with Mundipharma Pharmaceutical Company
("Mundipharma") with respect to ALFERON(R) N Injection. In 1991,
Mundipharma assigned the right to market and distribute ALFERON N
Injection in the United States to a related entity, Purdue Pharma
L.P. ("Purdue Pharma," and collectively with Mundipharma and its
other affiliates, "Purdue"), and retained the right to market and
distribute ALFERON N Injection in Canada, Western Europe, Israel,
India, Japan, and Australia. In 1993 and 1994, (i) the Company
reacquired the right to market and distribute ALFERON N Injection
in all countries other than the United States and Canada; (ii) the
Company assumed responsibility for the conduct and funding of
clinical trials to develop new indications for ALFERON N Injection;
(iii) the Company agreed to purchase for $4.00 per share 994,994
shares (the "Purdue Shares") of Common Stock of the Company held by
Purdue over a period of 19 months; and (iv) Purdue Pharma and
Mundipharma granted the Company an option (as amended, the
"Repurchase Option") to reacquire the right to market and
distribute ALFERON N Injection in the United States and Canada.  In
July 1995, the Company was relieved of its obligation to repurchase
the remaining 619,994 Purdue Shares if the Repurchase Option was
not exercised.

       In April 1996, the Company entered into an agreement with
Purdue, conditioned upon the sale of at least 5,000,000 shares of
Common Stock in a public offering, to reacquire the remaining
marketing and distributuion rights from Purdue Pharma and
Mundipharma for $3,260,962 in cash, subject to minor adjustment. In
connection with the agreement, (i) Purdue Pharma agreed to provide,
during the first year after the reacquisition, certain distribution
services to the Company with respect to 24,000 vials of ALFERON N
Injection at an aggregate cost of $240,000, (ii) Purdue Pharma
agreed to provide during the second year after the reacquisition,
if requested by the Company, certain distribution services to the
Company with respect to up to 30,000 vials of ALFERON N Injection
at a cost of $15 per vial, and (iii) the Company agreed to purchase
from Purdue Pharma all vials of ALFERON N Injection and all other
assets of Purdue Pharma used exclusively in its ALFERON N Injection
business at an aggregate cost of $259,050 in cash, subject to minor
adjustment. In addition, at the time of entering into the
agreement, Purdue sold its remaining 619,994 Purdue Shares. On May
2, 1996, the Company completed the sale of 8,000,000 shares of
Common Stock for an aggregate of $16,000,000 (the "Offering"). The
Company applied $3,760,012 of the net proceeds of the Offering to
reacquire such marketing rights, pay for the first year's
distribution services, and purchase such vials and other assets.
The $3,313,705 cost of reacquisition of distribution rights from
Purdue was charged to expense in the second quarter of 1996.


Note 2.  Agreement with Cell Pharm GmbH

       In April 1996, the Company entered into a supply and
distribution agreement (the "Cell Pharm Agreement") with Cell Pharm
GmbH ("Cell Pharm"). Cell Pharm, headquartered in Hanover, Germany,
is a privately-owned pharmaceutical company primarily involved in
the distribution and manufacture of products for cancer treatment
and other uses.  The Cell Pharm Agreement, which terminates on
September 30, 2001, unless renewed, grants Cell Pharm rights to
distribute, promote, and sell ALFERON N Injection in Germany. The
Cell Pharm Agreement provides that the Company will supply Cell
Pharm with ALFERON N Injection at specified prices, and obligates
Cell Pharm to purchase specified minimum amounts in each annual
period. In addition, Cell Pharm is required to pay the Company 50%
of the incremental revenue Cell Pharm receives as a result of
selling the ALFERON N Injection at a price higher than a specified
price. Cell Pharm is required to maintain an active and efficient
sales and customer service organization with adequately trained
personnel for marketing and selling the ALFERON N Injection. Cell
Pharm represents to the Company that it has obtained, and Cell
Pharm agrees to maintain in effect, all registrations, approvals,
and consents from governments in Germany as are necessary to permit
or facilitate the lawful handling, promotion, and resale of ALFERON
N Injection in Germany. Cell Pharm has informed the Company that it
intends to market ALFERON N Injection under the trade name
Cellferon(R), pursuant to Cell Pharm's existing regulatory approval
to market Cellferon in Germany for the treatment of hairy cell
leukemia and for the treatment of patients who develop antibodies
against recombinant alpha interferons.

Note 3.  Inventories

       Inventories, consisting of material, labor and overhead, are
classified as follows:

                           September 30,       December 31,
                                1996               1995
                           --------------     --------------

   Finished goods          $ 2,047,677        $   344,550
   Work in process             982,916            162,567
   Raw materials               633,741            308,861
                           ------------       ------------
                           $ 3,664,334        $   815,978


     Finished goods inventory at September 30, 1996 and December
31, 1995 consisted of vials of ALFERON N Injection.


<PAGE>
            INTERFERON SCIENCES, INC. AND SUBSIDIARY

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS


Financial Condition and Liquidity

     As of November 1, 1996, the Company had an aggregate of
$9,600,000 in cash and cash equivalents. Until utilized, such cash
and cash equivalents are being invested principally in short-term
interest-bearing investments.

     The Company requires substantial funds to conduct research and
development and preclinical and clinical testing and to market its
products. The Company anticipates that its future capital
requirements will increase as a result of the repurchase of certain
marketing rights from Purdue. For the nine months ended September
30, 1996 and the years ended December 31, 1995, 1994, and 1993, the
cash utilized by the Company's operations was approximately $11.2
million, $7.1 million, $7.8 million, and $7.8 million,
respectively. The Company's future capital requirements will depend
on many factors, including: continued scientific progress in its
drug development programs; the magnitude of these programs;
progress with preclinical testing and clinical trials; the time and
costs involved in obtaining regulatory approvals; the costs
involved in filing, prosecuting, and enforcing patent claims;
competing technologies and market developments; changes in its
existing research relationships; the ability of the Company to
establish collaborative arrangements; and effective
commercialization activities and arrangements.

     Based on the Company's estimates of revenues and expenses,
management believes that the cash currently available will be
sufficient to enable the Company to continue operations for
approximately 16 months. However, actual results, especially with
respect to revenues, may differ materially from such estimates, and
no assurance can be given that additional funding will not be
required sooner than anticipated or that such additional funding,
whether from financial markets or collaborative or other
arrangements with corporate partners or from other sources, will be
available when needed or on terms acceptable to the Company.
Insufficient funds will require the Company to delay, scale back,
or eliminate certain or all of its research and development
programs or to license third parties to commercialize products or
technologies that the Company would otherwise seek to develop
itself or to shut down or curtail its manufacturing facility. 

     On May 2, 1996, the Company completed the sale of 8,000,000
shares of Common Stock for an aggregate of $16,000,000. Of the net
proceeds of $14,453,000, the Company has used an aggregate of
$3,760,000 to pay Purdue and anticipates that it will use
approximately $6,000,000 for research, product development and
clinical trials of the Company's products and the balance for
working capital and general corporate purposes.

     In August and September 1995, the Company completed the sale
of 12,000,000 shares of Common Stock for an aggregate of
$14,400,000 (the "August/September Offering"). Of the $12,494,000
of net proceeds from the August/September Offering, the Company has
used $1,870,000 to repay indebtedness to certain principal
stockholders and anticipates that it will use approximately
$7,000,000 for research, product development, and clinical trials
of the Company's products and the balance for working capital and
general corporate purposes.

     Between May and August 1995, three principal stockholders of
the Company loaned the Company an aggregate of $1,870,000.  Such
loans bore interest at prime plus 2% and were repaid with a portion
of the proceeds of the August/September Offering.  

     In April 1995, Amarillo Cell Culture Company, Incorporated and
its licensee agreed to purchase an aggregate of $750,000 of Common
Stock at $2.00 per share, all of which cash was received during the
second quarter of 1995. 

     In the first quarter of 1995, the Company concluded an
agreement with Fujimoto Diagnostics, Inc. ("Fujimoto"), a
pharmaceutical company located in Osaka, Japan, for the
commercialization of the Company's ALFERON N Injection and ALFERON
N Gel in Japan. In connection with the agreement, Fujimoto
purchased $1,500,000 of Common Stock at $1.45 per share (the then
market price), all of which cash was received during the first
quarter of 1995, and agreed to purchase an additional $500,000 of
Common Stock on February 6, 1996 at the then market price. During
January 1996, Fujimoto advised the Company that, to date, it had
incurred higher than anticipated development expenses, and that it
had determined that there may be greater difficulties in obtaining
Japanese regulatory approval than originally anticipated. Fujimoto
therefore requested that the Company renegotiate such investment
agreement.  The Company met with Fujimoto to consider its request.
As a result of such meeting, during the third quarter of 1996
Fujimoto purchased the additional $500,000 of Common Stock
originally scheduled for purchase on February 6, 1996 and
reimbursed the Company $133,000 for the cancellation of a prior
commitment to purchase ALFERON N Injection. The $133,000 was
recorded as other revenues in the third quarter of 1996. 

     During January 1994, Purdue ordered 45,000 vials of ALFERON
N Injection at an agreed upon price, which were shipped between
June 1994 and November 1995.  In June 1995, the Company received
purchase orders from Purdue totalling 22,744 vials of ALFERON N
Injection, of which 4,431 vials were shipped in November 1995. The
balance of the order was cancelled when the Company reacquired the
marketing rights for ALFERON N Injection in the United States and
Canada from Purdue.  Purdue has informed the Company that during
the period from January 1, 1996 through May 6, 1996 and the years
ended December 31, 1995 and 1994, it sold approximately 5,200
vials, 23,900 vials and 25,000 vials, respectively, and distributed
as free samples approximately 90 vials, 400 vials and 2,000 vials,
respectively, of ALFERON N Injection from its inventory. In
addition, during the period from May 6, 1996 through September 30,
1996, the Company sold approximately 6,600 vials and distributed as
free samples approximately 80 vials. During the month of October
1996, the Company sold approximately 5,200 vials of ALFERON N
Injection, which represents a significant increase over Purdue's
and, after the reacquisition of marketing rights, the Comapny's
historical monthly sales. The Company is unable to determine
whether such sales are indicative of increased future sales, and
there can be no assurance as to what the level of future sales will
be. Nonetheless, based in part on such October sales, the Company
has determined to increase the rate of production of vials.
However, there is a lead time of several months before the new
production schedule will result in more finished vials, and even
though the Company has built up its inventory of vials during the 
first nine months of 1996 for use in the Phase 3 clinical trials
described below, if sales continue at or near the October rate, the
Company may not have sufficient vials to meet sales demand over the
short term.

     In January 1994, the Company amended its marketing and
distribution agreements with Purdue. Pursuant to such amended
agreements, the Company assumed sole responsibility to conduct and
fund clinical trials required to obtain FDA approval for additional
indications for ALFERON N Injection. Prior to these amendments,
Purdue was responsible for the payment of the costs of such
clinical trials. During June and July 1996, respectively, the
Company commenced a Phase 3 clinical trial in HIV-positive patients
and a Phase 3 clinical trial in chronic Hepatitis C patients. The
Company anticipates that the expansion of its research and
development efforts and clinical trial activities and its assuming
responsibility for the conduct and funding thereof will increase
operating expenses. The Company intends to seek to enter into joint
ventures or other arrangements with strategic partners who agree to
bear all or part of such expenses.

     In April 1996, the Company entered into an agreement with
Purdue, conditioned upon the sale of at least 5,000,000 shares of
Common Stock in the Offering, to reacquire the remaining marketing
and distribution rights from Purdue Pharma and Mundipharma for
$3,260,962 in cash, subject to minor adjustment. In connection with
the agreement (i) Purdue Pharma agreed to provide during the first
year after the reacquisition certain distribution services to the
Company with respect to 24,000 vials of ALFERON N Injection at an
aggregate cost of $240,000, (ii) Purdue Pharma agreed to provide
during the second year after the reacquisition, if requested by the
Company, certain distribution services to the Company with respect
to up to 30,000 vials of ALFERON N Injection at a cost of $15 per
vial, and (iii) the Company agreed to purchase from Purdue Pharma
all vials of ALFERON N Injection and all other assets of Purdue
Pharma used exclusively in its ALFERON N Injection business at an
aggregate cost of $259,050 in cash, subject to minor adjustment. In
addition, at the time of entering into the agreement, Purdue sold
its remaining 619,994 shares of Common Stock.  Upon completion of
the Offering, the Company applied $3,760,012 of the net proceeds to
reacquire such marketing rights, pay for the first year's
distribution services, and purchase such vials and other assets.
The $3,313,705 cost of reacquisition of distribution rights from
Purdue was charged to expense in the second quarter of 1996.

     The Company believes that while the reacquisition of marketing
rights from Purdue will increase the Company's future capital
requirements, such reacquisition provides it with greater financial
flexibility and control over the distribution of ALFERON N
Injection. Since the reacquisition of marketing rights, the Company
has focused its marketing efforts in the United States on making
additional sales to existing customers. In September 1996, the
Company hired Magnus Precht as Executive Vice President, Sales and
Marketing.  Mr. Precht is evaluating the Company's marketing
strategy based on sales experience to date and is considering a
number of options, including forming a small sales force and
entering into arrangements with marketing partners.

Results of Operations

     For the nine months ended September 30, 1996 (the "1996
Period"), the Company's revenues of $964,907 included $815,212 from
the sale of ALFERON N Injection and the balance from sales of
research products and revenues resulting from the cancellation of
a prior commitment to purchase ALFERON N Injection.  Revenues of
$843,601 for the nine months ended September 30, 1995 (the "1995
Period") included $810,433 from the sale of ALFERON N Injection and
the balance from sales of research products.  Sales of ALFERON N
Injection to Purdue declined from approximately $660,000 in the
1995 Period to none in the 1996 Period, offset by direct sales of
ALFERON N Injection of approximately $715,000 by the Company in the
1996 Period after it reacquired the United States and Canadian
marketing rights for ALFERON N Injection from Purdue in May 1996. 
There were no sales to Purdue during the 1996 Period because the
Company was negotiating the reacquisition of United States and
Canadian marketing rights from Purdue during such period and Purdue
had adequate inventory from which to make sales pending the
consummation of such reacquisition. Cost of goods sold and
excess/idle production costs totalled $1,152,199 and $2,032,754 for
the nine months ended September 30, 1996 and 1995, respectively. 
The inventory which was sold during the nine months ended September
30, 1996 and 1995 had previously been written down to its then net
realizable value.  Since the facility was operating during the nine
months ended September 30, 1996 and 1995, excess/idle production
costs primarily represented current production costs in excess of
the estimated net realizable value of the inventory produced. The
positive gross margin achieved during the three months ended
September 30, 1996 reflects the higher selling prices of ALFERON N
Injection realized as a result of the reacquisition of United
States marketing rights, as well as the low carrying values of
inventories written down in prior periods due to the sales prices
specified in the Purdue distribution agreements.

     Research and development expenses during the 1996 Period of
$3,627,087 increased by $919,063 from $2,708,024 for the 1995
Period, principally because the Company has increased its level of
clinical research on ALFERON N Injection.  The Company received
$194,238 and $136,494 during the nine months ended September 30,
1996 and 1995, respectively, as rental income from National Patent
Development Corporation ("NPDC") for the use of a portion of the
Company's facilities, which offset research and development
expenses.

     General and administrative expenses for the 1996 Period were
$2,640,951 as compared to $1,401,904 for the 1995 Period.  The
increase of $1,239,047 was principally due to nonrecurring
compensation expenses of approximately $768,000 ($517,000 of which
was paid in shares of Common Stock) and the balance to increases in
payroll and other operating expenses, including distribution
expenses of $100,000 for ALFERON N Injection incurred pursuant to
the distribution agreement with Purdue which was entered into in
connection with the Company's reacquisition of marketing rights.
NPDC provides certain administrative services for which the Company
paid NPDC $90,000 for each of the nine month periods ended
September 30, 1996 and 1995.  In addition, for the nine months
ended September 30, 1996 and 1995, the Company reimbursed NPDC
$146,250 and $187,497, respectively, for expenses paid by NPDC on
behalf of the Company.  During the nine months ended September 30,
1995, NPDC provided to the Company, at its estimated cost, certain
personnel which the Company used in its operations.  For the nine
months ended September 30, 1995, payments to NPDC for the services
provided to the Company by NPDC personnel amounted to $651,096. 
Commencing January 1, 1996, most of the NPDC personnel who had been
providing a portion of their time to the Company became employees
of the Company and are now providing a portion of their time to
NPDC at the Company's estimated cost. For the nine months ended
September 30, 1996, receipts from NPDC for the services provided to
NPDC by Company personnel amounted to $258,262 and payments to NPDC
for the services provided to the Company by NPDC personnel amounted
to $119,380.

     The $3,313,705 cost of reacquisition of marketing rights from
Purdue was charged to expense in the second quarter of 1996.

     Interest and other income for the nine months ended September
30, 1996 was $322,032 as compared to $69,190 for the same period in
1995.  The increase of $252,842 was due to more funds available for
investment in the current period.

     Interest expense for the nine months ended September 30, 1996
and 1995 was zero and $80,511, respectively.  The decrease was due
to the absence of interest bearing debt during the 1996 period.

     As a result of the foregoing, the Company incurred net losses
of $9,447,003 and $5,310,402 for the nine months ended September
30, 1996 and 1995, respectively.  

Recent Tax and Accounting Developments

     Effective January 1, 1996, the Company adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of." Statement 121 requires the Company to estimate the
future cash flows expected to result from the use and eventual
disposition of its property, plant and equipment, and if the sum of
such cash flows is less than the carrying amount of these assets,
to recognize an impairment loss to the extent, if any, that the
carrying amount of the assets exceeds their fair values. The
Company believes that, although it has a current period operating
loss and a history of operating losses, expected future cash flows
derived from these assets will be at least equal to their carrying
values, and that no impairment loss will be indicated. The Company
bases this assessment both upon expected future product revenues
and upon the fact that it completed a major manufacturing facility
expansion and purchase of manufacturing equipment in 1991, the cost
of which constitutes a major portion of the carrying value of its
property, plant and equipment. The Company believes that this
expanded facility will be suitable for a number of years without
significant repairs.  

     In December 1995, the Financial Accounting Standards Board
issued Statement No. 123, "Accounting for Stock-Based Compensation"
("SFAS 123"), effective for years beginning after December 15,
1995.  Under SFAS 123, the Company may elect either a "fair value"
based method or the current "intrinsic value" based method of
accounting prescribed by APB No. 25, "Accounting for Stock Issued
to Employees," for its stock-based compensation arrangements. Under
the "intrinsic value" based method, the Company will be required to
disclose in the footnotes to the consolidated financial statements
net income and earnings per share computed under the "fair value"
based method. The Company has elected to continue accounting for
stock-based compensation arrangements using the "intrinsic value"
based method; therefore, the adoption of SFAS 123 will not impact
the Company's results of operations or financial condition.

Forward-Looking Statements

     This report contains certain forward-looking statements
reflecting management's current views with respect to future events
and financial performance.  These forward-looking statements are
subject to certain risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking
statements, including, but not limited to, uncertainty of obtaining
additional funding for the Company; uncertainty of obtaining United
States regulatory approvals for the Company's products under
development and foreign regulatory approvals for the Company's FDA-
approved product and products under development and, if such
approvals are obtained, uncertainty of the successful commercial
development of such products; substantial competition from
companies with substantially greater resources than the Company in
the Company's present and potential businesses; no guaranteed
source of required materials for the Company's products; dependence
on certain distributors to market the Company's products; potential
adverse side effects from the use of the Company's products;
potential patent infringement claims against the Company; possible
inability of the Company to protect its technology; uncertainty of
pharmaceutical pricing; substantial royalty obligations payable by
the Company; limited marketing and production experience of the
Company; risk of product liability; and risk of loss of key
management personnel, all of which are difficult to predict and
many of which are beyond control of the Company.

<PAGE>
            INTERFERON SCIENCES, INC. AND SUBSIDIARY


         QUALIFICATION RELATING TO FINANCIAL INFORMATION

                       SEPTEMBER 30, 1996


     The financial information included herein is unaudited.  Such
information, however, reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of
management, necessary to a fair statement  of the results for the
interim periods. The results for interim periods are not
necessarily indicative of results to be expected for the year.


<PAGE>
            INTERFERON SCIENCES, INC. AND SUBSIDIARY

                   PART II.  OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

              None

         (b)  Reports on Form 8-K

              There were no reports on Form 8-K filed for the
              period ended September 30, 1996.

<PAGE>
                    INTERFERON SCIENCES, INC.

                       SEPTEMBER 30, 1996




                           SIGNATURES

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



                               INTERFERON SCIENCES, INC.




DATE: November 14, 1996     By:  /s/ Lawrence M. Gordon
                                 Lawrence M. Gordon
                                 Chief Executive Officer




DATE: November 14, 1996     By:  /s/ Donald W. Anderson
                                 Donald W. Anderson
                                 Controller