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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


                                   (MARK ONE)

             [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
                 OF THE SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended June 30, 1997

                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                         Commission File Number 0-19635


                               GENTA INCORPORATED
   (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CERTIFICATE OF INCORPORATION)

             Delaware                                      33-0326866
(STATE OR OTHER JURISDICTION OF                          (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                          IDENTIFICATION NUMBER)


         3550 General Atomics Court
         San Diego, California                                    92121
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                        (ZIP CODE)


                                 (619) 455-2700
              (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  [ ]


         As of July 31, 1997,  the  registrant  had 4,451,018  shares of common
stock outstanding.


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<PAGE>

                               GENTA INCORPORATED
                               INDEX TO FORM 10-Q

PART I.  FINANCIAL INFORMATION                                             Page
                                                                           ----
Item 1.  Financial Statements (Unaudited)

              Condensed Consolidated Balance Sheets at June 30, 1997
                  and December 31, 1996                                       3

              Consolidated Statements of Operations for the
                  Three and Six Months Ended June 30, 1997 and 1996           4

              Condensed Consolidated Statements of Cash Flows for the
                  Six Months Ended June 30, 1997 and 1996                     5

              Notes to Consolidated Financial Statements                      6

Item 2.  Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                       8


PART II. OTHER INFORMATION

Item 2.  Changes in Securities                                                19

Item 4.  Submission of Matters to a Vote of Security Holders                  19

Item 6.  Exhibits and Reports on Form 8-K                                     20



SIGNATURES                                                                    21


<PAGE>

PART 1. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

                               GENTA INCORPORATED
                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                   JUNE 30,        DECEMBER 31,
                                        ASSETS                                       1997              1996
                                                                                -------------    -------------
                                                                                  (UNAUDITED)        (NOTE)
Current assets:                             
<S>                                                                               <C>                <C>     
   Cash and cash equivalents                                                      $9,969,724         $532,013
   Subscription receivable                                                         4,154,007                0
   Trade accounts receivable                                                         520,630          602,696
   Notes receivable from officers and employees                                            0           62,000
   Inventories                                                                       873,457          992,243
   Other current assets                                                              190,590          185,164
                                                                               --------------    -------------
Total current assets                                                              15,708,408        2,374,116
                                                                               --------------    -------------
Property and equipment, net                                                        2,917,910        3,634,281
Intangibles, net                                                                   4,074,665        4,022,242
Other assets, net                                                                  1,087,149        1,138,745
                                                                               --------------    -------------
                                                                                 $23,788,132      $11,169,384
                                                                               ==============    =============
                                                                                                
                         LIABILITIES AND STOCKHOLDERS' EQUITY                                   
                                                                                                
Current liabilities:                                                                            
   Accounts payable                                                               $2,614,878       $1,481,521
   Other accrued expenses                                                          2,210,374        2,012,125
   Deferred revenue                                                                  132,110          193,121
   Short term notes payable                                                        2,350,000          350,000
   Current portion of notes payable and                                                         
      capital lease obligations                                                      221,602          291,842
                                                                               --------------    -------------
Total current liabilities                                                          7,528,964        4,328,609
                                                                               --------------    -------------
Capital lease obligations, less current portion                                            0           30,652
Notes payable, less current portion                                                  917,431        1,129,388
Deficit in Joint Venture                                                           2,003,013        1,606,503
Stockholders' equity:                                                                           
   Preferred stock; 5,000,000 shares authorized:                                                
      Series A convertible preferred stock, $.001 par value;                                    
        528,100 shares issued and outstanding at                                                
        June 30, 1997 and December 31, 1996,                                                    
         liquidation value is $29,045,500 at June 30, 1997                               528              528
      Series C convertible preferred stock, $.001 par value; 1,144 shares                       
        and 1,424 shares issued and outstanding at June 30, 1997 and                            
        December 31, 1996, respectively, liquidation value is                                   
        $1,202,422 at June 30, 1997.                                                       1                1
      Series D convertible preferred stock, $.001 par value; 174,580                            
        shares and no shares issued and outstanding at June 30, 1997                            
        and December 31, 1996, respectively, liquidation value is                               
        $24,441,200 at June 30, 1997                                                     175                0
   Common stock, $.001 par value; 70,000,000 shares authorized;                                 
     4,378,852 and 3,999,163 shares issued and outstanding at                                   
      June 30, 1997 and December 31, 1996, respectively*                               4,379            3,999
   Additional paid-in capital                                                    122,732,087      108,823,555
   Accumulated deficit                                                          (114,156,246)    (108,375,407)
   Accrued dividends payable                                                       4,807,776        3,671,532
   Notes receivable from stockholders                                                (49,976)         (49,976)
                                                                               --------------    -------------
Total stockholders' equity                                                        13,338,724        4,074,232
                                                                               --------------    -------------
                                                                               ==============    =============
                                                                                 $23,788,132      $11,169,384
                                                                               ==============    =============
                                                                                             
</TABLE>

Note:  The balance  sheet at December  31, 1996 has been  derived  from the
       audited  financial  statements at that date but does not include all
       of the  information  and  footnotes  required by generally  accepted
       accounting principles for complete financial statements.

* Adjusted to reflect the  one-for-ten  reverse  stock split of the Company's
  outstanding common stock which was effected on April 4, 1997.


                             See accompanying notes


                                      3

<PAGE>

                                 GENTA INCORPORATED
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                       THREE MONTHS ENDED JUNE 30,                 SIX MONTHS ENDED JUNE 30,
                                    -------------------------------------      ---------------------------------
                                            1997               1996                 1997              1996
                                    ----------------    ----------------       -------------     --------------
Revenues:
<S>                                  <C>                  <C>                  <C>                  <C>        
   Product sales ...........         $ 1,093,214          $ 1,365,636          $ 2,252,053          $ 2,611,195
   Collaborative research
     and development .......                   0                    0               50,000                    0
                                     -----------          -----------          -----------          -----------
                                       1,093,214            1,365,636            2,302,053            2,611,195
                                     -----------          -----------          -----------          -----------

Cost and expenses:
   Cost of products sold ...             792,860              708,443            1,505,086            1,263,835
   Research and development            1,141,584            1,453,806            2,248,623            3,030,242
   Selling, general and
      administrative .......           2,115,131            1,226,296            3,574,589            2,335,373
                                     -----------          -----------          -----------          -----------
                                       4,049,575            3,388,545            7,328,298            6,629,450
                                     -----------          -----------          -----------          -----------
Loss from operations .......          (2,956,361)          (2,022,909)          (5,026,245)          (4,018,255)
Equity in net loss of
  joint venture ............            (477,393)            (941,776)            (780,522)          (2,149,623)
Other income (expense):
   Interest and other income              85,740               97,816              203,844              174,803
   Interest expense ........            (111,966)             (48,092)            (177,916)            (142,815)
                                     -----------          -----------          -----------          -----------
                                         (26,226)              49,724               25,928               31,988
                                     -----------          -----------          -----------          -----------
Net loss ...................         $(3,459,980)         $(2,914,961)         $(5,780,839)         $(6,135,890)
Dividends on preferred stock            (573,163)            (676,584)          (1,148,318)          (1,354,084)
                                     -----------          -----------          -----------          -----------
Net loss applicable to
  common shares ............         $(4,033,143)         $(3,591,545)         $(6,929,157)         ($7,489,974)
                                     ===========          ===========          ===========          ===========
Net loss per common share* .         $     (0.94)         $     (1.35)         $     (1.67)         $     (2.92)
                                     ===========          ===========          ===========          ===========
Shares used in computing net
  loss per common share* ...           4,293,722            2,654,225            4,147,358            2,566,944
                                     ===========          ===========          ===========          ===========
</TABLE>
*    Per share data have been adjusted to reflect the one-for-ten  reverse stock
     split of the Company's outstanding common stock which was effected on April
     4, 1997.

                             See accompanying notes


                                      4

<PAGE>

                                   GENTA INCORPORATED
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                             SIX MONTHS ENDED JUNE 30,
                                                                       ----------------------------------
                                                                              1997             1996
                                                                              ----             ----
OPERATING ACTIVITIES
<S>                                                                        <C>             <C>         
Net loss                                                                   ($5,780,839)    ($6,135,890)
Items reflected in net loss not requiring cash:
   Depreciation and amortization                                               466,889         781,378
   Equity in net loss of joint venture                                         780,522       2,149,623
   Changes in operating assets and liabilities                               1,474,580      (1,341,175)
                                                                          -------------   -------------
Net cash used in operating activities                                       (3,058,848)     (4,546,064)

INVESTING ACTIVITIES
Purchase of property and equipment                                             (11,556)        (64,419)
Sale of property and equipment                                                 338,161               0
Investment in and advances to joint venture                                   (384,012)     (1,205,517)
Deposits and other                                                             (77,950)       (206,708)
                                                                          -------------   -------------
Net cash used in investing activities                                         (135,357)     (1,476,644)

FINANCING ACTIVITIES
Issuance of common stock                                                             0       5,539,287
Issuance of preferred stock, net                                             9,882,765               0
Proceeds from notes payable                                                  3,000,000         240,000
Proceeds from notes receivable                                                  62,000       2,910,722
Repayments of notes payable and capital lease obligations                     (312,849)       (618,325)
                                                                          -------------   -------------
Net cash provided by financing activities                                   12,631,916       8,071,684
                                                                          -------------   -------------
Increase (decrease) in cash and cash equivalents                             9,437,711       2,048,976
Cash and cash equivalents at beginning of period                               532,013         271,755
                                                                          -------------   -------------
Cash and cash equivalents at end of period                                  $9,969,724      $2,320,731
                                                                          =============   =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid                                                                  $26,584        $105,523
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
  FINANCING ACTIVITIES:
Preferred stock dividends accrued                                            1,148,318       1,354,084
Common stock issued in payment of dividends on preferred stock                  12,074               0
Common stock issued upon conversion of convertible debentures
   and accrued interest                                                        358,559               0
Preferred stock issued upon conversion of short term notes payable             650,000               0
Preferred stock issued for receivable                                        4,154,007               0
</TABLE>


                             See accompanying notes


                                        5


<PAGE>

                               GENTA INCORPORATED
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1997
                                   (UNAUDITED)


(1)      BASIS OF PRESENTATION

         The unaudited  condensed  consolidated  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q. Accordingly,  they
do not include all of the information and footnotes required to be presented for
complete financial statements. The accompanying financial statements reflect all
adjustments  (consisting  only of normal  recurring  accruals) which are, in the
opinion of management,  necessary for a fair presentation of the results for the
interim periods  presented.  

         The condensed consolidated financial statements and related disclosures
have been  prepared  with the  presumption  that users of the interim  financial
information have read or have access to the audited financial statements for the
preceding fiscal year. Accordingly, these financial statements should be read in
conjunction with the audited  consolidated  financial statements and the related
notes thereto  included in the  Registrant's  Annual Report on Form 10-K for the
year ended December 31, 1996.

         The Company  has  experienced  significant  quarterly  fluctuations  in
operating results and it expects that these  fluctuations in revenues,  expenses
and losses will continue.

(2)      INVENTORIES

         Inventories are comprised of the following:

                                                   June 30,     December 31,
                                                   1997             1996
                                                -----------     -----------


         Raw materials and supplies            $    303,046      $   342,875
         Work-in-process                            170,684          272,259
         Finished goods                             399,727          377,109
                                               ------------      -----------
                                               $    873,457      $   992,243
                                               ============      ===========

(3)      STOCKHOLDERS' EQUITY

         In  June  1997,  the  Company  raised  gross  proceeds  of $16  million
(approximately  $14  million  net of  placement  agent fees and other  expenses)
through the private placement of Premium Preferred Units(TM).  Each unit sold in
the private placement  consists of 1,000 shares of Premium Preferred  Stock(TM),
par value $.001 per share,  stated value $100 per share (the "Series D Preferred
Stock") and Warrants to purchase  5,000 shares of Genta common stock,  par value
$.001 (the "Class D Warrants"),  at any time prior to the fifth  anniversary  of
the final closing.  The Series D Preferred  Stock is immediately  convertible at
the option of the holder into shares of common stock at a conversion price equal
to the lesser of (i) $3.00 and (ii) 50% of the average  closing bid price of the
common  stock for the five  consecutive  trading days  immediately  prior to the
final closing date of the Private  Placement  (i.e. June 30, 1997). In addition,
the  holders of the  Series D  Preferred  Stock are  entitled  to a  liquidation
preference  aggregating  $24,441,200,  which represents an immediate increase in
value to the Series D  Preferred  Stock.  The  Company  has  accounted  for such
increase by charging  accumulated  deficit, and increasing the carrying value of
the Series D Preferred Stock to its liquidation preference.


                                       6

<PAGE>

         During  April 1997,  $250,000  of the 4%  Convertible  Debentures  (the
"Convertible  Debentures")  and the related accrued interest were converted into
153,368  shares of  Genta's  common  stock.  During  May 1997,  $100,000  of the
Convertible  Debentures  and the related  accrued  interest were  converted into
50,895 shares of Genta's common stock. The conversion prices were based upon 75%
of the average  Nasdaq  closing bid prices of Genta's common stock for specified
periods.  Terms of the 4%  Convertible  Debentures  also  provide  for  interest
payable in shares of the Company's common stock.

         Also during May 1997, $650,000 of the Senior Secured Convertible Bridge
Notes (the  "Convertible  Notes") were  converted into 13,000 shares of Series D
Preferred  Stock.  The  conversion  price was based upon the initial  conversion
price of $5 per share of Series D Preferred  Stock adjusted for the  one-for-ten
reverse  stock split to a $50 per share of Series D Preferred  Stock  conversion
price.

         During April 1997,  280.336 shares of the Series C Preferred  Stock and
accrued  dividends  were  converted  at the option of the holders  into  175,221
shares of Genta's  common  stock.  During July 1997,  100 shares of the Series C
Preferred  Stock and  accrued  dividends  were  converted  at the  option of the
holders into 72,166 shares of Genta's common stock.  The conversion  prices were
based upon 75% of the average  Nasdaq closing bid prices of Genta's common stock
for specified  periods.  Terms of the Series C Preferred  Stock also provide for
dividends payable in shares of the Company's common stock.

         In July  1997,  Nasdaq  informed  Genta  that it has met the  terms for
continued  listing  set forth in the April 11,  1997  revised  exception  of the
Nasdaq Listings Qualifications Panel (the "Panel") and that Genta's common stock
will  therefore  continue  to be  listed  on  the  Nasdaq  SmallCap  Market.  In
conjunction with this decision, Genta resumed trading under the symbol "GNTA" as
of July 24, 1997.

(4)      NET LOSS PER COMMON SHARE

         Net loss per common share is computed using the weighted average number
of common shares outstanding during each of the interim periods. Shares issuable
upon the  exercise  of  outstanding  stock  options  and  warrants  and upon the
conversion of convertible  preferred  stock are not reflected as their effect is
anti-dilutive.

         In February  1997,  the  Financial  Accounting  Standards  Board issued
Statement  No. 128,  "Earnings  per  Share,"  which is required to be adopted on
December  31,  1997.  At that time,  the Company  will be required to change the
method  currently  used to compute net earnings  (loss) per share and to restate
all prior periods. Under the new requirements for calculating basic, or primary,
earnings per share,  the dilutive effect of stock options will be excluded.  The
impact of the new  standard  will have no effect on the  Company's  net loss per
share for the quarters ended June 30, 1997 and 1996.

ITEM 2.  MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND
         RESULTS OF OPERATIONS

OVERVIEW

         Since its inception in February 1988,  Genta  Incorporated  ("Genta" or
the "Company") has devoted its principal efforts toward drug discovery, research
and  development.  Genta has been  unprofitable  to date and, even if it obtains
financing to continue its  operations,  expects to incur  substantial  operating
losses for the next  several  years due to  continued  requirements  for ongoing
research and development  activities,  preclinical  testing and clinical trials,


                                       7

<PAGE>

manufacturing  activities,  regulatory activities,  establishment of a sales and
marketing  organization if so decided, and development  activities undertaken by
Genta Jago  Technologies  B.V. ("Genta Jago"),  the Company's joint venture with
Jagotec AG  ("Jagotec").  From the period since its  inception to June 30, 1997,
the Company has incurred a cumulative  net loss of $114.2  million.  The Company
has experienced  significant quarterly  fluctuations in operating results and it
expects that these fluctuations in revenues,  expenses and losses will continue.
See "Risk Factors".

         The statements contained in this Quarterly Report on Form 10-Q that are
not historical are forward-looking  statements within the meaning of Section 27A
of the Securities Act of 1933, as amended (the  "Securities  Act"),  and Section
21E of the  Securities  Exchange Act of 1934, as amended (the  "Exchange  Act"),
including  statements  regarding  the  expectations,   beliefs,   intentions  or
strategies  regarding the future.  The Company intends that all  forward-looking
statements be subject to the  safe-harbor  provisions of the Private  Securities
Litigation  Reform Act of 1995.  These  forward-looking  statements  reflect the
Company's  views as of the date they are made with respect to future  events and
financial  performance,  but are subject to many risks and uncertainties,  which
could  cause the actual  results of the  Company to differ  materially  from any
future results expressed or implied by such forward-looking statements. Examples
of such risks and  uncertainties  include,  but are not  limited  to,  obtaining
sufficient  financing to maintain the Company's planned  operations,  the timely
development,  receipt of necessary  regulatory  approvals and  acceptance of new
products,  the successful application of the Company's technology to produce new
products,  the obtaining of proprietary  protection for any such  technology and
products,  the impact of  competitive  products  and pricing  and  reimbursement
policies,  changing  market  conditions and the other risks detailed in the Risk
Factors  section of this  Quarterly  Report on Form 10-Q.  The Company  does not
undertake to update any forward-looking statements.

RESULTS OF OPERATIONS

         Operating  revenues  decreased to $1.1 million in the second quarter of
1997  compared to $1.4 million in the second  quarter of 1996,  and $2.3 million
for the six  months  ended  June  30,  1997  compared  to  $2.6  million  in the
comparable  period of 1996 due to  decreased  sales of  specialty  chemical  and
pharmaceutical  intermediate  products.  All of the Company's  product sales are
attributable to its manufacturing subsidiary,  JBL Scientific,  Inc. The Company
has historically  experienced significant quarterly fluctuations in its level of
product sales, generally reflecting the timing and degree of customer demand for
certain products, and the Company anticipates that these sales fluctuations will
continue in future periods.  For example,  while product sales have decreased in
1997 compared to 1996, the Company experienced its greatest sales for any single
month in the month of July,  1997  recording  $600,000  of sales.  Collaborative
research and development  revenues recorded during the six months ended June 30,
1997  represented  revenues  earned  pursuant to the  Company's  agreement  with
Johnson & Johnson  Consumer  Products,  Inc. which provided  limited funding for
preliminary feasibility studies using Genta's Anticode compounds.

         Costs and expenses  increased to $4.0 million in the second  quarter of
1997 from $3.4  million in the second  quarter of 1996,  and to $7.3 million for
the six months ended June 30, 1997  compared to $6.6  million in the  comparable
period of 1996.  The cost of products sold increased from $700,000 in the second
quarter of 1996 to  $800,000 in the second  quarter of 1997 and to $1.5  million
for the six months  ended June 30,  1997  compared  to $1.3  million for the six
months ended June 30, 1996.  Research and  development  expenses  decreased from
$1.4 million in the second quarter of 1996 to $1.1 million in the second quarter
of 1997 and to $2.2 million for the six months  ended June 30, 1997  compared to
$3.0  million  in the  comparable  period  of  1996.  Selling  and  general  and
administrative  expenses  increased  from $1.2 million in the second  quarter of


                                       8

<PAGE>

1996 to $2.1 million in the second  quarter of 1997, and to $3.6 million for the
six months ended June 30, 1997 compared to $2.3 million in the comparable period
of 1996.  The  increase  in the cost of  products  sold is  primarily  due to an
unfavorable  product mix variance and the  redeployment of certain  employees in
connection with a reduction in the research and development  staff. The decrease
in research and development expenses is primarily  attributable to the Company's
restructuring  and related  workforce  reductions  implemented  in 1995 and 1996
together with the  discontinuation or non-initiation of several programs and the
redeployment  mentioned in the prior sentence.  However the decrease in research
and development expenses was partially offset by a $300,000 non-recurring charge
recorded   during  the  second   quarter  of  1997  related  to  the   Company's
restructuring and workforce reductions.  The increase in selling and general and
administrative  expenses is primarily  attributable to $300,000 in non-recurring
charges  recorded  during the second  quarter of 1997  related to the  Company's
restructuring and workforce reductions, increased legal expenses associated with
successfully  defending  the  litigation  brought by  certain  of the  Company's
preferred stockholders challenging a $3 million investment made in February 1997
and increased  accounting  and legal  expenses due to the  Company's  successful
efforts to avoid the potential  Nasdaq  delisting and associated with the equity
offerings consummated in 1997.

         The  Company's  equity  in net  loss  of  joint  venture  (Genta  Jago)
decreased to $477,000 in the second  quarter of 1997 from $900,000 in the second
quarter of 1996, and to $781,000 for the six months ended June 30, 1997 compared
to $2.1 million in the comparable  period of 1996. Such decrease is attributable
to the fact  that a  greater  portion  of  development  activities  were  funded
pursuant to Genta Jago's collaborative agreements with third parties.

LIQUIDITY AND CAPITAL RESOURCES

         Since inception, the Company has financed its operations primarily from
private and public offerings of its equity securities.  Cash provided from these
offerings totaled  approximately $112.4 million through June 30, 1997, including
net proceeds of approximately  $17.0 million (net of expenses) raised during the
first six  months  of 1997.  At June 30,  1997,  the  Company  had cash and cash
equivalents  totaling $10.0 million  compared to a total of $532,000 at December
31,  1996.  The $10.0  million  does not reflect the $4.2  million  subscription
receivable  related to the private placement of equity securities that closed on
June 30, 1997,  which amount was received in cash on July 1, 1997.  The increase
in cash and cash  equivalents  during  the first six  months of 1997 is  largely
attributable  to proceeds  from the issuance of the Senior  Secured  Convertible
Bridge  Notes (the  "Convertible  Notes") in February  1997 and the  issuance of
Premium  Preferred  Units(TM) in June 1997 (the "Private  Placement")  less cash
used in the  Company's  operations.  As a result of the  closing of the  Private
Placement  the  conversion  prices and  exercise  prices of certain  outstanding
securities   were   adjusted   pursuant  to  their  terms.   See  "Risk  Factors
Subordination  of Common Stock to Senior  Secured  Convertible  Bridge Notes and
Series A, Series C and Series D Preferred Stock; Risk of Dilution; Anti-dilution
Adjustments" and "Part II, Item 2, Changes in Securities."

         The  Convertible  Notes are due on the earlier of (a) December 31, 1997
and (b) the date of any decision,  order or other  determination  adverse to the
Company or any of its directors by any court or other tribunal in any lawsuit or
other  proceeding  against the Company and/or any of its directors by any of the
Company's preferred stockholders.

         The  Company  is  negotiating  with  biotechnology  and  pharmaceutical
companies regarding  collaborative  agreements and other financial arrangements.
There  can be no  assurance,  however,  that  any such  sources  of  funding  or
collaborative agreements will be available on favorable terms, if at all.

         Unless the Company and/or Genta Jago  successfully  secures  sufficient
levels of collaborative  revenues and other sources of financing,  it expects to
incur substantial  additional costs, including costs related to ongoing research
and   development   activities,   preclinical   testing  and  clinical   trials,
manufacturing  activities,  costs  associated  with the market  introduction  of
potential products,  expansion of its administrative activities, and development
activities   undertaken  by  Genta  Jago.  The  Company  will  need  substantial
additional  funds before it can expect to realize  significant  product revenue.
The  Company  anticipates  that  significant  additional  sources of  financing,
including  equity  financings,  will be  required  in order for the  Company  to
continue its planned  principal  operations.  The Company's  working capital and
additional  funding  requirements will depend upon numerous factors,  including:
(i) the availability of funding; (ii) the progress of the Company's research and
development  programs;  (iii) the timing and results of preclinical  testing and
clinical trials;  (iv) the timing and costs of obtaining  regulatory  approvals;
(v) the level of  resources  devoted to Genta Jago;  (vi) the level of resources
that  the  Company   devotes  to  sales  and   marketing   capabilities;   (vii)
technological  advances;  (viii) the  activities  of  competitors;  and (ix) the
ability of the Company to establish and maintain collaborative arrangements with
others to fund certain research and development,  to conduct clinical trials, to
obtain regulatory approvals and, if such approvals are obtained,  to manufacture
and market products.


                                       9

<PAGE>

RISK FACTORS

         In addition to the other information contained in this Quarterly Report
on Form 10-Q, the following factors should be considered carefully.

         Need for  Additional  Funds.  Genta's  operations to date have consumed
substantial amounts of cash. Substantial additional sources of financing will be
required  in order for the  Company to  continue  its  planned  operations.  The
Company will need to raise  substantial  additional  funds to conduct the costly
and  time-consuming  research,  pre-clinical  development  and  clinical  trials
necessary  to bring its  products  to market  and to  establish  production  and
marketing  capabilities.  The Company intends to seek additional funding through
public  or  private  financings,   including  equity  financings,   and  through
collaborative arrangements.  Adequate funds for these purposes, whether obtained
through financial markets or collaborative or other  arrangements with corporate
partners or from other  sources,  may not be  available  when needed or on terms
acceptable to the Company.  Insufficient funds may require the Company to delay,
scale back or  eliminate  some or all of its  research  and product  development
programs or to license third parties to  commercialize  products or technologies
that the Company would  otherwise seek to develop itself.  The Company's  future
cash  requirements  will be  affected by results of  research  and  development,
results  of  preclinical   studies  and   bioequivalence  and  clinical  trials,
relationships with corporate  collaborators,  changes in the focus and direction
of  the  Company's   research  and   development   programs,   competitive   and
technological advances,  resources devoted to Genta Jago, the United States Food
and Drug  Administration  ("FDA")  and  foreign  regulatory  process,  potential
litigation by companies seeking to prevent or delay marketing  approval of Genta
Jago's products and other factors.

         Risks of Low-Priced  Stock;  Possible  Effect of "Penny Stock" Rules on
Liquidity for the Company's  Securities.  If the Company's  securities  were not
listed on a national  securities  exchange  nor listed on a qualified  automated
quotation system,  they may become subject to Rule 15g-9 under the Exchange Act,
which imposes additional sales practice requirements on broker-dealers that sell
such  securities to persons  other than  established  customers and  "accredited
investors"  (generally,  individuals with a net worth in excess of $1,000,000 or
annual incomes exceeding $200,000 or $300,000 together with their spouses).  For
transactions  covered  by  Rule  15g-9,  a  broker-dealer  must  make a  special
suitability  determination  for the purchaser and have received the  purchaser's
written consent to the transaction  prior to sale.  Consequently,  such Rule may
affect the ability of  broker-dealers  to sell the Company's  securities and may
affect the ability of purchasers to sell any of the Company's  securities in the
secondary market.

         The  Securities  and  Exchange   Commission  (the  "SEC")  has  adopted
regulations  that define a "penny  stock" to be any equity  security  that has a
market  price  (as  therein  defined)  of less  than  $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions.  For
any  transaction  involving a penny  stock,  unless  exempt,  the rules  require
delivery,  prior to any transaction in a penny stock,  of a disclosure  schedule
prepared  by the SEC  relating  to the penny stock  market.  Disclosure  is also
required to be made about sales  commissions  payable to both the  broker-dealer
and the registered  representative  and current  quotations for the  securities.
Finally,  monthly  statements  are required to be sent  disclosing  recent price
information  for the penny  stock held in the  account  and  information  on the
limited market in penny stock.

         The foregoing  required penny stock  restrictions will not apply to the
Company's securities if the Company meets certain minimum net tangible assets or
average  revenue  criteria.  There  can  be  no  assurance  that  the  Company's
securities will qualify for exemption from the penny stock restrictions.  In any
event, even if the Company's securities were exempt from such restrictions,  the
Company  would remain  subject to Section  15(b)(6) of the Exchange  Act,  which
gives the SEC the  authority  to  restrict  any person from  participating  in a
distribution of penny stock,  if the SEC finds that such a restriction  would be
in the public interest.

         If the Company's  securities were subject to the rules on penny stocks,
the market liquidity for the Company's  securities could be materially adversely
affected.


                                       10


<PAGE>

         Jago Notice of Default. On May 7, 1997 Jago and Jagotec gave Genta Jago
formal  notices of its  assertion  that Genta Jago is in breach of the  Restated
GEOMATRIX(R)   Services  Agreement,   the  Restated  GEOMATRIX(R)  Research  and
Development Agreement and the Restated  GEOMATRIX(R) License Agreement,  stating
that should the breach not be cured within the  applicable  cure  period,  Genta
Jago would  reserve the right to terminate the  agreements  in  accordance  with
their  terms.  Jago,  Jagotec  and Jago  Holding AG also gave  formal  notice of
default under the Restated Joint Venture and Shareholders Agreement,  contending
that due to Genta's failure to meet its funding obligations to Genta Jago, Genta
Jago was unable to fulfill its  obligations  to Jago. The amount claimed by Jago
to be in default is  approximately  $1.2 million,  of which $200,000  relates to
1997 and $1.0 million  relates to  development  costs and license fees for 1996.
The Company  recently met with Jago and is  attempting  to resolve the situation
without resort to litigation. While a termination of these agreements may have a
material adverse effect on the Company, the Company intends vigorously to oppose
Jago's  position.   Without  prejudice  to  Genta's  position,   Genta  provided
approximately  $129,000  to Genta  Jago  for the  payment  by Genta  Jago of all
amounts claimed by Jago under the Restated  GEOMATRIX(R)  License  Agreement and
certain  other  amounts owed by Genta Jago to third  parties  (both  included in
Jago's  notice of default). 

         Subordination  of Common  Stock to Senior  Secured  Convertible  Bridge
Notes and Series A, Series C and Series D  Preferred  Stock;  Risk of  Dilution;
Anti-dilution  Adjustments.  In the  event of the  liquidation,  dissolution  or
winding up of the Company,  the common stock is expressly  subordinate  to $2.35
million  principal  amount of  Convertible  Notes  payable in  December  1997 or
earlier under certain circumstances, the approximately $29 million preference of
the 528,100  outstanding  shares of Series A Preferred Stock, the  approximately
$1.2 million  preference of the 1,144 shares of Series C Preferred Stock and the
approximately  $37 million  preference  of 261,975  shares of Series D Preferred
Stock  (assuming  full  conversion  of the  Convertible  Notes but excluding any
Series D  Preferred  Stock  that may be issued  pursuant  to  conversion  of any
interest  on the  Convertible  Notes  and  including  40,395  shares of Series D
Preferred  Stock issuable upon exercise of certain  warrants  exercisable  after
December  31,  1997).  Further,  the payment of dividends on the common stock is
prohibited  by the  terms  of  the  Convertible  Notes  unless  approved  by the
Convertible  Note  holders,  nor may any  dividends  be paid on the common stock
unless  full  cumulative  dividends  on the  Series  A,  Series  C and  Series D
Preferred  Stock have been paid or funds have been set aside for such  preferred
dividends by the Company.

         The Convertible Notes are initially convertible into 60,000 shares (and
such  additional  shares  issuable  upon  conversion  of  the  interest  on  the
Convertible  Notes) of Series D Preferred  Stock,  which are in turn convertible
into  common  stock as  described  below.  The  conversion  rate of the Series A
Preferred Stock and the exercise price of warrants issued in connection with the
Series A Preferred  Stock (the  "Series A Warrants")  is subject to  adjustment,
among  other  things,  upon  certain  issuances  of common  stock or  securities
convertible  into common stock at $67.50 per share or less. Each share of Series
A Preferred Stock is presently  convertible into 6.65 shares of common stock and
the  exercise  price of the  Series A  Warrants  is $9.32 per  share.  There are
outstanding  Series A Warrants  to  purchase an  aggregate  of 60,000  shares of
common stock.  Shares of Series C Preferred  Stock are  convertible  into common
stock at a  conversion  price equal to 75% of a moving  average of  market-based
prices.  The  conversion  rate of the Series D Preferred  Stock and the exercise
prices of the Class D Warrants are subject to  adjustment,  among other  things,
upon certain  issuances of common stock or  securities  convertible  into common
stock at prices per share below certain levels. Each share of Series D Preferred
Stock is presently  convertible into 106 shares of common stock and the exercise
price of the Class D Warrants is presently $0.94375 per share. There are 807,900
Class D Warrants  outstanding and another 201,975 Class D Warrants issuable upon
the exercise of certain warrants.  Finally, the Company has outstanding warrants
to purchase an  aggregate  of  6,357,616  shares of common  stock at an exercise
price of $0.471875 per share, warrants to purchase an aggregate of 50,000 shares
of common stock at an exercise price of $2.50 per share, warrants to purchase an
aggregate of 95,769 shares of common stock at various  exercise  prices  between
approximately $13 and $21 per share and outstanding employee stock options.


                                       11

<PAGE>

         Early Stage of Development;  Technological Uncertainty.  Genta is at an
early stage of development.  All of the Company's potential therapeutic products
are in  research  or  development,  and no  revenues  have been  generated  from
therapeutic  product sales.  To date, a portion of the Company's  resources have
been  dedicated to applying  molecular  biology and  medicinal  chemistry to the
research  and  development  of  potential  pharmaceutical  products  based  upon
Anticode technology. While the Company has demonstrated the activity of Anticode
technology in model systems in vitro and the activity of antisense technology in
animals and has identified a number of compounds which the Company  believes are
worthy of additional testing,  only one of these potential Anticode products has
begun to be tested in humans,  with such testing in its early stages.  There can
be no  assurance  that the novel  approach  of  Anticode  technology  to develop
therapeutic  products will result in products which receive necessary regulatory
approvals or that will be successful commercially.  Further, results obtained in
preclinical  studies  or  pilot   bioequivalence   trials  are  not  necessarily
indicative of results that will be obtained in human clinical testing or pivotal
bioequivalence trials, respectively. The Company is also developing products for
certain  diseases  where no animal models exist.  There can be no assurance that
any of the  Company's or Genta  Jago's  potential  products can be  successfully
developed.  Furthermore,  the Company's  products in research or development may
prove to have  undesirable and unintended side effects or other  characteristics
that may prevent or limit their  commercial  use. There can be no assurance that
the  Company  will be  permitted  to  undertake  human  clinical  testing of the
Company's products currently in preclinical development,  or, if permitted, that
such products will be  demonstrated to be safe and  efficacious.  The Company is
pursuing  research  and  development,  through  Genta  Jago,  of a range of oral
controlled-release formulations of currently available pharmaceuticals.  Many of
the products to be developed  through Genta Jago have not yet been  successfully
formulated  using  GEOMATRIX(R)  technology.  In addition,  none of the products
being  developed   through  Genta  Jago  has  had  its   manufacturing   process
successfully   scaled-up  for  commercial  production  or  has  started  pivotal
bioequivalence  trials.  In addition,  there can be no assurance that any of the
Company's  or Genta  Jago's  products  will  obtain  FDA or  foreign  regulatory
approval for any  indication  or that an approved  compound  would be capable of
being  produced in commercial  quantities at reasonable  costs and  successfully
marketed.  Products, if any, resulting from Genta's or Genta Jago's research and
development programs are not expected to be commercially  available for a number
of years.

         Loss  History;  Uncertainty  of  Future  Profitability.  Genta has been
unprofitable to date,  incurring  substantial  operating losses  associated with
ongoing  research and  development  activities,  preclinical  testing,  clinical
trials,  manufacturing activities and development activities undertaken by Genta
Jago.  From the period since its  inception  to June 30,  1997,  the Company has
incurred a cumulative net loss of $114.2  million.  The Company has  experienced
significant  quarterly  fluctuations in operating results and expects that these
fluctuations  in revenues,  expenses and losses will  continue.  The Company has
historically  experienced  significant  quarterly  fluctuations  in its level of
product sales, generally reflecting the timing and degree of customer demand for
various  products.   The  Company's   independent   auditors  have  included  an
explanatory  paragraph in their report to the Company's financial  statements at
December  31,  1996,  which  paragraph  expresses  substantial  doubt  as to the
Company's ability to continue as a going concern.  However, in 1997, the Company
has raised net  proceeds of  approximately  $17  million  (net of  expenses)  in
various private  placements.

         Limited Availability of Net Operating Loss Carry Forwards.  For Federal
income tax  purposes,  net  operating  loss and tax credit  carryforwards  as of
December 31, 1996 are  approximately  $61,731,000 and $9,585,000,  respectively.
These  carryforwards  will expire  beginning in 2003. The Tax Reform Act of 1986
provided  for a  limitation  on the use of net  operating  loss  and tax  credit
carryforwards following certain ownership changes. The Company believes that the
Private  Placement,  together with certain prior  issuances of  securities  may
restrict  the  Company's  ability to utilize  its net  operating  losses and tax
credits.  Additionally,  because  U.S.  tax laws limit the time during which net
operating  loss and tax  credit  carryforwards  may be  applied  against  future
taxable income and tax liabilities,  respectively,  the Company may not be fully
able to use its net  operating  loss and tax  credits  for  federal  income  tax
purposes.

         Dividends.  The  Company  has never paid cash  dividends  on its common
stock and does not  anticipate  paying  any such  dividends  in the  foreseeable
future. In addition, the Company is restricted from paying cash


                                       12

<PAGE>

dividends on its common stock until such time as all  cumulative  dividends have
been paid on outstanding shares of its Series A, Series C and Series D Preferred
Stock.  The Company  currently  intends to retain its  earnings,  if any,  after
payment of  dividends on  outstanding  shares of Series A, Series C and Series D
Preferred Stock, for the development of its business.

         No Assurance of Regulatory Approval; Government Regulation. The FDA and
comparable  agencies in foreign countries impose substantial  premarket approval
requirements  upon the introduction of  pharmaceutical  products through lengthy
and detailed  preclinical and clinical  testing  procedures and other costly and
time-consuming  procedures.  Satisfaction of these requirements,  which includes
demonstrating  to the  satisfaction of the FDA and foreign  regulatory  agencies
that the product is both safe and  effective,  typically  takes several years or
more depending upon the type,  complexity and novelty of the product.  There can
be no  assurance  that  such  testing  will  show  any  product  to be  safe  or
efficacious  or,  in the  case  of  certain  of  Genta  Jago's  products,  to be
bioequivalent to a currently marketed pharmaceutical. Government regulation also
affects the manufacture and marketing of pharmaceutical  products. The effect of
government  regulation  may be to  delay  marketing  of any new  products  for a
considerable or indefinite  period of time, to impose costly procedures upon the
Company's or Genta Jago's  activities and to diminish any competitive  advantage
that the Company or Genta Jago may attain.  It may take years  before  marketing
approvals  are obtained for the Company's or Genta Jago's  products,  if at all.
There can be no assurance that FDA or other regulatory approval for any products
developed by the Company or Genta Jago will be granted on a timely basis,  if at
all, or, if granted,  that such approval will cover all the clinical indications
for which the  Company  or Genta Jago is seeking  approval  or will not  sustain
significant   limitations   in   the   form   of   warnings,    precautions   or
contraindications  with respect to conditions of use.  Further,  with respect to
the reformulated versions of currently available pharmaceuticals being developed
through  Genta  Jago,  there is a  substantial  risk that the  manufacturers  or
marketers  of such  currently  available  pharmaceuticals  will seek to delay or
block regulatory approval of any reformulated  versions of such  pharmaceuticals
through  litigation  or other means.  Any  significant  delay in  obtaining,  or
failure to obtain, such approvals would materially  adversely affect the Company
and Genta Jago's revenue. Moreover, additional government regulation from future
legislation or  administrative  action may be established which could prevent or
delay  regulatory  approval of the Company's or Genta Jago's products or further
regulate the prices at which the Company's or Genta Jago's proposed products may
be sold.

         The  Company is also  subject to various  foreign,  federal,  state and
local  laws,   regulations  and  recommendations   (collectively   "Governmental
Regulations") relating to safe working conditions,  laboratory and manufacturing
practices,  the experimental use of animals and the use,  manufacture,  storage,
handling  and  disposal  of  hazardous  or  potentially   hazardous  substances,
including   radioactive   compounds  and  infectious  disease  agents,  used  in
connection with the Company's  research and development  work and  manufacturing
processes.  In October 1996, JBL Scientific,  Inc.  ("JBL")  retained a chemical
consulting firm to advise it with respect to environmental  compliance regarding
an  incident  of soil  and  groundwater  contamination  (the  "Spill")  by small
quantities of certain  chemicals.  The Company believes,  based upon information
known to date,  that the Spill is relatively  minor and will not have a material
adverse  effect  on  the  business  of the  Company,  although  there  can be no
assurance  thereof.  Although  the  Company  believes it is in  compliance  with
Governmental  Regulations in all material  respects  (except with respect to the
Spill), there can be no assurance that the Company will not be required to incur
significant costs to comply with Governmental Regulations in the future.

         Uncertainty Regarding Patents and Proprietary Technology. The Company's
and Genta Jago's success will depend, in part, on their respective  abilities to
obtain  patents,  maintain  trade  secrets and operate  without  infringing  the
proprietary  rights of others.  No assurance can be given that patents issued to
or licensed by the Company or Genta Jago will not be challenged,  invalidated or
circumvented,  or that the rights granted  thereunder  will provide  competitive
advantages  to the Company or Genta  Jago.  There can be no  assurance  that the
Company's or Genta Jago's patent applications will be approved, that the Company
or Genta Jago will develop  additional  products that are  patentable,  that any
issued  patent  will  provide  the  Company or Genta  Jago with any  competitive
advantage or adequate protection for its inventions or will not be challenged by
others,  or that the  patents of others  will not have an adverse  effect on the
ability of the Company or Genta Jago to do business.  Competitors may have filed
applications,  may have been issued patents or may obtain additional patents and
proprietary rights relating to


                                       13


<PAGE>

products  or  processes  competitive  with those of the  Company or Genta  Jago.
Furthermore,  there  can be no  assurance  that  others  will not  independently
develop  similar  products,  duplicate  any of the  Company's  or  Genta  Jago's
products or design  around any  patented  products  developed  by the Company or
Genta Jago. The Company and Genta Jago rely on secrecy to protect  technology in
addition  to  patent  protection,  especially  where  patent  protection  is not
believed to be appropriate or obtainable.  No assurance can be given that others
will not independently develop substantially  equivalent proprietary information
and  techniques or otherwise  gain access to the Company's or Genta Jago's trade
secrets,  or that the Company or Genta Jago can effectively protect is rights to
its unpatented trade secrets.

         Genta and Genta Jago have obtained  licenses or other rights to patents
and other  proprietary  rights of third  parties,  and may be required to obtain
licenses to additional patents or other proprietary rights of third parties.  No
assurance  can be given that any existing  licenses and other rights will remain
in effect or that any licenses  required  under any such  additional  patents or
proprietary rights would be made available on terms acceptable to the Company or
Genta Jago, if at all. If Genta's or Genta Jago's  licenses and other rights are
terminated  or if Genta or Genta Jago cannot  obtain such  additional  licenses,
Genta or Genta Jago could encounter delays in product market introductions while
it attempts to design  around such  patents or could find that the  development,
manufacture or sale of products requiring such licenses could be foreclosed.  In
addition,  the Company or Genta Jago could incur  substantial  costs,  including
costs caused by delays in obtaining regulatory approval and bringing products to
market,  in defending  itself in any suits brought  against the Company or Genta
Jago claiming infringement of the patent rights of third parties or in asserting
the Company's or Genta Jago's patent  rights,  including  those granted by third
parties,  in a suit against  another  party.  The Company or Genta Jago may also
become involved in interference proceedings declared by the United States Patent
and  Trademark  Office in  connection  with one or more of its patents or patent
applications,  which could  result in  substantial  cost to the Company or Genta
Jago,  as well as an adverse  decision as to priority of invention of the patent
or patent  application  involved.  There can be no assurance that the Company or
Genta Jago will have sufficient funds to obtain,  maintain or enforce patents on
their respective products or technology, to obtain or maintain licenses that may
be required in order to develop and commercialize their respective products,  to
contest patents obtained by third parties, or to defend against suits brought by
third parties.

         Dependence  on  Others.   The  Company's  strategy  for  the  research,
development  and  commercialization  of certain of its or Genta Jago's  products
requires  negotiating,  entering into and maintaining various  arrangements with
corporate collaborators,  licensors, licensees and others, and is dependent upon
the   subsequent   success  of  these  outside   parties  in  performing   their
responsibilities.  In addition,  Genta Jago is seeking additional  collaborative
arrangements to develop and commercialize  certain of their respective products.
No assurance can be given that they will obtain such collaborative  arrangements
on acceptable  terms, if at all, nor can any assurance be given that any current
collaborative arrangements will be maintained.

         Technology  Licensed From Third  Parties.  The Company has entered into
certain  agreements  with, and licensed  certain  technology and compounds from,
third  parties.  The  Company  has relied on  scientific,  technical,  clinical,
commercial  and other data  supplied and  disclosed  by others in entering  into
these  agreements,  including the Genta Jago  agreements,  and will rely on such
data in support of development of certain products.  Although the Company has no
reason to believe  that this  information  contains  errors of omission or fact,
there can be no  assurance  that  there are no errors of  omission  or fact that
would  materially  affect the future  approvability  or commercial  viability of
these products.

         Potential Adverse Effect of Technological  Change and Competition.  The
biotechnology   industry  is  subject  to  intense  competition  and  rapid  and
significant  technological  change.  The  Company  and Genta Jago have  numerous
competitors  in the  United  States  and other  countries  for their  respective
technologies  and products  under  development,  including  among others,  major
pharmaceutical  and  chemical  companies,   specialized   biotechnology   firms,
universities and other research institutions. There can be no assurance that the
Company's or Genta Jago's competitors will not succeed in developing products or
other novel technologies that are more effective than any which have been or are
being developed by the Company or Genta Jago or which would render the Company's
or Genta Jago's technology and products  non-competitive.  Many of the Company's
and Genta Jago's  competitors have substantially  greater financial,  technical,
marketing and human resources than the Company or Genta Jago. In


                                       14

<PAGE>

addition,  many of those competitors have significantly  greater experience than
the Company or Genta Jago in undertaking  preclinical testing and human clinical
trials of new  pharmaceutical  products and obtaining  FDA and other  regulatory
approvals of products for use in healthcare. Accordingly, the Company's or Genta
Jago's  competitors  may succeed in obtaining  regulatory  approval for products
more rapidly than the Company or Genta Jago and such  competitors may succeed in
delaying or blocking  regulatory  approvals  of the  Company's  or Genta  Jago's
products.  Furthermore,  if the Company or Genta Jago is  permitted  to commence
commercial  sales  of  products,  it will  also be  competing  with  respect  to
marketing  capabilities,  an area in which it has limited or no experience,  and
manufacturing  efficiency.  There are many public and private companies that are
conducting  research  and  development  activities  based on drug  delivery  and
antisense technologies.  The Company believes that the industry-wide interest in
such  technologies  will  accelerate  and  competition  will  intensify  as  the
techniques which permit drug design and development  based on such  technologies
are more widely understood.

         Uncertainty  of Clinical  Trials and  Results.  The results of clinical
trial and preclinical  testing are subject to varying  interpretations.  Even if
the development of the Company's  products advances to the clinical stage, there
can be no assurance that they will prove to be safe and effective.  The products
that are successfully developed, if any, will be subject to requisite regulatory
approval prior to their  commercial sale, and the approval,  if obtainable,  may
take several years. Generally, only a very small percentage of the number of new
pharmaceutical  products  initially  developed  is  approved  for sale.  Even if
products  are approved  for sale,  there can be no  assurance  that they will be
commercially  successful.  The  Company  may  encounter  unanticipated  problems
relating to  development,  manufacturing,  distribution  and marketing,  some of
which may be beyond the Company's financial and technical capacity to solve. The
failure to address such problems adequately could have a material adverse effect
on the  Company's  business,  financial  condition,  prospects  and  results  of
operations.  No  assurance  can be given that the  Company  will  succeed in the
development  and  marketing of any new drug  products,  or that they will not be
rendered obsolete by products of competitors.

         Difficult   Manufacturing   Process.   The   manufacture   of  Anticode
oligonucleotides  is a time-consuming and complex process.  Management  believes
that  the  Company  has  the  ability  to  acquire  or  produce   quantities  of
oligonucleotides  sufficient  to support its present  needs for research and its
projected needs for its initial clinical development  programs.  However,  Genta
believes  that it will need to obtain an agreement  with a third party  supplier
(including,   potentially,   agreements  with  competitors  of  Genta)  or  make
improvements in its  manufacturing  technology to enable the Company to meet the
volume and cost  requirements  needed for  certain  commercial  applications  of
Anticode products.  Products based on chemically modified  oligonucleotides have
never been  manufactured  on a commercial  scale.  The manufacture of all of the
Company's   and  Genta  Jago's   products   will  be  subject  to  current  Good
Manufacturing  Practices  ("GMP")  requirements  prescribed  by the FDA or other
standards prescribed by the appropriate regulatory agency in the country of use.
There  can be no  assurance  that  the  Company  or Genta  Jago  will be able to
manufacture  products, or have products manufactured for it, in a timely fashion
at acceptable  quality and prices,  that they or third party  manufacturers  can
comply  with  GMP or that  they or  third  party  manufacturers  will be able to
manufacture an adequate supply of product.

         Limited Sales, Marketing and Distribution  Experience.  The Company and
Genta Jago have very limited experience in pharmaceutical  sales,  marketing and
distribution. In order to market and sell certain products directly, the Company
or Genta Jago would have to develop or subcontract a sales force and a marketing
group with technical expertise.  There can be no assurance that any direct sales
or marketing efforts would be successful.

         Uncertainty of Product Pricing,  Reimbursement and Related Matters. The
Company's and Genta Jago's business may be materially  adversely affected by the
continuing  efforts of governmental  and third party payers to contain or reduce
the costs of healthcare  through various means. For example,  in certain foreign
markets  the  pricing or  profitability  of  healthcare  products  is subject to
government  control.  In the United  States,  there have been,  and the  Company
expects that there will continue to be, a number of federal and state  proposals
to implement  similar  governmental  control.  While the Company  cannot predict
whether any such legislative or regulatory proposals or reforms will be adopted,
the  adoption  of any  such  proposal  or  reform  could  adversely  affect  the
commercial  viability of the Company's and Genta Jago's potential  products.  In
addition, in both the United States and elsewhere,  sales of healthcare products
are dependent in part on the availability of reimbursement to the


                                       15

<PAGE>

consumer  from third party  payers,  such as  government  and private  insurance
plans.  Third party payers are  increasingly  challenging the prices charged for
medical products and services and therefore,  significant  uncertainty exists as
to the reimbursement of existing and newly approved healthcare products.  If the
Company or Genta Jago  succeeds in bringing one or more  products to the market,
there can be no assurance that these products will be considered  cost effective
and that  reimbursement  to the consumer will be available or will be sufficient
to allow the Company or Genta Jago to sell its products on a competitive basis.

         Dependence  on  Qualified  Personnel;  No  Full  Time  Chief  Executive
Officer.  The Company does not currently  have a Chief  Executive  Officer.  The
Company's  success  is highly  dependent  on the  hiring  and  retention  of key
personnel  and  scientific  staff.  The loss of key  personnel or the failure to
recruit  necessary  additional  personnel  does  and  will  further  impede  the
achievement  of  development  objectives.   There  is  intense  competition  for
qualified personnel in the areas of the Company's  activities,  and there can be
no  assurance  that Genta  will be able to  continue  to attract  and retain the
qualified personnel  necessary for the development of its business.  The Company
is actively engaged in the search for a new Chief Executive Officer.

         Product Liability Exposure;  Limited Insurance Coverage. The Company's,
JBL's and Genta Jago's  businesses  expose them to potential  product  liability
risks which are inherent in the testing,  manufacturing,  marketing  and sale of
human therapeutic  products.  If available,  product liability insurance for the
pharmaceutical industry generally is expensive. The Company has obtained a level
of liability insurance coverage which it deems appropriate for its current stage
of development.  However,  there can be no assurance that the Company's  present
insurance  coverage is adequate.  Such existing  coverage may not be adequate as
the Company further develops products, and no assurance can be given that in the
future adequate insurance coverage will be available in sufficient amounts or at
a reasonable  cost, or that a product  liability claim would not have a material
adverse effect on the business or financial condition of the Company.

         Fundamental Change. The Company's Restated Certificate of Incorporation
currently  provides  that upon the  occurrence  of a  "Fundamental  Change," the
holders of Series A Preferred  Stock have the option of requiring the Company to
repurchase all of each such holder's  shares of Series A Preferred  Stock at the
Redemption  Price,  an event that could result in the Company being  required to
pay to the holders of Series A Preferred  Stock cash in the aggregate  amount of
approximately $29 million. "Fundamental Change" is defined as: (i) a "person" or
"Group"  (as  defined),  together  with any  affiliates  thereof,  becoming  the
beneficial  owner (as  defined)  of Voting  Shares (as  defined)  of the Company
entitled to exercise more than 60% of the total voting power of all  outstanding
Voting  Shares of the  Company  (including  any Voting  Shares that are not then
outstanding   of  which  such   person  or  Group  is  deemed   the   beneficial
owner)(subject  to certain  exceptions);  (ii) any  consolidation of the Company
with,  or merger of the Company into,  any other  person,  any merger of another
person into the Company,  or any sale, lease or transfer of all or substantially
all of  the  assets  of the  Company  to  another  person  (subject  to  certain
exceptions);  (iii) the sale, transfer or other disposition (or the entry into a
commitment to sell,  transfer or otherwise dispose) of all of any portion of the
shares of Genta Jago held at any time by the Company (or the  imposition  of any
material  lien on  such  shares  which  lien is not  removed  within  30 days of
imposition)  and  the  sale  (or  functional  equivalent  of a  sale)  of all or
substantially all of the assets of Genta Jago or (iv) the substantial  reduction
or  elimination  of a  public  market  for the  common  stock as the  result  of
repurchases,  delisting  or  deregistration  of the  common  stock or  corporate
reorganization or recapitalization undertaken by the Company.

         Hazardous Materials;  Environmental Matters. The Company's research and
development and manufacturing  processes involve the controlled storage, use and
disposal of hazardous materials,  biological hazardous materials and radioactive
compounds.  The  Company  is  subject  to  federal,  state  and  local  laws and
regulations  governing the use, manufacture,  storage,  handling and disposal of
such materials and certain waste  products.  Although the Company  believes that
its safety  procedures for handling and disposing of such materials  comply with
the standards  prescribed by such laws and  regulations,  the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of such an  accident,  the  Company may be held liable for any damages
that result,  and any such liability  could exceed the resources of the Company.
There  can be no  assurance  that  the  Company  will not be  required  to incur
significant  costs to comply  with  environmental  laws and  regulations  in the
future,  nor that the operations,  business or assets of the Company will not be
materially


                                       16

<PAGE>

adversely affected by current or future  environmental laws of regulations.  See
"Risk Factors - No Assurance of Regulatory Approval;  Government Regulation" for
a discussion of the Spill.

         Volatility  of Stock Price.  The market price of the  Company's  common
stock, like that of the common stock of many other biopharmaceutical  companies,
has been highly  volatile  and may be so in the future.  Factors  such as, among
other things,  the results of preclinical  studies and clinical trials by Genta,
Genta Jago or their  competitors,  other  evidence  of the safety or efficacy of
products  of  Genta,   Genta  Jago  or  their   competitors,   announcements  of
technological innovations or new therapeutic products by the Company, Genta Jago
or their competitors,  governmental regulation,  developments in patent or other
proprietary  rights of the  Company or its  competitors,  including  litigation,
fluctuations  in the Company's  operating  results,  and market  conditions  for
biopharmaceutical  stocks in  general  could  have a  significant  impact on the
future  price  of  the  common  stock.  At  the  Company's   Annual  Meeting  of
Stockholders  held on April 4, 1997, the  stockholders  approved an amendment to
the Company's  Restated  Certificate  of  Incorporation  effecting a one for ten
reverse  stock  split of its common  stock.  The  stockholders  also  approved a
reduction of the Company's authorized shares of common stock from 150,000,000 to
70,000,000.  The Company  commenced trading on a post reverse split basis at the
commencement  of trading on April 7, 1997. As of July 31, 1997,  the Company had
4,451,018 shares of common stock  outstanding.  Future sales of shares of common
stock by existing  stockholders  and option holders also could adversely  affect
the market price of the common stock.

         No  predictions  can be made of the effect that future  market sales of
the shares of common stock  underlying the  convertible  securities and warrants
referred to under the caption "Risk Factors -  Subordination  of Common Stock to
Senior  Secured  Convertible  Bridge  Notes and Series A,  Series C and Series D
Preferred  Stock;   Risk  of  Dilution;   Anti-dilution   Adjustments,"  or  the
availability  of such  securities for sale, will have on the market price of the
common  stock  prevailing  from time to time.  Sales of  substantial  amounts of
common stock,  or the perception  that such sales might occur,  could  adversely
affect prevailing market prices.

         Certain  Interlocking  Relationships;  Potential Conflicts of Interest.
The Aries  Trust and the Aries  Domestic  Fund  L.P.  (collectively  the  "Aries
Funds") have the  contractual  right to appoint a majority of the members of the
Board of  Directors  of the Company,  subject to certain  conditions.  The Aries
Funds  have  appointed  Michael  S.  Weiss to the Board of  Directors.  David R.
Walner, the Secretary of the Company,  is an Associate Director and Secretary of
Paramount  Capital  Asset  Management,  Inc.  ("PCAM").  PCAM is the  investment
manager and  general  partner of The Aries  Trust and the Aries  Domestic  Fund,
L.P., respectively. The Aries Funds currently do not hold a controlling block of
voting  stock,  although  the Aries  Funds have the  present  right to appoint a
majority of the Board of Directors, and to convert and exercise their securities
into a significant  portion of the outstanding common stock. See "Risk Factors -
Concentration  of Ownership and Control" below.  Dr. Lindsay A.  Rosenwald,  the
President  and  sole  stockholder  of  PCAM,  is also  the  President  and  sole
stockholder of Paramount  Capital  Investments  LLC, a New  York-based  merchant
banking  and  venture  capital  firm  specializing  in  biotechnology  companies
("PCI").  In the regular course of its business,  PCI identifies,  evaluates and
pursues  investment  opportunities  in biomedical and  pharmaceutical  products,
technologies and companies.  Generally, Delaware corporate law requires that any
transactions  between the Company  and any of its  affiliates  be on terms that,
when taken as a whole,  are  substantially  as favorable to the Company as those
then  reasonably  obtainable  from  a  person  who is  not  an  affiliate  in an
arms-length  transaction.  Nevertheless,  neither  such  affiliates  nor  PCI is
obligated  pursuant to any agreement or  understanding  with the Company to make
any additional products or technologies  available to the Company, nor can there
be any  assurance,  and the  Company  does  not  expect  and  purchasers  of the
securities   offered   hereby  should  not  expect,   that  any   biomedical  or
pharmaceutical product or technology identified by such affiliates or PCI in the
future  will be made  available  to the  Company.  In  addition,  certain of the
current  officers  and  directors  of the Company or certain of any  officers or
directors  of the  Company  hereafter  appointed  may from time to time serve as
officers or directors of other  biopharmaceutical  or  biotechnology  companies.
There can be no assurance  that such other  companies will not have interests in
conflict with those of the Company.

         Concentration  of  Ownership  and  Control.  The  Company's  directors,
executive  officers and principal  stockholders  and certain of their affiliates
have the ability to influence the election of the  Company's  directors and most
other  stockholder  actions.  In  particular,  the  Aries  Funds  may be  deemed
beneficially to own a majority of


                                       17

<PAGE>

the  outstanding  shares of the common stock and have the  contractual  right to
appoint a majority of the members of the Board of Directors of the Company,  and
have to date appointed only one member, Michael S. Weiss. Accordingly, the Aries
Funds have the ability to exert  significant  influence over the election of the
Company's  Board of  Directors  and other  matters  submitted  to the  Company's
stockholders  for approval.  These  arrangements  may  discourage or prevent any
proposed takeover of the Company,  including  transactions in which stockholders
might otherwise  receive a premium for their shares over the then current market
prices. Such stockholders may influence corporate actions, including influencing
elections of directors and significant corporate events. See also, "Risk Factors
-- Effect of Certain Anti-Takeover Provisions."

         Effect of Certain  Anti-Takeover  Provisions.  The  Company's  Restated
Certificate  of  Incorporation   and  By-laws  include   provisions  that  could
discourage  potential  takeover  attempts and make attempts by  stockholders  to
change  management  more  difficult.  The  approval of 66-2/3% of the  Company's
voting  stock is required to approve  certain  transactions  and to take certain
stockholder actions,  including the calling of a special meeting of stockholders
and  the  amendment  of any of the  anti-takeover  provisions  contained  in the
Company's Restated Certificate of Incorporation.  Additionally,  the Company has
contractual  obligations  to certain of its  security  holders  which may impair
potential  takeovers.  Further,  pursuant to the terms of its stockholder rights
plan adopted in December  1993,  the Company has  distributed  a dividend of one
right for each  outstanding  share of common  stock.  These  rights will cause a
substantial  dilution to a person or group that  attempts to acquire the Company
on terms not  approved  by the  Board of  Directors  and may have the  effect of
deterring hostile takeover attempts.  The stockholder rights plan was amended to
permit the consummation of the $3 million private placement in February 1997 and
the Private Placement in June 1997 described in this Report on Form 10-Q.


                                       18

<PAGE>

PART II. OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES.

     (c) Sales of Unregistered Securities.

         On June 30, 1997, a total of 161.58 Premium Preferred UnitsTM were sold
to accredited investors in the Private Placement. Such sale was made in reliance
on the exemption from  registration  pursuant to Rule 506 of Regulation D of the
Securities Act. Each Unit sold in the Private Placement consists of 1,000 shares
of Premium Preferred StockTM,  par value $0.001 per share,  stated value $100.00
per share and warrants to purchase  5,000 shares of the Company's  common stock,
par value $0.001 per share,  at any time prior to the fifth  anniversary  of the
final closing date. A total of $16.158  million was raised.  The net proceeds to
the Company were $14,036,772.  The respective  conversion and exercise prices of
the Series D Preferred  Stock and the Class D Warrants is $0.94375  per share of
common stock, subject to adjustment upon the occurrence of certain events.

         In connection with the Private Placement,  the placement agent received
cash  commissions  equal to 9% of the gross  sales  price and a  non-accountable
expense  allowance equal to 4% of the gross sales price, and the placement agent
is entitled to receive warrants (the "Placement Warrants") to purchase up to 10%
of the Units sold in the Private  Placement  for 110% of the offering  price per
Unit.  Furthermore,  the  Company  has  agreed  to  enter a  financial  advisory
agreement  pursuant to which the financial  advisor  shall receive  certain cash
fees and warrants (the  "Advisory  Warrants") to purchase up to 15% of the Units
sold in the  Private  Placement  for 110% of the  offering  price per Unit.  The
Placement  Warrants and the Advisory Warrants are not exercisable for six months
following the closing of the Private Placement.

         The Company is required to file a  Registration  Statement  on Form S-3
with the  Securities  and  Exchange  Commission  under the  Securities  Act with
respect to the common stock  issuable upon  conversion  and upon exercise of the
securities issued in the private placement  consummated in February 1997 and the
Private Placement.

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

     (a) The Company held its Annual Meeting of Stockholders on April 4, 1997.

     (b) Proxies for the meeting were  solicited  pursuant to Regulation  14A of
the  Exchange  Act.  There was no  solicitation  in  opposition  to the Board of
Directors  nominee for the Class III director as listed in the definitive  proxy
statement of the Company dated as of March 14, 1997.

     (c) Briefly described below is each matter voted upon at the Annual Meeting
of Stockholders.

          (i) Approval of the amendment to the Company's Restated Certificate of
          Incorporation  to  effectuate a one for ten reverse stock split of the
          Company's  outstanding  Common  Stock and  decrease  in the  number of
          authorized  Shares of Common  Stock from  150,000,000  to  70,000,000.
          Total Common Stock voted was 31,711,962 in favor,  1,114,225  against,
          78,900 abstained and 245,087 broker non-votes.

          (ii) Election of one Class III director.  Total Common Stock voted for
          the election of Robert E. Klem was  31,977,180  in favor and 1,172,994
          withheld.

          (iii)  Ratification  of  the  appointment  of  Ernst  &  Young  LLP as
          independent  auditors  of the  Company  for the  current  year  ending
          December 31, 1997.  Total Common Stock voted was  31,922,631 in favor,
          561,983 against and 665,560 abstained.


                                       19


<PAGE>

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K



     (a) Exhibits.

Exhibit
Number            Description of Document
------            -----------------------

27.1(1)           Financial Data Schedule

----------
(1)  Filed herewith.

     (b) Reports on Form 8-K

         (i) On April 15, 1997,  the Company filed a Report on Form 8-K dated as
of March 19, 1997 reporting  under Item 5 that (A) The Nasdaq Hearing and Review
Committee  had called for review of The Nasdaq  Listing  Qualifications  Panel's
decision (the "Panel"),  (B) the Panel had determined to modify the terms of the
Exception,  and (C) the  Company  was  making a filing  in  accordance  with the
Revised Exception showing capital and surplus of $2,722,091.

         (ii) On April 25, 1997, the Company filed a Report on Form 8-K dated as
of April 25, 1997 reporting under Item 5 that the Company issued a press release
entitled "Aries Investment in Genta Upheld by Delaware Court: Genta Wins Lawsuit
Brought by Certain Preferred Stockholders."

         (iii) On May 6, 1997,  the Company  filed a Report on Form 8-K dated as
of May 1, 1997  reporting  under Item 5 that (A) The Nasdaq  Hearing  and Review
Committee has  withdrawn  its call for review of the decision of the Panel,  (B)
the Company  issued a press release  entitled  "Genta  Announces  Resignation of
Thomas H. Adams,  Ph.D., the appointment of Michael S. Weiss as Interim Chairman
and the  appointment  of a transitional  management  team" and (C) the Company's
Nasdaq symbol has changed back to GNTAC.

         (iv) On July 3, 1997,  the Company  filed a Report on Form 8-K dated as
of July 3, 1997  reporting  under Item 5 that the Company issued a press release
entitled  "Genta  Incorporated  Raises in Excess of $12 million  through Private
Placement of Equity Securities."

         (v) On July 7, 1997, the Company filed a Report on Form 8-K dated as of
June 30,  1997  reporting  under Item 5 that the  Company was making a filing in
accordance   with  the  Revised   Exception   Showing  capital  and  surplus  of
$13,338,724.

         (vi) On July 23, 1997,  the Company filed a Report on Form 8-K dated as
of July 23, 1997 reporting  under Item 5 that the Company issued a press release
entitled  "Nasdaq to Maintain Genta's Listing on SmallCap Market Resumes Trading
as "GNTA" Effective July 24."


                                       20

<PAGE>


                                   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.

                                    GENTA INCORPORATED                         
                                    (Registrant)                               
                                                                               
                                                                               
                                                                               
                                    By: /s/ Michael S. Weiss                   
                                        --------------------                   
                                    Name:    Michael S. Weiss                  
                                    Title:   Interim Chairman of the Board     
                                                                               
                                                                               
                                                                               
                                                                               
                                    By: /s/ Robert E. Klem, Ph.D.              
                                        -------------------------              
                                    Name:    Robert E. Klem, Ph.D.             
                                    Title:   Acting Chief Financial Officer and
                                             Member of the Board of Directors  

Date:    August 14, 1997


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