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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 March 31, 1998

                                       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 May 15, 1998,  the  registrant  had 5,752,266  shares of common stock
outstanding.


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<PAGE>



                               Genta Incorporated
                                INDEX TO FORM 10




PART I.                    FINANCIAL INFORMATION                            Page
-------                    ---------------------                            ----

Item 1.       Financial Statements (Unaudited)

              Condensed Consolidated Balance Sheets at March 31, 1998
                  and December 31, 1997                                       3

              Consolidated Statements of Operations for the
                  Quarters Ended March 31, 1998 and 1997                      4

              Condensed Consolidated Statements of Cash Flows for the
                  Quarters Ended March 31, 1998 and 1997                      5

              Notes to Consolidated Financial Statements                      6

Item 2.       Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                       7


PART II.                            OTHER INFORMATION

Item 1.       Legal Proceedings                                              22

Item 6.       Exhibits and Reports on Form 8-K                               22



SIGNATURES                                                                   23


<PAGE>

                               Genta Incorporated
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                    MARCH 31,       DECEMBER 31,
                            ASSETS                                    1998             1997
                                                                 ------------------------------
                                                                     (Unaudited)       (Note)
<S>                                                              <C>              <C>          
Current assets:
   Cash and cash equivalents..................................   $     453,420    $   1,202,668
   Short term investments ....................................       6,380,717        7,253,756
   Trade accounts receivable .................................         938,348          431,046
   Inventories ...............................................         696,020          826,008
   Other current assets ......................................         278,215          218,513
                                                                 ------------------------------
Total current assets .........................................       8,746,720        9,931,991

Property and equipment, net ..................................       1,578,400        1,718,150
Intangibles, net .............................................       3,240,000        3,390,032
Deposits and other assets ....................................         708,550          713,730
                                                                 ------------------------------
Total assets..................................................   $  14,273,670    $  15,753,903
                                                                 ==============================
             LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable ..........................................   $     938,455    $     882,111
   Payable to Research Institution............................         602,658          602,658
   Accrued payroll payable ...................................         426,307          548,295
   Other accrued expenses ....................................       1,175,017          992,660
   Deferred revenue ..........................................         212,382          198,570
   Current portion of notes payable...........................         906,064          900,558
                                                                 ------------------------------
Total current liabilities ....................................       4,260,883        4,124,852
                                                                 ------------------------------
Deficit in joint venture .....................................       2,481,178        2,204,053
Stockholders' equity:
   Preferred stock; 5,000,000 shares authorized:
       Series A convertible preferred stock, $.001 par value;
          453,100 and 456,600 shares issued and outstanding
          at March 31, 1998 and December 31, 1997,
          respectively, liquidation value is $27,186,000 at
          March 31, 1998 .....................................             453              457
       Series D convertible preferred stock, $.001 par
          value; 226,995 shares issued and outstanding at 
          March 31, 1998 and December 31, 1997, liquidation
          value is $31,779,300 at March 31, 1998 .............             227              227
   Common stock, $.001 par value; 70,000,000 shares
       authorized; 5,737,756 and 5,712,364 shares issued and
       outstanding at March 31, 1998 and December 31, 1997,
       respectively ..........................................           5,738            5,712
   Additional paid-in-capital ................................     129,330,493      129,320,493
   Accumulated deficit .......................................    (126,361,302)    (124,467,891)
   Accrued dividends payable .................................       4,556,000        4,566,000
                                                                 ------------------------------
Total stockholders' equity ...................................       7,531,609        9,424,998
                                                                 ------------------------------
Total liabilities and stockholders' equity ...................   $  14,273,670    $  15,753,903
                                                                 ==============================
</TABLE>

Note:     The balance  sheet at  December  31,  1997 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.


See accompanying notes.



<PAGE>


                               Genta Incorporated
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                     Quarters Ended March 31,
                                                         1998          1997
                                                     -----------    -----------
                                                            (Unaudited)
Revenues:
   Product sales .................................   $ 1,602,179    $ 1,158,839
   Contract revenue for Genta Jago................        17,396         87,524
   Collaborative research and development ........            --         50,000
                                                     -----------    -----------
                                                       1,602,179      1,208,839
                                                     -----------    -----------

Cost and expenses:
   Cost of products sold .........................       870,881        712,226
   Research and development ......................       932,187      1,194,563
   Selling, general and administrative ...........     1,506,215      1,459,458
                                                     -----------    -----------
                                                       3,291,887      3,278,723
                                                     -----------    -----------
Loss from operations .............................    (1,689,708)    (2,069,884)

Equity in net loss of joint venture ...............     (286,790)      (303,129)
Other income (expense):
   Interest income ...............................        86,517        118,104
   Interest expense ..............................        (3,430)      (610,950)
                                                     -----------    -----------
Net loss .........................................    (1,893,411)    (2,865,859)
Dividends on preferred stock .....................             0       (575,155)
                                                     -----------    -----------
Net loss applicable to common shares..............   $(1,893,411)   $(3,441,014)
                                                     ===========    ===========
Net loss per common share (basic and diluted).....   $      (.33)   $      (.86)
                                                     ===========    ===========
Shares used in computing net 
loss per common share (basic and diluted).........    5,737,756      3,999,163
                                                     ===========    ===========

See accompanying notes.

*    Per share data has been  adjusted to reflect the one for ten reverse  stock
     split of the Company's outstanding common stock which was effected April 4,
     1997.




<PAGE>



                               Genta Incorporated
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                        Quarters ended March 31,
                                                                          1998           1997
                                                                       -----------    -----------
                                                                              (Unaudited)
<S>                                                                    <C>            <C>        
Operating activities:
Net Loss ...........................................................   $(1,893,411)   $(2,865,859)
Items reflected in net loss not requiring cash:
   Depreciation and amortization ...................................       289,782        250,666
   Equity in net loss of joint venture .............................       286,790        303,129
   Interest imputed on convertible debentures.......................            --        545,000
   Changes in operating assets and liabilities .....................      (295,783)      (238,092)
                                                                        -----------    ----------- 
Net cash used in operating activities ..............................    (1,612,622)    (2,005,156)

Investing activities:
Maturities of short-term investments................................       873,039             --
Purchase of property and equipment .................................            --         (4,449)
Sale of property and equipment......................................            --        253,337
Loans receivable from joint venture ................................        (9,665)      (169,090)
Deposits and other .................................................            --       (108,020)
                                                                       -----------    -----------
Net cash provided by (used in) investing activities ................      (863,374)       (28,222)

Financing activities:
Proceeds from notes payable ........................................            --      3,000,000
Repayments of notes payable and capital lease ......................            --       (209,947)
                                                                       -----------    -----------
Net cash provided by financing activities ..........................            --      2,790,053
                                                                       -----------    -----------
Increase (decrease) in cash and cash equivalents ...................      (749,248)       756,675
Cash and cash equivalents at beginning of period ...................     1,202,668        532,013
                                                                       -----------    -----------
Cash and cash equivalents at end of period .........................   $   453,420    $ 1,288,688
                                                                       ===========    ===========

Supplemental disclosures of cash flow information:
Interest paid ......................................................   $     3,430    $    14,670
Supplemental schedule of noncash investing and financing activities:
Preferred stock dividends accrued ..................................            --        575,155
</TABLE>


See accompanying notes.





<PAGE>



                               Genta Incorporated
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1998
                                   (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.  Certain balances in 1997 have been  reclassified to
conform with the presentation in 1998.

     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, 1997, as amended.

     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:

                                            March 31,             December 31,
                                              1998                   1997
                                           ------------           -----------
         Raw materials and supplies        $    306,148           $   329,691
         Work-in-process                        149,064               141,120
         Finished goods                         240,808               355,197
                                           ------------           -----------
                                           $    696,020           $   826,008
                                           ============           ===========


(3)  Net Loss Per Common Share

      As required,  the Company adopted SFAS No. 128,  "Earnings Per Share," for
the year ended  December  31,  1997.  SFAS No. 128  changes  the method  used to
calculate  earnings per share and requires the restatement of all prior periods.
Under SFAS No.  128,  the  Company is  required  to  present  basic and  diluted
earnings  per  share if  applicable.  Basic  earnings  per share is based on the
weighted  average  number of  shares  outstanding  during  the  period.  Diluted
earnings per share includes the weighted  average  number of shares  outstanding
and gives effect to potentially dilutive common shares such as options, warrants
and convertible debt and preferred stock outstanding.

     Net loss per common  share for the three  months  ended  March 31, 1998 and
1997 is  based  on the  weighted  average  number  of  shares  of  common  stock
outstanding during the periods. Potentially dilutive securities include options,
warrants and convertible preferred stock; however, such securities have not been
included in the  calculation of the net loss per common share as their effect is
antidilutive  where,  as here,  there is loss rather than  earnings.  Therefore,
there is no  difference  between the basic and diluted net loss per common share
for any of the periods presented.


                                        6

<PAGE>



(4)  Stockholders' Equity

     During  January and February 1998, an aggregate of 3,500 shares of Series A
Preferred  Stock and  accrued  dividends  were  converted  at the  option of the
respective  holders thereof into an aggregate of 25,392 shares of Genta's common
stock at a conversion price of $8.27 per share.

(5)  Legal Proceedings

     LBC Capital Resources,  Inc. ("LBC"), a  Philadelphia-based  broker/dealer,
has asserted claims against the Company and others,  including Paramount Capital
Inc., of which Dr.  Rosenwald is the sole  stockholder and Mr. Weiss is a Senior
Managing Director, and various related entities and persons. LBC's claims relate
to the alleged  breach by the Company of certain  letter  agreements,  allegedly
entered  into by LBC and the Company in 1995 and 1996 with  respect to brokerage
and/or investment banking services, particularly in connection with a $3 million
investment, for which LBC is  seeking a fee.  On March  30,  1998,  the  Company
received a Statement of Claim under NASD  arbitration  rules, and a request that
the Company  voluntarily  submit to NASD  arbitration.  LBC's Statement of Claim
sought  damages in the form of cash (in excess of $4 million),  stock,  warrants
and other securities.  Subsequently, LBC abandoned the arbitration, and on April
9, 1998,  the Company's  counsel  learned that a Complaint had been filed in the
United  States  District  Court for the  Southern  District of New York (98 Civ.
2491) by LBC  against  the Company  and the same  other  parties.   The  Company
believes it has valid legal and equitable defenses to LBC's lawsuit. The Company
intends to defend vigorously and possibly to assert counterclaims against LBC.

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

Overview

     Since its  inception  in February  1988,  Genta 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  and  clinical  testing,   manufacturing   activities,
regulatory activities,  establishment of a sales and marketing organization, and
development  activities  undertaken by Genta Jago,  the Company's  joint venture
with Jagotec. From the period since its inception to March 31, 1998, the Company
has  incurred  a  cumulative  net  loss  of  $126.4  million.  The  Company  has
experienced  significant  quarterly  fluctuations  in  operating  results and it
expects that these fluctuations in revenues, expenses and losses will continue.

     The Company's  independent auditors have included an explanatory  statement
in their report to the Company's financial statements at December 31, 1997, that
expresses  substantial  doubt as to the Company's ability to continue as a going
concern.  There are several factors that must be considered risks in that regard
and those that are known to management are discussed under the caption  "Certain
Trends and  Uncertainties,  in this  Management's  discussion  and  Analysis  of
Financial Condition and Results of Operations ("MD&A")."

     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,  and  Section  21E of the  Securities
Exchange  Act  of  1934,  as  amended,   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 Certain Trends and  Uncertainties
section of this Management's  Discussion and Analysis of Financial Condition and
Results of Operations and elsewhere in this  Quarterly  Report on Form 10-Q. The
Company does not undertake to update any forward-looking statements.

Results of Operations

     Operating  revenues  totaled  $1.62  million  in the first  quarter of 1998
compared  to $1.30  million in the first  quarter of 1997.  This  revenue is the
result of increased sales by the Company's subsidiary, JBL Scientific,  Inc. All
of the  Company's  product  sales are  attributable  to JBL.  Sales of specialty
chemical  and  pharmaceutical   intermediate   products  used  in  the  clinical
diagnostics,   pharmaceutical   research  and  development  and   pharmaceutical
manufacturing  increased to $1.60  million in the first quarter of 1998 compared
to $1.16 million in the same period in 1997. While the annual demand for many of
JBL's products is relatively  stable,  there are significant  quarter to quarter
variations  in sales due to the timing of  customers' production  schedules and
demands.  The increases in the current  quarter were primarily a result of sales
in  pharmaceutical  and custom  syntheses.  Overall,  demand  for the  Company's
products has been increasing,  while  competition has caused prices to decrease.
Sales of products used

                                        7


<PAGE>

in  pharmaceutical  manufacturing  and  pharmaceutical  research and development
increased due to increased  market  penetration  while sales of products used in
clinical  diagnostics  trended  slightly  downward. 

     Europa Bioproducts  ("Europa"),  JBL's European distributor,  accounted for
approximately 10% of product sales in the first quarter of 1998, compared to 23%
in the comparable  period in 1997.  Two other  customers each accounted for more
than 10% of product sales in the first quarter of 1998,  representing  15.7% and
14.4%,  respectively.  Individual  customers' demands for JBL products generally
fluctuate with the outcomes of clinical  trials or the  availability of funding.
The Company  believes that the loss of any material  customer,  if not replaced,
could have an adverse effect on the Company.

     Costs and expenses  were $3.3 million in the first  quarter of 1998,  which
was unchanged  from the same quarter in 1997.  The costs of products sold by JBL
increased  from $0.71  million in the first  quarter of 1997 to $0.87 million in
the first  quarter of 1998 as volumes  increased.  Gross  margins for JBL in the
quarter were $0.73  million  compared to $0.45  million in the first  quarter of
1997. The  improvement in gross margins  largely  reflects the increase in sales
combined with relatively stable fixed overhead costs.

     Research and Development  expenses decreased in the first quarter from $1.1
million in 1997 to $0.93  million in 1998.  Included  in these  expenses  in the
first quarter of 1998 is $0.45 million for the purchase of bulk G3139 to support
the Company's expanded clinical research program.  Not included is $0.26 million
for additional G3139 supplies that were still undergoing  release testing at the
end of the first  quarter.  The remaining  decrease in research and  development
expenses is primarily  attributable  to the Company's  research and  development
workforce  reductions  implemented in 1997 together with the  discontinuation of
several programs.

     Selling, General and Administrative Expenses were $1.5 million in the first
quarter of 1998, which did not differ from the corresponding period in 1997.

     The Company's equity in net loss of joint venture (Genta Jago) decreased to
$0.29 million in the first quarter of 1998 from $0.30 million in the  comparable
period  of 1997.  The  decrease  in the  Company's  equity  in net loss of joint
venture  is  largely  attributable  to  the  fact  that  a  greater  portion  of
development  activities  were  funded  pursuant  to Genta  Jago's  collaborative
agreements  with  third  parties.  The  equity in net loss of joint  venture  is
determined by reducing the loss per Genta Jago  financials by Genta's 20% markup
on  internal  costs  for which the joint  venture  is billed  plus the  interest
accrued on the working capital loans.

     Since the  formation  of Genta  Jago,  no products  have been  successfully
developed and marketed. Since the initial plans called for earlier introductions
and since there have been significant  changes in the market  environment  since
the Company entered into the joint venture,  there is reason to believe that any
products that may be marketed in the future could represent significantly poorer
financial  opportunities  than those that were anticipated in the earlier plans.
This  reduction  in  opportunity  derives  from  factors such as the presence of
direct  competitors  to Genta Jago's  products being in the  marketplace  before
Genta Jago, and increasing  pricing pressures on  pharmaceuticals,  particularly
multisource or generic  products from payers such as reimbursers  and government
buyers.   See   "MD&A--Certain   Trends   and    Uncertainties--Uncertainty   of
Technological   Change   and   Competition"   and   "MD&A--Certain   Trends  and
Uncertainties--Uncertainty   of  Product  Pricing,   Reimbursement  and  Related
Matters."  Both of these factors may  adversely  affect Genta Jago even if it is
successful in developing products to obtain regulatory approval. As a result and
in consideration of the Company's need to reduce expenses and focus its efforts,
the  Company is seeking to direct its  resources  from the joint  venture to its
Anticode(TM) drug development, specifically G3139, for the immediate future.

     Interest income has fluctuated  significantly  each year and is anticipated
to  continue  to  fluctuate  primarily  due to  changes  in the  levels of cash,
short-term investments and interest rates each period.

     In  consideration  of EITF D-60, which was issued by the SEC in March 1997,
the Company  recorded debt issuance costs totaling $3.0 million related to value
associated  with 6.4 million Bridge  Warrants  issued in connection  with a $3.0
million debt issue in February 1997 that matured in December  1997.  The Company
has amortized  such costs to interest  expense over the life of the debt. In the
three  months ended March 31,  1997,  the Company  recorded a charge to interest
expense totaling  $545,000 ($.14 per share) related to amortization of such debt
issuance costs.

                                        8

<PAGE>

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 March 31, 1998. At March
31, 1998, the Company had cash,  cash  equivalents  and  short-term  investments
totaling $6.8 million compared to $8.5 million at December 31, 1997.

     The Company will need substantial  additional funds before it can expect to
realize significant  product revenue.  The Company projects that, at its current
rate of spending and for its current  activities,  its existing  cash funds will
enable the Company to maintain its present  operations into the first quarter of
1999.  To the  extent  that  the  Company  is  successful  in  accelerating  its
development of G3139 or in expanding its  development  portfolio or acquiring or
adding new development candidates,  the current cash resources would be consumed
at a greater rate. Similarly,  the Company has been seeking to identify and hire
additional senior managers to direct the business of the Company.  To the extent
it is successful in these  endeavors,  the rate of cash  utilization  would also
increase.  Certain  parties  with whom the Company has  agreements  have claimed
default  and,  should the Company be obligated to pay these claims or should the
Company  engage legal services to defend or negotiate its positions or both, its
ability to continue operations could be significantly reduced or shortened.  See
"MD&A--Certain Trends and Uncertainties--Claims of Genta's Default Under Various
Agreements."  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  also
anticipates seeking additional product  development  opportunities from external
sources.  Such acquisitions may consume cash reserves or require additional cash
or equity.  The Company's  working capital and additional  funding  requirements
will depend upon numerous factors,  including: (i) the progress of the Company's
research and  development  programs;  (ii) the timing and results of preclinical
testing and clinical trials; (iii) the level of resources devoted to Genta Jago;
(iv) the level of  resources  that the  Company  devotes to sales and  marketing
capabilities;  (v) technological  advances;  (vi) the activities of competitors;
and (vii) the ability of the Company to  establish  and  maintain  collaborative
arrangements  with others to fund certain research and development  efforts,  to
conduct clinical trials, to obtain  regulatory  approvals and, if such approvals
are obtained, to manufacture and market products.  See "MD&A--Certain Trends and
Uncertainties--Need for Additional Funds; Risk of Insolvency."

     If the Company  successfully  secures  sufficient  levels of  collaborative
revenues and other  sources of  financing,  it expects to use such  financing to
continue and expand its 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.

     In the first  quarter of 1998,  the holders of an aggregate of 3,500 shares
of Series A Preferred  Stock converted those shares into 25,392 shares of Common
Stock. See Note 4 to the financial statements.

Certain Trends and Uncertainties

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


                                        9
<PAGE>


Need for Additional Funds; Risk of Insolvency.

     Genta's operations to date have consumed  substantial  amounts of cash. The
Company's auditors have included an explanatory  paragraph in their opinion with
respect to the Company's ability to continue as a going concern.  See "Report of
Ernst & Young, LLP, Independent Auditors" in the Company's Annual Report on Form
10-K,  as  amended,  for the year ended  December  31,  1997 (the  "1997  Annual
Report") and "MD&A -- Liquidity and Capital Resources." 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;  to license third
parties  to  commercialize  products  or  technologies  that the  Company  would
otherwise  seek to develop  itself;  to sell itself to a third  party;  to cease
operations;  or to declare  bankruptcy.  The Company's future cash  requirements
will be affected by results of research and development, results of pre-clinical
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 FDA and foreign regulatory processes, potential litigation by
companies  seeking  to  prevent  or delay  marketing  approval  of Genta  Jago's
products and other factors.

Loss History; Uncertainty of Future Profitability.

     Genta has been unprofitable to date, incurring substantial operating losses
associated  with  ongoing  research  and  development  activities,  pre-clinical
testing,  clinical trials,  manufacturing  activities and development activities
undertaken by Genta Jago. From the period since its inception to March 31, 1998,
the Company has incurred a cumulative  net loss of $126.4  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's  independent  auditors have included an  explanatory  paragraph in
their report to the Company's  financial  statements at December 31, 1997, which
paragraph expresses substantial doubt as to the Company's ability to continue as
a going concern. See "Report of Ernst & Young LLP, Independent  Auditors" in the
1997 Annual  Report and "MD&A -- Certain  Trends and  Uncertainties  -- Need for
Additional Funds; Risk of Insolvency."

Subordination of Common Stock to Series A 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 the  approximately  $27.2 million
preference of the 453,100 outstanding shares of Series A Preferred Stock and the
approximately  $37.4  million  preference  of the  267,390  shares  of  Series D
Preferred  Stock  (including  40,395 shares of Series D Preferred Stock issuable
upon  exercise  of certain  warrants).  Dividends  may not be paid on the Common
Stock  unless full  cumulative  dividends on the Series A and Series D Preferred
Stock have been paid or funds have been set aside for such  preferred  dividends
by the Company.

     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")  are 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. As of March 31, 1998,  each share of Series A Preferred Stock
is convertible  into  approximately  7.25 shares of Common Stock at a conversion
price of $8.27 per share and the  exercise  price of the  Series A  Warrants  is
presently $9.32 per share.  There are outstanding  Series A Warrants to purchase
an aggregate of 675,966  shares of Common  Stock,  which expire on September 24,
1998.  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

                                       10

<PAGE>



Stock or  securities  convertible  into  Common  Stock at prices per share below
certain  levels.  In addition,  the  Conversion  Price of the Series D Preferred
Stock in effect on June 29, 1998 (the "Reset  Date") will be adjusted  and reset
effective  as of the Reset Date if the  average  closing bid price of the Common
Stock for the 20 consecutive  trading days immediately  preceding the Reset Date
(the  "12  Month  Trading  Price")  is less  than  140% of the  then  applicable
Conversion  Price (a "Reset Event").  Upon the occurrence of a Reset Event,  the
then applicable  Conversion  Price will be reduced to be equal to the greater of
(i) the 12  Month  Trading  Price  divided  by 1.40  and  (ii)  25% of the  then
applicable Conversion Price. Each share of Series D Preferred Stock is presently
convertible into approximately 106 shares of Common Stock, at a conversion price
of $0.94375 per share 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  Bridge  Warrants to
purchase an aggregate of 6,357,616  shares of Common Stock at an exercise  price
of  $0.471875  per share,  Line of Credit  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 95,768  shares of Common Stock at various  exercise
prices  between  approximately  $13 and $21 per share and  outstanding  employee
stock options. The Note and Warrant Purchase Agreement provides that a number of
additional Bridge Warrants  ("Penalty  Warrants") equal to 1.5% of the number of
Bridge  Warrants then held by the Aries Funds shall be issued to the Aries Funds
for each day beyond 30 days after the final  closing  of the  Private  Placement
that a shelf  registration  statement  covering the Common Stock  underlying the
securities  purchased pursuant to the Note and Warrant Purchase Agreement is not
filed with the SEC and for each day beyond  210 days after the  closing  date of
the investment contemplated by the Note and Warrant Purchase Agreement that such
shelf  registration  statement is not declared effective by the SEC. The Company
filed such  shelf  registration  statement  with the SEC on  September  9, 1997,
however,  the Company  has to date been  unable to have such shelf  registration
statement  declared  effective  by the SEC. As a result,  the  Company  could be
obligated to issue  Penalty  Warrants to the Aries  Funds.  The Aries Funds have
not,  to date,  requested  that the Company  issue such  Penalty  Warrants.  The
Company and the Aries Funds are currently  conducting  negotiations to determine
whether,  and to what extent,  Penalty Warrants will be issued.  See "Market for
Registrant's  Common Equity and Related  Stockholder  Matters -- Recent Sales of
Unregistered Securities" in the 1997 Annual Report.

Claims of Genta's Default Under Various Agreements.

     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.  Each  of  these
Agreements  provides for a cure period of 30 days, except that if the default is
not  capable of being  cured  within  this  period and the  defaulting  party is
diligently  undertaking  to cure such default as soon as  commercially  feasible
thereafter under the circumstances,  then the non-breaching  party shall have no
right to terminate the agreement.  In addition each of these agreements contains
a  provision  providing  for the final  resolution  of any  disputes,  claims or
controversies,  whether  before  or  after  termination  of  the  agreement,  by
arbitration in Paris, France. After the 30-day cure period expired, Jago did not
take action  purporting to terminate  these  agreements  but did not rescind the
notices of default. 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.
There is no specific  cure period  contained in the Restated  Joint  Venture and
Shareholders  Agreement  but rather a  provision  providing  for  resolution  of
disputes,  claims or controversies by arbitration in Paris,  France. The Company
met with Jago and is  attempting  to resolve  the  situation  without  resort to
arbitration. While a termination of these agreements may have a material adverse
effect on the Company, the Company intends to oppose vigorously Jago's position.
Stating  that it was  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

                                       11

<PAGE>

owed by Genta Jago to third parties (both included in Jago's notice of default).
On May 15, 1997, Johns Hopkins  University ("Johns Hopkins") sent Genta a letter
stating  that the license  agreement  entered into between the Company and Johns
Hopkins in May 1990 (the "Johns Hopkins Agreement") was terminated.  On November
26, 1997 the Ts'o/Miller Partnership sent Genta a letter claiming that Genta was
in material  breach of the February 1989 license  agreement  between the Company
and the Ts'o/Miller Partnership (the "Ts'o/Miller Agreement") for failing to pay
royalties  from 1995  through  1997.  This notice  further  advised  that if the
alleged  breach were not cured within 90 days of the notice the license would be
terminated.  The Company has received a further  notice stating that the license
is  terminated  and  that  $287,671  is  due  and  payable.   See  "Business  --
Anticode(TM)  Brand of  Antisense  Oligonucleotide  Programs --  Oligonucleotide
Collaborative and Licensing Agreements --Ts'o/Miller/Hopkins" in the 1997 Annual
Report.  The Company is currently  engaged in settlement  discussions with Johns
Hopkins and the Ts'o/Miller  Partnership.  The French government agency L'Agence
Nationale de Valorisation de la Recherche ("ANVAR") asserted,  in a letter dated
February  13,  1998,  that  Genta  Europe was not in  compliance  with the ANVAR
Agreement,  and that ANVAR might request the  immediate  repayment of such loan.
The Company does not believe that under the terms of the ANVAR Agreement,  ANVAR
is entitled to request  early  repayment  and is working with ANVAR to achieve a
mutually  satisfactory  resolution.  See  "Business -- Genta Europe" in the 1997
Annual  Report.  LBC  Capital  Resources,  Inc.  ("LBC"),  a  Philadelphia-based
broker/dealer,  has asserted  claims against the Company and others.  See "Legal
Proceedings." There can be no assurance that the Company will not incur material
costs  in  relation  to these  terminations  and/or  assertions  of  default  or
liability. See "MD&A -- Liquidity and Capital Resources."

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,  most of the  Company's
resources  have been  dedicated  to applying  molecular  biology  and  medicinal
chemistry   to  the   research  and   development   of  potential   Anticode(TM)
pharmaceutical products based upon oligonucleotide technology. While the Company
has  demonstrated  the activity of  Anticode(TM)  oligonucleotide  technology in
model  systems in vitro and the activity of antisense  technology in animals and
has  identified  compounds  that the Company  believes are worthy of  additional
testing, only one of these potential Anticode(TM)  oligonucleotide  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  oligonucleotide  technology  will
result in products that will receive necessary regulatory approvals or that will
be successful commercially. Further, results obtained in pre-clinical studies or
early clinical investigations or pilot bioequivalence trials are not necessarily
indicative  of results  that will be  obtained  in  pivotal  human  clinical  or
bioequivalence  trials.  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
pre-clinical  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  formulated  using  GEOMATRIX
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. Certain competitive products have
already been filed with and/or  approved by the FDA. See "MD&A -- Certain Trends
and  Uncertainties  --  Potential  Adverse  Effect of  Technological  Change and
Competition."


                                       12

<PAGE>

Limited Availability of Net Operating Loss Carry Forwards.

     At December 31, 1997,  the Company has federal and California net operating
loss carryforwards of approximately  $71,697,000 and $15,236,000,  respectively.
The  difference  between the federal and California  tax loss  carryforwards  is
primarily  attributable  to  the  capitalization  of  research  and  development
expenses  for  California  tax  purposes  and the fifty  percent  limitation  on
California loss carryforwards  prior to 1997. The federal tax loss carryforwards
will  begin  expiring  in  2003,  unless  previously   utilized.   Approximately
$2,767,000 of the California tax loss  carryforward  expired during 1997 and the
related deferred tax asset and tax loss  carryforward  amounts have been reduced
accordingly.  The remaining California tax loss will continue to expire in 1998,
unless  utilized.  The  Company  also has federal and  California  research  and
development tax credit carryforwards of $2,921,000 and $1,203,000, respectively,
which will begin expiring in 2003 unless previously utilized.

     Federal and  California  tax laws limit the  utilization  of income tax net
operating loss and credit  carryforwards  that arise prior to certain cumulative
changes  in a  corporation's  ownership  resulting  in change of  control of the
Company.  The future annual use of net operating loss carryforwards and research
and  development  tax credits will be limited due to the ownership  changes that
occurred  during 1990,  1991,  1993,  1996 and 1997.  Because of the decrease in
value of the Company's stock,  the ownership  changes which occurred in 1996 and
1997 will cause a material  limitation on the Company's ability to utilize these
carryforwards, and therefore much of the carryforwards will not be utilized.

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 dividends on its Common Stock until such
time as all cumulative  dividends  have been paid on  outstanding  shares of its
Series A and Series D Preferred Stocks.  The Company currently intends to retain
its earnings, if any, after payment of dividends on outstanding shares of Series
A and Series D Preferred Stocks, 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 on the introduction of pharmaceutical  products
through lengthy and detailed  pre-clinical 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 have  attained.  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  could  materially  adversely  affect  the
Company's or Genta Jago's revenue.  Moreover,  additional  government regulation
from future legislation or administrative  action may be established which could
prevent or

                                       13

<PAGE>

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
retained an engineering consulting firm to advise it with respect to an incident
of soil and groundwater  contamination (the "Spill").  Sampling conducted at the
JBL facility revealed the presence of chloroform and perchloroethylenes ("PCEs")
in the soil and  groundwater  at this site.  Six soil  borings  were drilled and
groundwater  monitoring  wells were  installed at several  locations  around the
site. Chloroform was detected in on-site monitoring wells at levels of up to 190
ug/liter,  exceeding the California  Drinking Water Maximum  Contamination Level
for  trihalomethanes  of 100  ug/liter.  PCEs  were  also  detected  in  on-site
monitoring  wells at  levels  of up to 22  ug/liter,  exceeding  the  California
Drinking Water Maximum Contamination Level of 5 ug/liter.  In addition,  Toluene
was detected at levels of up to 2 ug/liter at several monitoring points on-site,
which  is  significantly  below  the  California  Toxicity  Action  Level of 100
ug/liter. These toxicity levels are not binding, as the final regulatory maximum
levels  may be higher or lower.  JBL has  notified  the  appropriate  regulatory
agency,  the California  Regional Water Quality  Control Board, of conditions at
the  site,  and  with  the  agency's  approval,  JBL is  monitoring  groundwater
conditions  at  the  site  on  a  quarterly  basis.  JBL  is  currently  in  the
pre-regulatory action stage with ongoing site monitoring and site assessment. In
addition,  current sampling results indicate that  contaminants may be migrating
off-site.  An off-site well, used as a domestic and irrigation water source, has
shown  evidence of being  impacted by chloroform at 0.9 ug/liter,  significantly
below  (less  than  one  percent  of)  the  California  Drinking  Water  Maximum
Contamination  Level for  trihalomethanes  of 100  ug/liter,  and toluene at 0.9
ug/liter,  also  significantly  below (less than one percent of) the  California
Toxicity  Action Level of 100  ug/liter.  While  another  off-site well has been
found to contain  chloroform,  the  engineering  consultant  concluded  that the
contaminants  do not appear to relate to impact  from the JBL site.  The Company
believes that any costs  associated  with further  investigating  or remediating
this  contamination  will not have a material  adverse effect on the business of
the Company,  although there can be no assurance  thereof.  The Company believes
that it is in material compliance with Governmental Regulations,  however, 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  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 


                                       14

<PAGE>

gain access to the Company's or Genta Jago's trade secrets,  or that the Company
or Genta  Jago can  effectively  protect  its  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 (or any foreign counterpart) 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 and Genta Jago's  strategy for the research,  development and
commercialization  of their  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.  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 addition,  many
of those competitors have significantly greater

                                       15


<PAGE>


experience  than the Company or Genta Jago in undertaking  pre-clinical  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.  As  competitors of the Company or of Genta
Jago receive  approval to products that share the same  potential  market as the
Company's or Genta Jago's potential products,  the market share available to the
Company or Genta Jago will likely be reduced,  thereby  reducing  the  potential
revenues  and  earnings  available  to the Company or Genta Jago.  In  addition,
increased  pricing  competition  would also likely result,  further reducing the
earnings potential of the Company's or Genta Jago's products.  In December 1997,
a competitor of the Company,  Elan Corporation,  received approval of their ANDA
for a generic formulation of Oruvail(R) (ketoprofen), and another company, Mylan
Laboratories,  Inc.,  has filed an ANDA for a generic  formulation  of Procardia
XL(R)  (nifedipine).  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  or
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  trials and  pre-clinical  testing are subject to
varying  interpretations.  Even if the  development  of the  Company's  or Genta
Jago's  respective  products  advances to the  clinical  stage,  there can be no
assurance that such products 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 or Genta Jago may encounter unanticipated
problems  relating to development,  manufacturing,  distribution  and marketing,
some of which may be beyond the Company's or Genta Jago's  respective  financial
and technical capacity to solve. The failure to address such problems adequately
could have a material adverse effect on the Company's or Genta Jago's respective
businesses,  financial  conditions,  prospects  and  results of  operations.  No
assurance  can be given  that the  Company  or Genta  Jago will  succeed  in the
development  and  marketing of any new drug  products,  or that they will not be
rendered  obsolete by products of competitors.  "See "MD&A -- Certain Trends and
Uncertainties  --  Potential   Adverse  Effect  of   Technological   Change  and
Competition."

Difficult Manufacturing Process; Access to Certain Raw Materials.

     The manufacture of Anticode(TM)  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, in order to obtain  oligonucleotides  sufficient to meet the
volume and cost  requirements  needed for  certain  commercial  applications  of
Anticode(TM)  oligonucleotide  products,  Genta requires raw materials currently
provided by a single supplier which is itself a development stage  biotechnology
company  (and a  competitor  of the  Company)  and is subject  to  uncertainties
including  the  potential  for  a  decision  by  such  supplier  to  discontinue
production  of such raw  materials,  the  insolvency  of such  supplier,  or the
failure of such supplier to follow applicable  regulatory  guidelines.  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 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

                                       16

<PAGE>



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 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 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. Finally, given the above
potential  market  constraints  on  pricing,  the  availability  of  competitive
products in these  markets  may further  limit the  Company's  and Genta  Jago's
flexibility in pricing and in obtaining adequate reimbursement for its potential
products.  See "MD&A -- Certain Trends and  Uncertainties  -- Potential  Adverse
Effect of Technological Change and Competition."

Need for and Dependence on Qualified Personnel.

     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 or both is likely further to 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  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  Financial  Officer and a head of Research
and  Development.  In  March  1998,  the  Company's  Controller  resigned  and a
replacement is being sought.  At the present time the Company believes its stock
option plan is inadequate to provide  sufficient  incentives  for the successful
recruitment  of key  personnel  and a new plan will be proposed for  stockholder
approval at the next annual  stockholders'  meeting.  In  addition,  the current
senior  officers and directors have not been granted  options in accordance with
appointment  offers  since the  current  plan does not have  sufficient  options
available.  There can be no assurance that the stockholders  will approve such a
plan or that, if approved,  it will be adequate to enable recruitment of new, or
retention of existing, key employees and directors.

Product Liability Exposure; Limited Insurance Coverage.

     The Company's,  JBL's and Genta Jago's  businesses expose them to potential
product  liability  risks  that  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

                                       17

<PAGE>



liability  insurance coverage that 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 stock or (in certain  circumstances)  cash in the  aggregate
amount of approximately $27.2 million.  Furthermore,  if the Company is required
to redeem the Series A  Preferred  Stock it would also be  required  (subject to
certain  conditions)  to offer to redeem the Series D Preferred  Stock on a pari
passu  basis  with  the  Series A  Preferred  Stock  and  with the same  type of
consideration  paid in  redemption  of the  Series  A  Preferred  Stock;  upon a
Fundamental Change, the Company could, under certain circumstances,  be required
to pay the holders of Series D Preferred  Stock cash in the aggregate  amount of
approximately $31.8 million (not including an additional $5.7 million that could
be payable upon redemption of 40,395 shares of Series D Preferred Stock issuable
upon exercise of certain  warrants).  "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 or 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.

     The SEC Staff is  currently  in the  process of  reviewing  a  registration
statement filed by the Company,  and has raised certain questions  regarding the
Company's  classification  of the  Preferred  Stock as  permanent  (rather  than
"mezzanine")  equity.  Management  of  the  Company  believes,  based  upon  its
Certificate of Incorporation  and the agreement  pursuant to which the Preferred
Stock was issued, and after discussion with Company counsel, that the conditions
for redemption of the Preferred Stock require  volitional acts undertaken by the
Company and are therefore  solely within the control of the Company.  If the SEC
Staff does not accept the Company's position, the Company will file an amendment
to this Form 10-Q  reclassifying the Preferred Stock as "mezzanine"  rather than
permanent equity.

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

                                       18

<PAGE>



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  adversely  affected by current or future
environmental laws or regulations. See "MD&A -- Certain Trends and Uncertainties
-- No Assurance of Regulatory Approval;  Government Regulation" for a discussion
of the Spill.

Volatility  of  Stock  Price;  Market  Overhang  from  Outstanding   Convertible
Securities and Warrants.

     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
pre-clinical  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, Genta Jago or their respective  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 March 31, 1998, the Company had
5,737,756  shares of Common  Stock  outstanding.  The  Company  intends  to seek
stockholder  approval  of  another  reverse  stock  split  at  its  next  annual
stockholders'  meeting.  Future  sales of  shares of  Common  Stock by  existing
stockholders,  holders of preferred stock who might convert such preferred stock
into Common Stock,  and option and warrant 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  "MD&A -- Certain  Trends and  Uncertainties  --
Subordination of Common Stock to Series A 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  Funds have the  contractual  right to appoint a majority  of the
members  of the  Board  of  Directors  of the  Company.  The  Aries  Funds  have
designated Michael S. Weiss, Glenn L. Cooper, M.D., Donald G. Drapkin,  Bobby W.
Sandage,  Jr., Ph.D., and Andrew J. Stein as nominees to the Board of Directors.
Such persons were  elected as  Directors  of the Company.  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 "MD&A -- Certain
Trends and  Uncertainties  --  Concentration of Ownership and Control" below. In
addition to the Aries Funds'  investments  in the Company that are  disclosed in
"Market for Registrant's Common Equity and Related Stockholder Matters -- Recent
Sales of Unregistered  Securities,"  in the 1997 Annual Report,  the Aries Funds
also engaged in the following transactions: as of June 30, 1997, the Aries Funds
purchased an aggregate of 10,000  shares of Series D Preferred  Stock and 50,000
Class D Warrants in a private placement (the "Private  Placement");  on December
2, 1997,  the Aries Funds  purchased an  aggregate of 54,000  shares of Series A
Preferred  Stock;  on December  29,  1997,  warrants to purchase an aggregate of
1,000  shares  of Series D  Preferred  Stock and  5,000  Class D  Warrants  were
allocated to the Aries Funds by Paramount

                                       19

<PAGE>



Capital,  Inc.,  which  warrants were  received in  connection  with the Private
Placement;  and on December 31, 1997, the Aries Funds  converted the outstanding
principal  of, and interest  on, their  respective  Senior  Secured  Convertible
Bridge  Notes of the  Company  into an  aggregate  of 52,415  shares of Series D
Preferred Stock. Dr. Lindsay A. Rosenwald, the President and sole stockholder of
PCAM, is also the President of Paramount Capital,  Inc. and 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
investors  in  the  Company   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.  See "MD&A -- Certain
Trends  and  Uncertainties  --  Certain  Interlocking  Relationships;  Potential
Conflicts of Interest."  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 "MD&A -- Certain Trends and Uncertainties
-- Effect of Certain Anti-Takeover Provisions" below.

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 amendment of the By-laws and the
amendment of any of the  anti-takeover  provisions  contained  in the  Company's
Restated  Certificate of Incorporation.  The Company's By-laws currently provide
that  meetings  of the  stockholders  may only be called by the  Chairman of the
Board, the Chief Executive Officer or the Board of Directors. At its next annual
stockholders'  meeting the Company intends to seek  stockholder  approval of two
amendments  to its Restated  Certificate  of  Incorporation  that would have the
effect of (i) eliminating the requirement that stockholder  action be taken at a
meeting  and (ii)  eliminating  the  classification  of the Board of  Directors,
respectively.  Additionally,  the Company has contractual obligations to certain
of its  security  holders  that may  impair  potential  takeovers.  See "MD&A --
Certain  Trends  and  Uncertainties  --  Certain   Interlocking   Relationships;
Potential  Conflicts  of  Interest."  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 private  placements in February 1997
and June 1997.  Additionally,  pursuant to the Company's Restated Certificate of
Incorporation,  if any  "person"  or "Group"  (as  defined),  together  with any
affiliates  thereof,  becomes the beneficial owner (as defined) of Voting Shares
(as  defined)  of the Company  entitled  to exercise  more than 60% of the total
voting power

                                       20

<PAGE>



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), then a Fundamental Change (as
defined)  would occur and the Company  would be obligated to redeem the Series A
and Series D Preferred Stocks.  See "MD&A -- Certain Trends and Uncertainties --
Fundamental Change." This Fundamental Change provision is a further disincentive
for any person  attempting  to acquire 60% or more of the total  voting power of
the Company's Voting Shares.

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).  Rule 15g-9 defines  "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  including (i) the securities being quoted
on the Nasdaq National Market or SmallCap  Market;  (ii) the securities'  issuer
having net tangible assets in excess of $2,000,000 and having been in continuous
operation  for at least  three  years and (iii) the  securities'  issuer  having
average  revenues  of at least  $6,000,000  for the last three  years (all three
exceptions enumerated above are currently met by the Company).  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. 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.  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.

     There can be no assurance  that the Company's  securities  will continue to
qualify for exemption from the penny stock  restrictions.  In any event, even if
the Company's  securities are 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.


                                       21

<PAGE>



PART II.          OTHER INFORMATION

Item 1.           Legal Proceedings

     LBC Capital Resources,  Inc. ("LBC"), a  Philadelphia-based  broker/dealer,
has asserted claims against the Company and others,  including Paramount Capital
Inc., of which Dr.  Rosenwald is the sole  stockholder and Mr. Weiss is a Senior
Managing Director, and various related entities and persons. LBC's claims relate
to the alleged  breach by the Company of certain  letter  agreements,  allegedly
entered  into by LBC and the Company in 1995 and 1996 with  respect to brokerage
and/or investment banking services, particularly in connection with a $3 million
investment,  for which LBC is  seeking a fee.  On March 30,  1998,  the  Company
received a Statement of Claim under NASD  arbitration  rules, and a request that
the Company  voluntarily  submit to NASD  arbitration.  LBC's Statement of Claim
sought  damages in the form of cash (in excess of $4 million),  stock,  warrants
and other securities.  Subsequently, LBC abandoned the arbitration, and on April
9, 1998,  the Company's  counsel  learned that a Complaint had been filed in the
United  States  District  Court for the  Southern  District of New York (98 Civ.
2491) by LBC  against  the  Company  and the same  other  parties.  The  Company
believes it has valid legal and equitable defenses to LBC's lawsuit. The Company
intends to defend vigorously and possibly to assert counterclaims against LBC.

     No material legal  proceedings  were  terminated in the quarter ended March
31, 1998.

Item 6.           Exhibits and Reports on Form 8-K

     (a)  Exhibits.

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

10.1      Severance Agreement, Release and Covenant Not to Sue between Thomas H.
          Adams, Ph.D. and the Company, dated May 5, 1998.

10.2      Consulting  Agreement between the Company and Thomas H. Adams,  Ph.D.,
          dated May 5, 1998.

27.1(1)   Financial Data Schedule

(1)       Filed herewith.

     (b)  Reports on Form 8-K

     (i) On February 2, 1998, the Company filed a Report on Form 8-K dated as of
February 2, 1998 reporting  under Item 5 that the Company issued a press release
entitled "Article in Leading  Scientific Journal Spotlights Use of Genta's BCL-2
Antisense Compound in Increasing Response to a Chemotherapeutic Drug."

     (ii) On April 2, 1998,  the Company  filed a Report on Form 8-K dated as of
April 1, 1998  reporting  under Item 5 that the Company  issued a press  release
entitled  "Genta  Announces  Issue of Patent for Lead  Antisense  Compound  that
Targets the BCL-2 Gene, Implicated in Prostate and Other Cancers."


                                       22

<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/ Kenneth G. Kasses, Ph.D.
                                      ----------------------------
                             Name:    Kenneth G. Kasses, Ph.D.
                             Title:   President and Principal Executive Officer




                             By:      /s/ Robert E. Klem, Ph.D.
                                      ----------------------------
                             Name:    Robert E. Klem, Ph.D.
                             Title:   Principal Financial Officer and
                                      Vice-President

Date:  May 15, 1998


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