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

FORM
  10-Q

(Mark One)

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

For the quarterly period ended March 31, 2004

OR

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

For the transition period from _______ to _______

Commission
  File Number 0-19635

GENTA
  INCORPORATED(Exact name
  of Registrant as specified in its charter)

|Delaware                                                             |  |  | 33-0326866                                   
|-------------------------------------------------------------------- |  |  | ---------------------------------------------
|(State or other
      jurisdiction of incorporation or organization) |  |  | (I.R.S. Employer
      Identification Number)
|                                                                     |  |  |                                              
|Two Connell Drive
      
      Berkeley Heights, NJ                  |  |  | 07922                                        
|(Address of principal
      executive offices)                       |  |  | (Zip Code)                                   

(908) 286-9800 (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
  þNO o

Indicate
  by check mark whether the registrant is an accelerated filer (as defined in
  Rule 12b-2 of the Securities Exchange Act of 1934).

YES
  þNO o

As
  of April 30, 2004, the registrant had 77,751,389 shares of common stock outstanding.

---



---



Genta
  Incorporated
  INDEX TO FORM 10-Q

|PART
      I.  |    | FINANCIAL
      INFORMATION                                                                 | Page                                                                                                
|-------------- | -- | ------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------
|               |    |                                                                                             |                                                                                                     
|Item
      1.  |    | Financial
      Statements:                                                                 |                                                                                                     
|               |    |                                                                                             |                                                                                                     
|               |    |                                                                                             | Consolidated
      Balance Sheets at March 31, 2004
      and December 31, 2003                     
|               |    |                                                                                             |                                                                                                     
|               |    |                                                                                             | Consolidated
      Statements of Operations for the
      Three Months Ended March 31, 2004 and 2003
|               |    |                                                                                             |                                                                                                     
|               |    |                                                                                             | Consolidated
      Statements of Cash Flows for the
      Three Months Ended March 31, 2004 and 2003
|               |    |                                                                                             |                                                                                                     
|               |    |                                                                                             | Notes
      to Consolidated Financial Statements                                                    
|               |    |                                                                                             |                                                                                                     
|Item
      2.  |    | Managements
      Discussion and Analysis of Financial Condition and Results of Operations | 15                                                                                                  
|               |    |                                                                                             |                                                                                                     
|Item
      3.  |    | Quantitative
      and Qualitative Disclosures about Market Risk                            | 19                                                                                                  
|               |    |                                                                                             |                                                                                                     
|Item
      4.  |    | Controls
      and Procedures                                                               | 20                                                                                                  
|               |    |                                                                                             |                                                                                                     
|PART
      II. |    | OTHER
      INFORMATION                                                                     |                                                                                                     
|               |    |                                                                                             |                                                                                                     
|Item
      1.  |    | Legal
      Proceedings                                                                     | 21                                                                                                  
|               |    |                                                                                             |                                                                                                     
|Item
      6.  |    | Exhibits
      and Reports on Form 8-K                                                      | 21                                                                                                  
|               |    |                                                                                             |                                                                                                     
|SIGNATURES     | 23
|               |    |                                                                                             |                                                                                                     
|CERTIFICATIONS | 26

2

---



INDEX TO FORM 10-Q

|PART
      I.  |  | FINANCIAL
      INFORMATION                                                                                                                                      
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |  |                                                                                                                                                                  
|Item
      1.  |  | Financial
      Statements:                                                                                                                                      
|               |  |                                                                                                                                                                  
|               |  |                                                                                                                                                                  
|               |  |                                                                                                                                                                  
|               |  |                                                                                                                                                                  
|               |  |                                                                                                                                                                  
|               |  |                                                                                                                                                                  
|               |  |                                                                                                                                                                  
|               |  |                                                                                                                                                                  
|               |  |                                                                                                                                                                  
|Item
      2.  |  | Managements
      Discussion and Analysis of Financial Condition and Results of Operations                                                                      
|               |  |                                                                                                                                                                  
|Item
      3.  |  | Quantitative
      and Qualitative Disclosures about Market Risk                                                                                                 
|               |  |                                                                                                                                                                  
|Item
      4.  |  | Controls
      and Procedures                                                                                                                                    
|               |  |                                                                                                                                                                  
|PART
      II. |  | OTHER
      INFORMATION                                                                                                                                          
|               |  |                                                                                                                                                                  
|Item
      1.  |  | Legal
      Proceedings                                                                                                                                          
|               |  |                                                                                                                                                                  
|Item
      6.  |  | Exhibits
      and Reports on Form 8-K                                                                                                                           
|               |  |                                                                                                                                                                  
|SIGNATURES    
|               |  |                                                                                                                                                                  
|CERTIFICATIONS
|31.1           |  | Certification by Chief Executive Officer pursuant to Section 302 of the
        Sarbanes-Oxley Act of 2002                                                       
|31.2           |  | Certification by Chief Financial Officer pursuant to Section 302 of the
        Sarbanes-Oxley Act of 2002                                                       
|32.1           |  | Certification by Chief Executive Officer pursuant to 18 U.S.C. Section
        1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
        2002
|32.2           |  | Certification by Chief Financial Officer pursuant to 18 U.S.C. Section
        1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
        2002



---



GENTA INCORPORATED
  CONSOLIDATED BALANCE SHEETS

(In thousands, except par value data)

|ASSETS                                                                                     |  |  | March
      31,
      2004 |          | December
      31,
      2003 |  
|------------------------------------------------------------------------------------------ |  |  | -------------------------- | -------- | ----------------------------- | -
|                                                                                           |  |  |                            |         
|                                                                                           |  |  | (Unaudited)                |          |                               |  
|Current
      assets:                                                                      |  |  |                            |          |                               |  
|Cash
      and cash equivalents (Note 2)                                                   |  |  | $                          | 36,149   |                               | $
|Marketable
      securities (Note 3)                                                       |  |  |                            | 31,337   |                               |  
|Accounts
      receivable - net (Note 4)                                                   |  |  |                            | 8,945    |                               |  
|Notes
      receivable                                                                     |  |  |                            | 200      |                               |  
|Inventory
      (Note 6)                                                                   |  |  |                            | 6,696    |                               |  
|Prepaid
      expenses and other current assets                                            |  |  |                            | 1,184    |                               |  
|                                                                                           |  |  |                            |         
|Total
      current assets                                                                 |  |  |                            | 84,511   |                               |  
|                                                                                           |  |  |                            |          |                               |  
|Property
      and equipment, net (Note 7)                                                 |  |  |                            | 5,683    |                               |  
|Notes
      receivable (Note 5)                                                            |  |  |                            | 4,387    |                               |  
|Intangibles,
      net (Note 8)                                                            |  |  |                            | 718      |                               |  
|Prepaid
      royalties (Note 9)                                                           |  |  |                            | 1,268    |                               |  
|Other
      assets                                                                         |  |  |                            | 1,481    |                               |  
|                                                                                           |  |  |                            |         
|Total
      assets                                                                         |  |  | $                          | 98,048   |                               | $
|                                                                                           |  |  |                            |         
|                                                                                           |  | 
|LIABILITIES
      AND STOCKHOLDERS' EQUITY                                                 |  | 
|                                                                                           |  | 
|Current
      liabilities:                                                                 |  | 
|Accounts
      payable and accrued expenses                                                |  |  | $                          | 12,579   |                               | $
|Notes
      payable                                                                        |  |  |                            | 374      |                               |  
|Deferred
      revenues, current portion (Note 11)                                         |  |  |                            | 5,282    |                               |  
|                                                                                           |  |  |                            |         
|Total
      current liabilities                                                            |  |  |                            | 18,235   |                               |  
|                                                                                           |  |  |                            |          |                               |  
|Deferred
      revenues (Note 11)                                                          |  |  |                            | 34,763   |                               |  
|Convertible
      debt (Note 12)                                                           |  |  |                            | 10,000   |                               |  
|Long
      term debt (Note 13)                                                             |  |  |                            | 35,000   |                               |  
|                                                                                           |  |  |                            |         
|Total
      liabilities                                                                    |  |  |                            | 97,998   |                               |  
|                                                                                           |  |  |                            |         
|Commitments
      and contingencies (Note 16)                                              |  | 
|                                                                                           |  | 
|Stockholders'
      equity:                                                                |  | 
|Series
      A convertible preferred stock, $.001 par value; 5,000 shares authorized,      |  | 
|10
      shares and 261 shares issued and outstanding, liquidation value of $485
      and |  | 
|$13,025
      at March 31, 2004 and December 31, 2003 respectively                         |  |  |                            | --       |                               |  
|Common
      stock, $.001 par value; 120,000 shares authorized,                            |  | 
|77,879
      and 75,927 shares issued and outstanding at March 31, 2004                    |  | 
|and
      December 31, 2003, respectively                                                  |  |  |                            | 78       |                               |  
|Additional
      paid-in capital                                                           |  |  |                            | 335,987  |                               |  
|Deferred
      financing costs                                                             |  |  |                            | (33      | )                             |  
|Accumulated
      deficit                                                                  |  |  |                            | (335,832 | )                             |  
|Deferred
      compensation                                                                |  |  |                            | (191     | )                             |  
|Accumulated
      other comprehensive income                                               |  |  |                            | 41       |                               |  
|                                                                                           |  |  |                            |         
|                                                                                           |  |  |                            | 50       |                               |  
|                                                                                           |  |  |                            |         
|Total
      liabilities and stockholders' equity                                           |  |  | $                          | 98,048   |                               | $
|                                                                                           |  |  |                            |         

See
  accompanying notes to consolidated financial statements

3

---



GENTA
  INCORPORATED
  CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                       | Three
      Months Ended March 31, | 
|-------------------------------------------------------------------------------------- | ---------------------------------- | 
|                                                                                       |                                    | 
|(In thousands,
      except per share data)                                            | 2004                               | 
|                                                                                       |                                    | 
|                                                                                       |                                    | 
|Revenues:                                                                              |                                    | 
|Product
      sales - net                                                              |                                    | 
|License
      fees and royalties                                                       |                                    | 
|Development
      funding (Note 10)                                                    |                                    | 
|                                                                                       |                                    | 
|                                                                                       |                                    | 
|                                                                                       |                                    | 
|Cost
      of goods sold                                                               |                                    | 
|                                                                                       |                                    | 
|Gross
      margin                                                                     |                                    | 
|                                                                                       |                                    | 
|Costs
      and expenses:                                                              |                                    | 
|Research
      and development (including non-cash compensation expense of $52 for the |                                    | 
|three
      months ended March 31, 2004 and March 31, 2003)                            |                                    | 
|Selling,
      general and administrative (including non-cash compensation             |                                    | 
|expense
      of $17 and $92 for the three months ended March 31, 2004 and             |                                    | 
|March
      31, 2003, respectively)                                                    |                                    | 
|                                                                                       |                                    | 
|Total
      costs and expenses - gross                                                 |                                    | 
|Aventis
      reimbursement                                                            |                                    | 
|                                                                                       |                                    | 
|Total
      costs and expenses - net                                                   |                                    | 
|                                                                                       |                                    | 
|Loss
      before other income                                                         |                                    | 
|                                                                                       |                                    | 
|Other
      income                                                                     |                                    | 
|                                                                                       |                                    | 
|Net loss                                                                               |                                    | 
|                                                                                       |                                    | 
|                                                                                       |                                    | 
|Net loss
      per basic and diluted share                                             |                                    | 
|                                                                                       |                                    | 
|                                                                                       |                                    | 
|Shares
      used in computing net loss per                                            |                                    | 
|basic
      and diluted share                                                          |                                    | 
|                                                                                       |                                    | 

See
  accompanying notes toconsolidatedfinancial statements

4

---



GENTA INCORPORATED
  CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                       | Three
      Months Ended March 31, | 
|---------------------------------------------------------------------- | ---------------------------------- | 
|                                                                       |                                    | 
|(In thousands)                                                         | 2004                               | 
|                                                                       |                                    | 
|                                                                       |                                    | 
|Operating
      activities:                                            |                                    | 
|Net loss                                                               |                                    | 
|Items
      reflected in net loss not requiring cash:                  |                                    | 
|Depreciation
      and amortization                                    |                                    | 
|Compensation
      expense related to stock options (Note 16)          |                                    | 
|Changes
      in operating assets and liabilities:                     |                                    | 
|Accounts,
      notes and loan receivable (Note 4)                     |                                    | 
|Inventory
      (Note 6)                                               |                                    | 
|Notes
      receivable (Note 5)                                        |                                    | 
|Accounts
      payable, accrued expenses and other current liabilities |                                    | 
|Deferred
      revenue (Note 11)                                       |                                    | 
|Other
      assets                                                     |                                    | 
|                                                                       |                                    | 
|Net cash
      used in operating activities                            |                                    | 
|                                                                       |                                    | 
|Investing
      activities:                                            |                                    | 
|Purchase
      of marketable securities                                |                                    | 
|Maturities
      and sales of marketable securities                    |                                    | 
|Purchase
      of property and equipment                               |                                    | 
|                                                                       |                                    | 
|Net cash
      provided by investing activities                        |                                    | 
|                                                                       |                                    | 
|Financing
      activities:                                            |                                    | 
|Borrowings
      under the line of credit (Note 12)                    |                                    | 
|Purchase
      of treasury stock                                       |                                    | 
|Deferred
      financing costs                                         |                                    | 
|Issuance
      of common stock upon exercise of warrants and options   |                                    | 
|                                                                       |                                    | 
|Net cash
      provided by financing activities                        |                                    | 
|                                                                       |                                    | 
|Increase
      in cash and cash equivalents                            |                                    | 
|Cash
      and cash equivalents at beginning of period                 |                                    | 
|                                                                       |                                    | 
|Cash
      and cash equivalents at end of period                       |                                    | 
|                                                                       |                                    | 

See
  accompanying notes toconsolidatedfinancial statements

5

---



GENTA
  INCORPORATED
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  March 31, 2004
  (Unaudited)

1.
Organization and Business

Genta
Incorporated (Genta or the Company) is a
biopharmaceutical company engaged in pharmaceutical (drug) research and
development, its sole reportable segment. The Company is dedicated to developing
innovative drugs to treat cancer. In the past, the Companys research
efforts have focused primarily on the development of antisense
drugs, which are designed to selectively prevent the production of specific
proteins that contribute to the cause or progression of disease. More recently,
the Company has broadened its research portfolio into other DNA
medicines, which, in addition to antisense drugs, consist of decoy
aptamers and small molecules, which include the Companys gallium products.

The
Company has had recurring operating losses since inception and management
expects that such losses will continue until Genasense receives approval
from the FDA for commercial sales and we receive a full year of royalties from
Aventis Pharmaceuticals Inc. (Aventis) on worldwide sales. Although
no assurances can be expressed, management believes that at the current rate of
spending, coupled with the amounts to be reimbursed by and the available line of
credit from Aventis, the Company should have sufficient cash funds to maintain
its present operations to the end of 2004. Additional Aventis milestone payments
and other funding available to the Company upon the anticipated NDA approval of
Genasense should provide sufficient capital resources for beyond 2004.

The
Company may also seek collaborative agreements, equity financing and other
financing arrangements with potential corporate partners and other sources.
However, there can be no assurance that any such collaborative agreements or
other sources of funding will be available on favorable terms, if at all. The
Company will need substantial additional funds before it can expect to realize
significant product revenue.

2.
Summary of Significant Accounting Policies

Basis
  of Presentation

The
consolidated financial statements are presented on the basis of accounting
principles generally accepted in the United States. All professional accounting
standards that are effective as of March 31, 2004 have been considered in
preparing the consolidated financial statements. Such financial statements
include the accounts of the Company and all majority-owned subsidiaries. All
material intercompany transactions and balances have been eliminated in
consolidation. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that affect reported earnings, financial position and
various disclosures. Actual results could differ from those estimates. Certain
reclassifications have been made to prior-year amounts to conform with
current-year presentation. The unaudited 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
Companys Annual Report on Form 10-K for the fiscal year ended December 31,
2003. Results for the interim periods are not necessarily indicative of results
for the full years.

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

6

---



Revenue
  Recognition

In
April 2002, the Company entered into a development and commercialization
agreement (Collaborative Agreement) with Aventis. Under the terms of
the Collaborative Agreement, the Company and Aventis will jointly develop and
commercialize Genasense in the U.S. (the Alliance), and
Aventis will have exclusive development and marketing rights to the compound in
all countries outside of the U.S. Under the Collaborative Agreement, Aventis
will pay 75% of U.S. NDA-directed development costs incurred by either Genta or
Aventis, subsequent to the execution of the Collaborative Agreement, and 100% of
all other development, marketing, and sales costs incurred within the U.S. and
elsewhere as subject to the Collaborative Agreement (Note 10). Reimbursements
are to be made pursuant to a single net payment from one party to the other.
Such payments are due and payable 60 days following the end of the quarter in
which such expenses are incurred.

We
  follow the provisions of the Securities and Exchange Commissions Staff
  Accounting Bulletin No. 104 (SAB No. 104), Revenue Recognition,
  and Emerging Issues Task Force No. 00-21 (EITF No. 00-21), Accounting
  for Revenue Arrangements with Multiple Deliverables.

In
accordance with EITF No. 00-21 we analyze our multiple element arrangements to
determine whether the elements can be separated and accounted for individually
as separate units of accounting.We recognize license payments as revenue
if the license has stand-alone value and the fair value of the undelivered items
can be determined. If the license is considered to have stand-alone value but
the fair value on any of the undelivered items cannot be determined, the license
payments are recognized as revenue over the period of performance for such
undelivered items or services. Our estimate of the period of performance
involves management judgment. Amounts received for milestones are recognized
upon achievement of the milestone, as long as the milestone is deemed to be
substantive and we have no other performance obligations.

We
have determined that, due to the nature of the on-going development work related
to our Collaborative Agreement with Aventis, the end of the development phase
and the fair-value of the undelivered elements is not determinable. Accordingly,
we have deferred recognition of the initial licensing fee and up-front
development funding received from Aventis and are recognizing these payments on
a straight-line basis over the original estimated useful life of the related
first-to-expire patent of 115 months. Any subsequent milestone payments that may
be received from Aventis will also be recognized over the then remaining
estimated useful life of the first-to-expire patent.

Genta
recognizes revenue from product sales when title to product and associated risk
of loss has passed to the customer and we are reasonably assured of collecting
payment for the sale. All revenue from product sales are recorded net of
applicable allowances for returns rebates and other applicable discounts and
allowances. We allow return of our product for up to twelve months after product
expiration.

Research
  and Development

Research
and development costs are expensed as incurred, including raw material costs
required to manufacture products for clinical trials. Reimbursements for
applicable Genasense-related costs, under the Collaborative Agreement
(Note 10), have been recorded as a reduction to expenses in the consolidated
statement of operations.

Cash,
  Cash Equivalents and Marketable Securities

Cash
and cash equivalents consisted entirely of money market funds. The carrying
amounts of cash, cash equivalents and marketable securities approximate fair
value due to the short-term nature of these instruments. Marketable securities
consisted primarily of corporate notes and government securities, all of which
are classified as available-for-sale marketable securities. Management
determines the appropriate classification of debt and equity securities at the
time of purchase and reassesses the classification at each reporting date. The
Company invests its excess cash primarily in debt instruments of domestic
corporations and government-backed securities. The Company has established
guidelines relative to diversification and maturities that attempt to maintain
safety and liquidity. These guidelines are periodically reviewed and modified to
take advantage of trends in yields and interest rates.

7

---



Property
  and Equipment

Property
and equipment is stated at cost and depreciated on the straight-line method over
the estimated useful lives of the assets, ranging from three to five years.
Leasehold improvements incurred in the renovation of the Companys current
offices are being amortized over the remaining life of the leases. The
Companys policy is to evaluate the appropriateness of the carrying value
of the undepreciated value of long-lived assets on the basis of estimated future
cash flows (undiscounted) and other factors. If such evaluation were to indicate
an impairment of these intangible assets, such impairment would be recognized by
a write-down of the applicable assets. Based on the valuation, no impairment was
indicated in accordance with Statement of Financial Accounting Standards
(SFAS) No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets.

Intangible
  Assets

Intangible
assets, consisting primarily of licensed technology and capitalized patent
costs, are amortized using the straight-line method over their estimated useful
lives of five years. The Companys policy is to evaluate the
appropriateness of the carrying values of the unamortized balances of intangible
assets on the basis of estimated future cash flows (undiscounted) and other
factors. If such evaluation were to indicate an impairment of these assets, such
impairment would be recognized by a write-down of the applicable assets. The
Company evaluates, each financial reporting period, the continuing value of
patents and patent applications. Through this evaluation, the Company may elect
to continue to maintain these patents, seek to out-license them, or abandon
them. Based on the valuation, no impairment was indicated in accordance with
SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

Inventories

Inventories
are stated at the lower of cost or market with cost being determined using the
first-in, first-out (FIFO) method.

Stock
  Options

The
Company accounts for stock-based compensation arrangements in accordance with
the provisions of Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees and complies with the disclosure
provisions of SFAS No. 123, Accounting for Stock-Based Compensation.
Under APB Opinion No. 25, compensation expense is based on the difference, if
any, on the date of grant, between the fair value of the Companys stock
and the exercise price. The Company accounts for stock options issued to
non-employees in accordance with the provisions of SFAS No. 123 and EITF No.
96-18, Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services.
The Company is amortizing deferred stock compensation using the graded vesting
method, in accordance with Financial Accounting Standards Board Interpretation
No. 28, over the vesting period of each respective option, which is generally
four years.

In
December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure  Amendment of FASB
Statement No. 123, to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation and amends the disclosure requirements of Statement No. 123. The
following table illustrates the effect on net loss and loss per share if the
Company had applied the fair value recognition provisions of SFAS No. 123 to
stock-based employee compensation:

8

---



|                                                                    |  |  | Three
      Months Ended March 31, |        
|------------------------------------------------------------------- |  |  | ---------------------------------- | -------
|                                                                    |  |  |                                    |        
|($
      thousands, except per share data)                          |  |  | 2004                               |        
|                                                                    |  |  |                                    |        
|Net loss
      applicable to common shares, as reported             |  |  | $                                  | (12,532
|Add:
      Equity related employee compensation expense included in |  | 
|reported
      net income, net of related tax effects               |  |  |                                    | 70     
|Deduct:
      Total stock-based employee compensation expense       |  | 
|determined
      under fair values based method for all awards, net |  | 
|of
      related tax effects                                        |  |  |                                    | (2,345 
|                                                                    |  |  |                                    |        
|Pro forma
      net loss                                            |  |  | $                                  | (14,807
|                                                                    |  |  |                                    |        
|                                                                    |  | 
|Net loss
      per share attributable to common shareholders:       |  | 
|As reported:
      Basic and diluted                                |  |  | $                                  | (0.16  
|Pro forma:
      Basic and diluted                                  |  |  | $                                  | (0.19  

The
pro-forma disclosure shown above were calculated for all options using the
Black-Scholes option pricing model with the following assumptions:

|                              |  |  |  | Three
      Months Ended March 31, |  
|----------------------------- |  |  |  | ---------------------------------- | -
|                              |  |  |  |                                    |  
|                              |  |  |  | 2004                               |  
|                              |  |  |  |                                    |  
|Risk-free
      interest rate |  |  |  | 2.9                                | %
|Dividend
      yield          |  |  |  | --                                 |  
|Expected
      life (years)   |  |  |  | 4.0                                |  
|Volatility                    |  |  |  | 61                                 | %

Net
  Loss Per Common Share

Basic
earnings per share are based upon the weighted-average number of shares
outstanding during the period. Diluted earnings per share includes the weighted
average number of all potentially dilutive common shares such as shares
outstanding, options, warrants and convertible preferred stock outstanding.

Net
loss per common share for the three months ended March 31, 2004 and 2003 is
based on the weighted average number of shares of common stock outstanding
during the periods. Basic and diluted loss per share are identical for all
periods presented as potentially dilutive securities, including options,
warrants and convertible preferred stock have been excluded from the calculation
of the diluted net loss per common share because the inclusion of such
securities would be antidilutive.

3.
Marketable Securities

The
carrying amounts of the companys marketable securities, which are solely
corporate debt securities, approximate fair value due to the short-term nature
of these instruments. The fair value of available-for-sale marketable securities
is as follows ($ thousands):

|                              | March
      31, 
      2004 |  | December
      31,
      2003 |       
|----------------------------- | --------------------------- |  | ----------------------------- | ------
|                              |                             |  |                               |       
|Amortized
      cost          |                             |  | $                             | 31,296
|Gross
      unrealized gains  |                             |  |                               | 43    
|Gross
      unrealized losses |                             |  |                               | (2    
|                              |                             |  |                               |       
|Estimated
      fair value    |                             |  | $                             | 31,337
|                              |                             |  |                               |       

The
estimated fair value of each marketable security has been compared to its cost,
and therefore, a net unrealized gain of approximately $41 thousand has been
recognized in accumulated other comprehensive income at March 31, 2004.

9

---



4.
Accounts Receivable-Net

Included
in accounts receivable and netted against operating expenses in the consolidated
statement of operations at March 31, 2004, is $8.7 million in net expense
reimbursements due from Aventis for various third-party costs, internal costs of
scientific and technical personnel (Full-time Equivalents or
FTEs) and Genasense drug supply costs for the three
month period ended March 31, 2004. Net expense reimbursement consists of the
appropriate reimbursement rate (75% or 100%) for costs incurred by Genta and
internal costs of Genta scientific and technical personnel net of our 25% share
of expenses incurred by Aventis and internal costs of Aventis scientific and
technical personnel. Also included in accounts receivable-net are receivables of
$0.2 million related to the sale of Ganite®, which are net of
allowances of $0.1 million. At March 31, 2003, $9.2 million in net expense
reimbursements due from Aventis for various third-party costs, internal costs of
scientific and technical personnel and Genasense drug supply costs for the
three month period ended March 31, 2003 was included in accounts receivable and
netted against operating expenses in the consolidated statement of operations.

5.
Notes Receivable

At
March 31, 2004, the Company had recorded $4.4 million as a note receivable
relating to advance financing provided to Avecia Biotechnology, Inc.
(Avecia) for facility expansion, which will be repaid with interest
through future payments determined as a function of drug substance purchases to
be made by the Company in the future.

|                                             | March
      31, 
      2004 |  | December
      31,
      2003 |      
|-------------------------------------------- | --------------------------- |  | ----------------------------- | -----
|                                             |                             |  |                               |      
|Advance
      funding for facility expansion |                             |  | $                             | 4,504
|Interest
      recorded                      |                             |  |                               | 154  
|Payments
      received                      |                             |  |                               | (271 
|                                             |                             |  |                               |      
|                                             |                             |  | $                             | 4,387
|                                             |                             |  |                               |      

6.
  Inventories

Inventories,
comprised of Ganite®and GenasenseTM , are stated at
the lower of cost or market with cost being determined using the first-in,
first-out (FIFO) method. Inventories consisted of the following (in thousands):

|                      | March
      31, 
      2004 |  | December
      31,
      2003 |      
|--------------------- | --------------------------- |  | ----------------------------- | -----
|                      |                             |  |                               |      
|Raw materials         |                             |  | $                             | 2,029
|Work
      in process |                             |  |                               | 4,302
|Finished
      goods  |                             |  |                               | 365  
|                      |                             |  |                               |      
|                      |                             |  | $                             | 6,696
|                      |                             |  |                               |      

10

---



7.
Property and Equipment

Property
and equipment is comprised of the following ($ thousands):

|                                                     |  |  |  | Estimated 
      Useful Lives |  | March
      31,
      2004 |        | December
      31,
      2003 |  
|---------------------------------------------------- |  |  |  | ----------------------------- |  | -------------------------- | ------ | ----------------------------- | -
|                                                     |  |  |  |                               |  |                            |        |                               |  
|Computer
      equipment                             |  |  |  | 3                             |  | $                          | 3,457  |                               | $
|Software                                             |  |  |  | 3                             |  |                            | 3,289  |                               |  
|Furniture
      and fixtures                         |  |  |  | 5                             |  |                            | 1,125  |                               |  
|Leasehold
      improvements                         |  |  |  | Life
      of lease           |  |                            | 1,001  |                               |  
|Equipment                                            |  |  |  | 5                             |  |                            | 579    |                               |  
|                                                     |  |  |  |                               |  |                            |        |                               |  
|                                                     |  |  |  |                               |  |                            | 9,451  |                               |  
|Less
      accumulated depreciation and amortization |  |  |  |                               |  |                            | (3,768 | )                             |  
|                                                     |  |  |  |                               |  |                            |        |                               |  
|                                                     |  |  |  |                               |  | $                          | 5,683  |                               | $
|                                                     |  |  |  |                               |  |                            |        |                               |  

8.
Intangibles, net

Intangible
assets consist of the following ($ thousands):

|                                     | March
      31, 
      2004 |  | December
      31,
      2003 |       
|------------------------------------ | --------------------------- |  | ----------------------------- | ------
|                                     |                             |  |                               |       
|Patent
      and patent applications |                             |  | $                             | 3,992 
|Less
      accumulated amortization  |                             |  |                               | (3,274
|                                     |                             |  |                               |       
|                                     |                             |  | $                             | 718   
|                                     |                             |  |                               |       

Future
amortization expense related to intangibles at March 31, 2004 are as follows ($
thousands):

|      |  |  | Amortization
      Expense |    
|----- |  |  | -------------------------- | ---
|      | 
|2004  |  |  | $                          | 433
|2005  |  |  |                            | 285
|      | 
|Total |  |  | $                          | 718
|      | 

9.
Prepaid Royalties

In
December 2000, the Company recorded $1.3 million as the fair value for its
commitment to issue 162,338 shares of common stock to a major university as
consideration for an amendment to a license agreement initially executed on
August 1, 1991 related to antisense technology licensed from the university. The
amendment provided for a reduction in the royalty percentage rate to be paid to
the university based on the volume of sales of the Companys products
containing the antisense technology licensed from such university. These shares
were issued in the first quarter of 2001. The Company will amortize the prepaid
royalties upon the commercialization of Genasense, the Companys
leading antisense drug, through the term of the arrangement which expires twelve
years from the date of first commercial sale.

10.
Collaborative Agreement

In
  April 2002, the Company entered into a development and commercialization agreement
  (Collaborative Agreement) with Aventis Pharmaceuticals Inc. (Aventis).
  Under the terms of the Collaborative Agreement, the Company and Aventis will
  jointly develop and commercialize Genasense in the U.S. (the Alliance),
  and Aventis will have exclusive development and marketing rights to the

11

---



compound
  in all countries outside of the U.S. The Company will retain responsibility
  for global manufacturing and for regulatory filings within the U.S., while Aventis
  will assume all regulatory responsibilities outside the U.S. Joint management
  teams, including representatives from both Genta and Aventis, will oversee the
  Alliance. Collectively, this Collaborative Agreement could provide up to $476.9
  million in cash, equity and convertible debt proceeds to the Company. In addition,
  under the Collaborative Agreement, Genta is entitled to royalties on any worldwide
  sales of Genasense, from which Genta is required to pay third-party pass-through
  royalties to the University of Pennsylvania (UPenn) and The National
  Institutes of Health (NIH) based on net worldwide sales. Furthermore,
  under the Collaborative Agreement, Aventis will pay 75% of U.S. NDA-directed
  development costs incurred by either Genta or Aventis subsequent to the execution
  of the Collaborative Agreement, and 100% of all other development, marketing,
  and sales costs incurred within the U.S. and elsewhere as subject to the Collaborative
  Agreement.

As
of March 31, 2004, the Company has received a total of $249.9 million in initial
and near-term funding, which included a $10.0 million licensing fee and $40.0
million in development funding, $10.0 million in convertible debt proceeds (Note
10), $71.9 million pursuant to an at-market equity investment in the
Companys common stock, $83.0 million in paid expense reimbursements and
$35.0 million in line of credit proceeds. A further $8.8 million in accrued
expense reimbursement is due for receipt during the second quarter of 2004. The
remaining amounts that could be received under the Collaborative Agreement,
$280.0 million in cash and $65.0 million in convertible note proceeds, are
contingent upon the achievement of certain research and development milestones.

11.
Deferred Revenues

As
of March 31, 2004, the Company had recorded $40.0 million, net of amortization
in deferred revenues relating to the initial $10.0 million licensing fee and
$40.0 million development funding received from Aventis under the Collaborative
Agreement (Note 10), of which $5.3 million is included in current liabilities
and $34.7 million is classified as long-term deferred revenues, which will be
recognized on a straight-line basis over the estimated original useful life of
the related first-to-expire patent of 115 months, in accordance with SAB No.
104. Any subsequent milestone payments that may be received from Aventis will
also be recognized over the then remaining estimated useful life of the related
first-to-expire patent.

12.
Convertible Debt

At
March 31, 2004, the Company had $10.0 million in convertible debt that was
issued in connection with the Collaborative Agreement (Note 10). The Company
received $10.0 million in debt proceeds from Aventis, and issued a $10.0 million
convertible promissory note to Aventis (Aventis Note). Interest
accrues at the rate of 5.63% per annum until April 26, 2009 (the Maturity
Date) and compounds annually on each anniversary date of the Aventis Note
through the Maturity Date. The Company may redeem the Aventis Note for cash in
whole or in part (together with any accrued and unpaid interest with respect to
such principal amount) in amounts of not less than $0.5 million. In addition,
the Company may convert the Aventis Note on or prior to the Maturity Date in
whole or in part into fully paid and non-assessable shares of common stock. As
of any date, the number of shares of common stock into which the Aventis Note
may be converted shall be determined by a formula based on the then market value
of the common stock (the Conversion Price), subject to a minimum
Conversion Price of $8.00 per share.

As
of March 31, 2004, the Company has accrued interest of $1.1 million on the
Aventis Note.

13.
Long Term Debt

At
  March 31, 2004, the Company had $35.0 million outstanding on a line of credit
  that was issued in connection with an amendment, dated March 14, 2003, to the
  Collaborative Agreement (Note 10) that established a line of credit of up to
  $40.0 million related to the development, manufacturing and commercialization
  of Genasense (Aventis Line of Credit). This revolving debt
  is considered an advance against both past and future costs. At the

12

---



time
  of Genasense NDA approval in the U.S., any outstanding balance will be
  offset against the first milestone payment that is due to Genta from Aventis.
  The terms of the Aventis Line of Credit provide for a favorable interest rate,
  which is set two days prior to the first day of each calendar quarter. The Aventis
  Line of Credit terminates upon the earlier of (i) the receipt of Genasense
  NDA approval in the U.S. or (ii) December 31, 2004, all amounts payable under
  the agreement are due six months after termination. As security for the repayment
  of the Aventis Line of Credit, Genta has granted Aventis a security interest
  in all of its accounts and/or other rights to payments under the Collaborative
  Agreement as well as all inventory related to Genasense .

As
of March 31, 2004, the Company has accrued interest of $0.4 million on the
Aventis Line of Credit.

14.
Comprehensive Loss

An
analysis of comprehensive loss is presented below:

|                                                              |  |  | Three
      Months Ended March 31, |        
|------------------------------------------------------------- |  |  | ---------------------------------- | -------
|                                                              |  |  |                                    |        
|($
      in thousands)                                        |  |  | 2004                               |        
|                                                              |  |  |                                    |        
|Net
      loss                                                |  |  | $                                  | (12,532
|Change
      in market value on available-for-sale short-term |  | 
|investments                                                   |  |  |                                    | 16     
|                                                              |  |  |                                    |        
|Total
      comprehensive loss                                |  |  | $                                  | (12,516
|                                                              |  |  |                                    |        

15.
Supplemental Disclosure of Cash Flows Information and Non-cash Investing and Financing
Activities

No interest
or income taxes were paid for the three months ended March 31, 2004 and 2003.

16.
Commitments and Contingencies

Litigation
  and Potential Claims

JBL
Scientifics, Inc.

During
May 2000, Promega notified Genta of two claims against Genta and Gentas
subsidiary, Genko Scientific, Inc. (formerly known as JBL Scientifics, Inc.),
for indemnifiable damages in the aggregate amount of $2.8 million under the
purchase agreement pursuant to which Promega acquired the assets of JBL.
Promegas letter stated that it intended to reduce to zero the principal
amount of the $1.2 million promissory note it issued as partial payment for the
assets of Genko Scientific, Inc. and that therefore Genta owed Promega
approximately $1.6 million. On October 16, 2000 Genta filed suit in a U.S.
District Court in California against Promega for the non-payment of the $1.2
million note plus accrued interest. On November 6, 2000, Promega filed a
counterclaim alleging indemnifiable damages in the aggregate amount of $2.8
million. During the first quarter of 2001, we agreed to resolve the matter with
Promega, and, in connection therewith, agreed to restructure its $1.2 million
promissory note receivable to provide for a $0.2 million non-interest bearing
note due to be repaid by Promega upon final resolution of certain environmental
issues related to JBL and forgave all accrued interest. While we have resolved
one of these environmental issues, we are awaiting final acceptance by the EPA
of our settlement offer on the other environmental issue before the restructured
note will be repaid by Promega. We are uncertain as to whether and when the EPA
will issue such final acceptance.

Genta
Pharmaceutical Europe S.A.

During
  1995, Genta Pharmaceutical Europe S.A., or Genta Europe, a wholly-owned subsidiary
  of Genta, received funding in the form of a loan from ANVAR, a French government
  agency, of which the proceeds were intended to fund research and development
  activities. In October 1996, in connection with a restructuring of Gentas
  operations, Genta terminated all scientific personnel of Genta Europe. In 1998,

13

---



ANVAR
  asserted that Genta Europe was not in compliance with the ANVAR Agreement, notified
  Genta Europe of its demand for accelerated repayment of the loan and notified
  Genta that it was liable as a guarantor on the note. Based on the advice of
  French counsel, Genta does not believe that ANVAR is entitled to payment under
  the terms of the ANVAR Agreement and that Genta will likely not incur any liability
  in this matter, although there can be no assurances thereof. During the quarter
  ended September 30, 2003, we reversed the accrued net liability of $0.2 million
  related to this matter, as management believes that a loss is not probable.

University
of Pennsylvania

In
October 2002, a licensing officer from the University of Pennsylvania asserted a
claim to a portion of the initial $40.0 million development funding we received
from Aventis pursuant to the collaborative agreement between Genta and Aventis.
In October 2003, we reached a settlement with the University of Pennsylvania
with respect to this claim. Under the terms of the settlement, in exchange for
an agreement by the University of Pennsylvania to forego any and all claims in
the future to any portion of any milestone and other payments (other than
royalty payments on sales) made to Genta pursuant to the collaborative
agreement, Genta has agreed to make the following payments to the University of
Pennsylvania: (i) $750,000 on November 5, 2003, (ii) $250,000 on February 2,
2004, (iii) $1.5 million upon the first new drug application or foreign
equivalent approval of Genasense and (iv) provided that the first new drug
application or foreign equivalent approval of Genasense has been received
by Genta, $750,000 on the earlier of (a) the second new drug application or
foreign equivalent approval of Genasense or (b) December 30, 2004.

17.
Subsequent Event

On
May 3, 2004 we presented results of our Phase 3 trial of Genasense in
combination with dacarbazine versus dacarbazine alone to the Oncology Drugs
Advisory Committee of the FDA. In the absence of increased survival, the
committee voted that the evidence presented did not provide substantial evidence
of effectiveness, as measured by response rate and progression-free survival, to
outweigh the increased toxicity of administering Genasense for the
treatment of patients with metastatic melanoma who have not received prior
chemotherapy. While the advisory committees recommendation is not binding,
the FDA will consider it as the agency completes its Priority Review of the NDA
for Genasense.

14

---



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

Certain
Factors Affecting Forward-Looking Statements  Safe Harbor Statement

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 actual results to
differ materially from any future results expressed or implied by such
forward-looking statements. Forward-looking statements include, without
limitation, statements about:

- U.S.
    Federal Drug Administration (FDA) approval or failure to approve
    GenasenseTM;
- the
    Companys ability to develop, manufacture and sell its products;
- the
    safety and efficacy of the Companys products;
- the
    commencement and completion of pre-clinical and clinical trials;
- the
    Companys ability to obtain necessary regulatory approvals;
- the
    Companys contractual collaborative arrangements;
- the
    adequacy of the Companys capital resources;
- the
    ability to obtain sufficient financing to maintain the Companys planned
    operations;
- the
    possibility and effect of patent infringement claims;
- the
    impact of competitive products and market conditions;
- the
    other risks described under Certain Risks and Uncertainties Related to the
    Companys Business.

The
Company does not undertake to update any forward-looking statements.

We
make available free of charge on our Internet website
(http://www.genta.com) our Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q, current reports on Form 8-K and amendments to these reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 as soon as reasonably practicable after we electronically file such
material with, or furnish it to, the Securities and Exchange Commission. The
content on the Companys website is available for informational purposes
only. It should not be relied upon for investment purposes, nor is it
incorporated by reference into this Form 10-K.

Overview

Since
its inception in February 1988, Genta has devoted its principal efforts toward
drug discovery and research and development. Gentas strategy is to build a
product and technology portfolio primarily focused on its cancer-related
products. Genta has been unprofitable to date and expects to incur substantial
operating losses due to continued requirements for ongoing and planned research
and development activities, pre-clinical and clinical testing, manufacturing
activities, regulatory activities and establishment of a sales and marketing
organization. From our inception to March 31, 2004, we have incurred a
cumulative net loss of $335.8 million. We have experienced significant quarterly
fluctuations in operating results and we expect that these fluctuations in
revenues, expenses and losses will continue.

Our
  financial results in 2004 may be significantly affected by FDA action with respect
  to GenasenseTM. We have filed a New Drug Application (NDA)
  for GenasenseTM to be used in combination with dacarbazine for the
  treatment of patients with advanced melanoma who have not previously received
  chemotherapy. The FDA accepted our NDA filing on February 5, 2004 and granted
  Priority Review status to the application, which targets an agency
  action on or before June 8, 2004. On February 10, 2004, we were invited by the
  FDA to meet on May 3, 2004 with the FDA Oncology Drugs Advisory Committee (ODAC).
  On May 3, 2004 we presented results of our Phase 3 trial of Genasense
  in combination with dacarbazine versus

15

---



dacarbazine
  alone to ODAC. In the absence of increased survival, the committee voted that
  the evidence presented did not provide substantial evidence of effectiveness,
  as measured by response rate and progression-free survival, to outweigh the
  increased toxicity of administering Genasense for the treatment of patients
  with metastatic melanoma who have not received prior chemotherapy. While the
  advisory committees recommendation is not binding, the FDA will consider
  it as the agency completes its Priority Review of the NDA for Genasense.

If
the FDA approves the NDA and qualifies Avecia, our contract manufacturer, then
Aventis, Gentas collaborative partner, will begin to market the product in
the United States, Avecia will begin to manufacture the product and Genta will
sell the product to Aventis. Genta will also earn a royalty from Aventis on all
sales of GenasenseTM.

Results
  of Operations for the Three Months Ended March 31, 2004 and 2003

|                                                                    | Summary Operating Results 
      For the three months ended March 31, | 
|------------------------------------------------------------------- | --------------------------------------------------------------------- | 
|                                                                    |                                                                       | 
|($
      thousands)                                                 | Increase
      (Decrease)                                             | 
|                                                                    | 2004                                                                  | 
|Revenues:                                                           |                                                                       | 
|Product
      sales  net                                           |                                                                       | 
|License
      fees and royalties                                    |                                                                       | 
|Development
      funding                                           |                                                                       | 
|                                                                    |                                                                       | 
|Net
      revenues                                                  |                                                                       | 
|                                                                    |                                                                       | 
|Cost
      of goods sold                                            |                                                                       | 
|                                                                    |                                                                       | 
|Gross
      margin                                                  |                                                                       | 
|                                                                    |                                                                       | 
|Costs
      and expenses:                                           |                                                                       | 
|Research
      and development (including non-cash                  |                                                                       | 
|compensation
      expense of $52 for the three months ended March  |                                                                       | 
|31,
      2004 and March 31, 2003)                                  |                                                                       | 
|Selling,
      general and administrative (including                |                                                                       | 
|non-cash
      compensation expense of $17 and $92 for the three    |                                                                       | 
|months
      ended March 31, 2004 and March 31, 2003, respectively) |                                                                       | 
|                                                                    |                                                                       | 
|Total
      costs and expenses  gross                              |                                                                       | 
|Less:
      Aventis reimbursement                                   |                                                                       | 
|                                                                    |                                                                       | 
|Total
      costs and expenses  net                                |                                                                       | 
|                                                                    |                                                                       | 
|Loss
      before other income                                      |                                                                       | 
|                                                                    |                                                                       | 
|Other
      income, principally net interest income                 |                                                                       | 
|                                                                    |                                                                       | 
|Net loss                                                            |                                                                       | 
|                                                                    |                                                                       | 

Net
  Revenues

Net
revenues, consisting of license fees and royalties, development funding and
product sales were $1.7 million for the three months ended March 31, 2004
compared to $1.3 million in for the three months ended March 31, 2003. License
fees and development funding revenues are generated by the initial $10.0 million
licensing fee and $40.0 million development funding received from Aventis in
2002 under the Collaborative Agreement (see Note 10 to our financial
statements), along with non-exclusive sub-license agreements involving antisense
technology. The initial payments received from Aventis are being recognized over
the original estimated useful life of the related first-to-expire patent of 115
months.

Research
  and Development Expenses

Research
and development expenses before reimbursement were $12.4 million for the three
months ended March 31, 2004 compared to $15.5 million for the three months ended
March 31, 2003. Approximately $10.7 million or 87% of research and development
expenses before reimbursement were incurred on the GenasenseTM
project for the three months ended March 31, 2004. For the three months ended
March 31, 2003, research and development expenses were higher due to the Phase 3
clinical trials related to GenasenseTM. Of the $12.4 million in
research and development expenses for the three months ended March 31, 2004,
$7.4 million is reimbursable pursuant to our collaborative agreement with
Aventis and is expected to be reimbursed by Aventis in the second quarter of
2004.

16

---



For
the twelve months ended December 31, 2003, research and development expenses
before reimbursement were $82.9 million, including a $13.5 million write-off of
acquired in-process research and development expenses related to the acquisition
of Salus Therapeutics, Inc. in August 2003. Research and development expenses
incurred on the GenasenseTMproject for the twelve months ended
December 31, 2003 were $63.5 million, representing 91% of research and
development expenses net of the write-off of acquired in-process research and
development expenses.

Due
to the significant risks and uncertainties inherent in the clinical development
and regulatory approval processes, the nature, timing and costs of the efforts
necessary to complete projects in development are not reasonably estimable.
Results from clinical trials may not be favorable. Data from clinical trials are
subject to varying interpretation and may be deemed insufficient by the
regulatory bodies reviewing applications for marketing approvals. As such,
clinical development and regulatory programs are subject to risks and changes
that may significantly impact cost projections and timelines.

Selling,
  general and administrative expenses

Selling,
general and administrative expenses were $9.2 million for the three months ended
March 31, 2004 compared to $4.9 million for the three months ended March 31,
2003. Expenses have substantially increased due to the creation of a sales
force, Ganite® launch activities, a larger administrative staff
and higher general corporate expenses driven by business growth. There were no
sales and marketing related expenses reimbursable at 100% pursuant to our
collaborative agreement with Aventis for the three months ended March 31, 2004,
as sales and marketing related expenses related to GenasenseTM are
incurred by, billed to and paid by Aventis.

Aventis
  Reimbursement

Under
the Collaborative Agreement with Aventis, (see Note 10 to our financial
statements), Aventis will pay 75% of U.S. NDA-directed development costs
incurred by either Genta or Aventis and 100% of all other development, marketing
and sales costs incurred within the U.S. and elsewhere as subject to the
Collaborative Agreement. A breakdown of the various third-party, drug supply
costs and internal costs of scientific and technical personnel, (Full-Time
Equivalents or FTEs) that Aventis is required to
reimburse under our collaborative agreement with Aventis, follows:

|($
      thousands)              |  |  | March
      31, |      
|-------------------------------- |  |  | --------------- | -----
|Reimbursement
      to Genta     |  |  | 2004            |      
|Third-party
      costs          |  |  | $               | 6,363
|Drug
      supply costs          |  |  |                 | (244 
|FTEs                            |  |  |                 | 1,731
|                                 |  |  |                 |      
|Amount
      due to Genta        |  |  |                 | 7,850
|                                 |  |  |                 |      
|Reimbursement
      to Aventis   |  |  |                 | (417 
|                                 |  |  |                 |      
|                                 |  | 
|Net reimbursement
      to Genta |  |  | $               | 7,433
|                                 |  |  |                 |      

Reimbursement
to Aventis is comprised of our 25% share of third party costs incurred by
Aventis and internal costs of Aventiss scientific and technical personnel.

Other
  Income

Net
other income for the three months ended March 31, 2004 declined $0.3 million, or
93% from the comparable period in 2003, principally as a result of lower
investment balances and higher borrowings from Aventis (see Note 13 to our
financial statements).

17

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Net
  Loss

Genta
incurred a net loss of $12.5 million, or $0.16 per share, for the three months
ended March 31, 2004, compared to a net loss of $9.6 million, or $0.13 per
share, for the three months ended March 31, 2003. The increase in net loss and
per share net loss to common shareholders was primarily due to increased
selling, general and administrative expenses described above.

Liquidity
and Capital Resources

Since
inception, we have financed our operations primarily through private placements
and public offerings of our equity securities. Cash provided from these
offerings totaled approximately $278.8 million through March 31, 2004, including
net proceeds of $71.0 million received in 2002 and $32.2 million received in
2001. At March 31, 2004, the Company had cash, cash equivalents and marketable
securities totaling $67.5 million compared to $103.3 million at March 31, 2003.

During
the first quarter of 2004, cash flow used in operating activities was $14.3
million, primarily resulting from a net loss of $12.5 million. The company had
proceeds of $33.7 million from sale of marketable securities. At March 31, 2004,
we had cash and cash equivalents totaling $36.1 million compared to $52.0
million at March 31, 2003. The decrease in our cash and cash equivalents was
primarily due to cash used to fund our operations.

During
the first quarter of 2004, the Company used approximately $6.2 million related
to increases in inventory, attributable to the capitalization of
GenasenseTM inventory in anticipation of the launch of this product
and an increase in Ganite® raw material inventory to support
increased sales activity of the product. We evaluate our ending inventories on a
quarterly basis for excess quantities, impairment of value and obsolescence.

In
March 2003, Genta and Aventis negotiated a line of credit for an amount up to
$40.0 million which terminates with respect to additional borrowings on the
earlier to occur of FDA approval of GenasenseTM or December 31, 2004.
Loans under this line of credit are subject to repayment six months after
termination. As of March 31, 2004, approximately $4.6 million remained available
under this line of credit. FDA approval of GenasenseTM would trigger
a milestone payment from Aventis of $75.0 million and an obligation by Aventis
to purchase, at our option, $20.0 million of convertible notes from Genta.
Management believes that at the current rate of spending, primarily in support
of ongoing and anticipated clinical trials, and after considering expense
reimbursement and the line of credit provided by Aventis, we should have
sufficient cash funds to maintain our present operations through 2004.

Our
principal expenditures relate to our research and development activities, which
include our ongoing and future clinical trials. We expect these expenditures to
continue. We expect increased total expenditures, prior to expense
reimbursement, for clinical trials and drug supply related to
GenasenseTM as a result of our collaboration agreement with Aventis.
In addition, expenditures associated with other products under development by us
may increase as research and development activities become more focused and as
other clinical trials are initiated.

If
we successfully secure sufficient levels of collaborative revenues and other
sources of financing, we expect to use such financing to continue to expand our
ongoing research and development activities, pre-clinical testing and clinical
trials, costs associated with the market introduction of potential products and
expansion of our administrative activities.

We
anticipate that significant additional sources of financing, primarily expense
reimbursement from Aventis, will be required in order for us to continue our
planned operations. We also anticipate seeking additional product development
opportunities through potential acquisitions or investments. Such acquisitions
or investments may consume cash reserves or require additional cash or equity.
Our working capital and additional funding requirements will depend upon
numerous factors, including: (i) the progress of our research and development
programs; (ii) the timing and results of pre-clinical testing and clinical
trials; (iii) the level of resources that we devote to sales and marketing
capabilities; (iv) technological advances; (v) the activities of competitors;
and (vi) our ability 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.

18

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Recent
Accounting Pronouncements

In
May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of Liabilities, Equity, or Both. This
limited scope statement prescribes changes to the classification of mandatorily
redeemable preferred stock, preferred securities of subsidiary trusts and the
accounting for forward purchase contracts issued by a company in its own stock
among other issues. SFAS No. 150 does not apply to features that are embedded in
a financial instrument that is not a derivative in its entirety and requires all
preferred securities of subsidiary trusts to be classified as debt on the
consolidated balance sheet and the related dividends as interest expense. The
Company adopted the provisions of SFAS No. 150, including the deferral of
certain effective dates as a result of the provisions of FASB Staff Position
150-3, Effective Date, Disclosures, and Transition for Mandatorily Redeemable
Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily
Redeemable Noncontrolling Interests Under FASB Statement No. 150 Accounting for
Certain Financial Instruments with Characteristics of Both Liabilities and
Equity. The adoption of this statement did not have any impact on the
Companys results of operations, financial position or cash flows.

In
April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. In
particular, SFAS No. 149 (1) clarifies under what circumstances a contract with
an initial net investment meets the characteristic of a derivative discussed in
paragraph 6(b) of SFAS No. 133, (2) clarifies when a derivative contains a
financing component, (3) amends the definition of an underlying to conform it to
language used in FIN 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others, and (4) amends certain other existing pronouncements. SFAS No. 149
is to be applied prospectively to contracts entered into or modified after June
30, 2003, with certain exceptions, and for hedging relationships designated
after June 30, 2003. The adoption of this statement did not have any impact on
the Companys results of operations, financial position or cash flows.

In
January 2003, the FASB issued Interpretation No. 46 Consolidation of Variable
Interest Entities. This interpretation defines when a business must
consolidate a variable interest entity. This interpretation applies immediately
to variable interest entities created after January 31, 2003 and became
effective for all other transactions as of July 1, 2003. However, in October
2003 the FASB permitted companies to defer the July 1, 2003 effective date to
December 31, 2003. Again in December 2003, the FASB permitted companies to defer
the December 31, 2003 effective date, in certain circumstances, to the first
interim or annual period ending after March 15, 2004. The Company has determined
that it is not reasonably probable that it will be required to consolidate or
disclose information about a variable interest entity.

Item
  3. Quantitative and Qualitative Disclosures about Market Risk

Our
carrying values of cash, marketable securities, accounts payable, accrued
expenses and debt are a reasonable approximation of their fair value. The
estimated fair values of financial instruments have been determined by us using
available market information and appropriate valuation methodologies (see Note 2
to our financial statements).

However,
considerable judgment is required in interpreting market data to develop the
estimates of fair value. Accordingly, the estimates utilized in the consolidated
financial statements are not necessarily indicative of the amounts that we could
realize in a current market exchange. We have not entered into, and do not
expect to enter into, financial instruments for trading or hedging purposes. We
do not currently anticipate entering into interest rate swaps and/or similar
instruments.

19

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Gentas
primary market risk exposure with regard to financial instruments is to changes
in interest rates, which would impact interest income earned on such
instruments. We have no material currency exchange or interest rate risk
exposure as of March 31, 2004. Therefore there will be no ongoing exposure to
material adverse effect on our business, financial condition or results of
operation for sensitivity to changes in interest rates or to changes in currency
exchange rates.

Item
  4. Controls and Procedures

Evaluation
of disclosure controls and procedures.Gentas Chief Executive Officer
and Chief Financial Officer, after evaluating the effectiveness of the
Companys disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered
by this report (the Evaluation Date), have concluded that as of the
Evaluation Date, our disclosure controls and procedures were adequate and
designed to ensure that material information relating to the Company would be
made known to them by others within the Company.

Changes
in internal controls.There were no significant changes in our internal
controls or, to our knowledge, in other factors that could significantly affect
the Companys disclosure controls and procedures during the period covered
by this report.

20

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PART
II      OTHER INFORMATION

Item
  1. Legal Proceedings

In
the first week of May, several complaints were filed in the United States
District Court for the District of New Jersey against us and certain of our
principal officers and directors on behalf of purported classes of our
shareholders who purchased our securities during several class periods. The
complaints generally allege that we and certain of our principal officers and
directors violated the federal securities laws by issuing materially false and
misleading statements regarding GenasenseTM for the treatment of
advanced melanoma that had the effect of artificially inflating the market price
of our securities. The complaints in the various actions seek monetary damages
in an unspecified amount and seek recovery of plaintiffs costs and
attorneys fees. All of these actions are in their earliest stages and we
intend to defend them vigorously.

Item
  6. Exhibits and Reports on Form 8-K

(a) Exhibits

|Exhibit
      Number |  | Description
      of Document                                                                                                                                                                                                   
|-------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1.a                |  | Restated Certificate of Incorporation of the Company (incorporated by
        reference to Exhibit 3(i).1 to the Companys Annual Report on Form
        10-K for the year ended December 31, 1995, Commission File No. 0-19635)

|3.1.b |  | Certificate
of Designations of Series D Convertible  Preferred Stock of the Company (incorporated  by
reference to Exhibit 3(i) to the  Companys  Current  Report on Form 8-K filed on
February  28, 1997, Commission File No. 0-19635)
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.c |  | Certificate
of Amendment of Restated  Certificate of Incorporation  of the Company  (incorporated  by
reference to Exhibit 3(i).3 to the Companys  Annual Report on Form 10-K for the
year ended  December 31, 1999, Commission File No. 0-19635)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.d |  | Amended
Certificate  of  Designations  of Series D  Convertible  Preferred  Stock of the Company
(incorporated  by reference to Exhibit 3(i).4 to the Companys  Annual Report on
Form 10-K for  the year ended December 31, 1999, Commission File No. 0-19635)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.e |  | Certificate
of Increase of Series D Convertible  Preferred Stock of the Company  (incorporated by
reference to Exhibit  3(i).5 to the  Companys  Annual  Report on Form 10-K for the
year ended  December 31, 1999, Commission File No. 0-19635)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.f |  | Certificate
of Amendment of Restated  Certificate of Incorporation  of the Company  (incorporated  by
reference to Exhibit 3(i).4 to the Companys  Annual Report on Form 10-K for the
year ended  December 31, 1998, Commission File No. 0-19635)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.g |  | Certificate
of Amendment of Restated  Certificate of Incorporation  of the Company  (incorporated  by
reference to Exhibit 3(i).3 to the Companys  Annual Report on Form 10-K for the
year ended  December 31, 1998, Commission File No. 0-19635)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.h |  | Certificate
of Amendment of Restated  Certificate of Incorporation  of the Company  (incorporated  by
reference to Exhibit 3(i).8 to the Companys  Annual Report on Form 10-K for the
year ended  December 31, 1999, Commission File No. 0-19635)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.i |  | Certificate
of Amendment of Restated  Certificate of Incorporation  of the Company  (incorporated  by
reference to Exhibit 3.1.i to the Companys  Registration Statement on Form S-1,
Commission  File No. 333-110238)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.j |  | Certificate
of Amendment of Restated  Certificate of Incorporation  of the Company  (incorporated  by
reference to Exhibit 3.1.j to the Companys  Registration Statement on Form S-1,
Commission  File No. 333-110238)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 |  | Amended
and Restated Bylaws of the Company  (incorporated  by reference to Exhibit 3(ii).1 to the
Companys  Annual Report on Form 10-K for the year ended  December 31, 1998,
Commission  File  No. 0-19635)
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|31.1 |  | Certification
by Chief Executive  Officer pursuant to Section 302 of the  Sarbanes-Oxley  Act of  2002
|---- |  | ------------------------------------------------------------------------------------------------------

21

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|Exhibit
      Number |  | Description
      of Document                                                                             
|-------------------- |  | ----------------------------------------------------------------------------------------------------------
|31.2                 |  | Certification by Chief Financial Officer pursuant to Section 302 of the
        Sarbanes-Oxley Act of 2002

|32.1 |  | Certification
by Chief Executive Officer pursuant to 18 U.S.C.  Section 1350, as adopted pursuant  to
Section 906 of  the Sarbanes-Oxley Act of 2002
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

|32.2 |  | Certification
by Chief Financial Officer pursuant to 18 U.S.C.  Section 1350, as adopted pursuant  to
Section 906 of  the Sarbanes-Oxley Act of 2002
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

22

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SIGNATURES

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

|      |              | Genta
      Incorporated
|----- | ------------ | ------------------------
|      |              |                         
|Date: | May 10, 2004 | By:                     
|      |              |                         
|      |              |                         
|      |              |                         
|      |              |                         
|      |              |                         
|Date: | May 10, 2004 | By:                     
|      |              |                         
|      |              |                         
|      |              |                         

23

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Exhibit Index

|Exhibit
      Number |  | Description
      of Document                                                                                                                                                                                                    | Sequentially 
      Numbered Pages
|-------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------
|3.1.a                |  | Restated Certificate of Incorporation of the Company (incorporated by
        reference to Exhibit 3(i).1 to the Companys Annual Report on Form
        10-K for the year ended December 31, 1995, Commission File No. 0-19635) |                                   

|3.1.b |  | Certificate of Designations of Series D Convertible Preferred Stock of
        the Company (incorporated by reference to Exhibit 3(i) to the Companys
        Current Report on Form 8-K filed on February 28, 1997, Commission File
        No. 0-19635) | 
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.c |  | Certificate of Amendment of Restated Certificate of Incorporation of the
        Company (incorporated by reference to Exhibit 3(i).3 to the Companys
        Annual Report on Form 10-K for the year ended December 31, 1999, Commission
        File No. 0-19635) | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.d |  | Amended
        Certificate of Designations of Series D Convertible Preferred Stock of
        the Company (incorporated by reference to Exhibit 3(i).4 to the Companys
        Annual Report on Form 10-K for the year ended December 31, 1999, Commission
        File No. 0-19635) | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.e |  | Certificate
        of Increase of Series D Convertible Preferred Stock of the Company (incorporated
        by reference to Exhibit 3(i).5 to the Companys Annual Report on
        Form 10-K for the year ended December 31, 1999, Commission File No. 0-19635) | 
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 

|3.1.f |  | Certificate
        of Amendment of Restated Certificate of Incorporation of the Company (incorporated
        by reference to Exhibit 3(i).4 to the Companys Annual Report on
        Form 10-K for the year ended December 31, 1998, Commission File No. 0-19635) | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.g |  | Certificate
        of Amendment of Restated Certificate of Incorporation of the Company (incorporated
        by reference to Exhibit 3(i).3 to the Companys Annual Report on
        Form 10-K for the year ended December 31, 1998, Commission File No. 0-19635) | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.h |  | Certificate
        of Amendment of Restated Certificate of Incorporation of the Company (incorporated
        by reference to Exhibit 3(i).8 to the Companys Annual Report on
        Form 10-K for the year ended December 31, 1999, Commission File No. 0-19635) | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.i |  | Certificate
        of Amendment of Restated Certificate of Incorporation of the Company (incorporated
        by reference to Exhibit 3.1.i to the Companys Registration Statement
        on Form S-1, Commission File No. 333-110238) | 
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.j |  | Certificate
        of Amendment of Restated Certificate of Incorporation of the Company (incorporated
        by reference to Exhibit 3.1.j to the Companys Registration Statement
        on Form S-1, Commission File No. 333-110238) | 
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.2 |  | Amended
        and Restated Bylaws of the Company (incorporated by reference to Exhibit
        3(ii).1 to the Companys Annual Report on Form 10-K for the year
        ended December 31, 1998, Commission File No. 0-19635) | 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|31.1 |  | Certification
        by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002 | 
|---- |  | ------------------------------------------------------------------------------------------------------------------ | 

|31.2 |  | Certification
        by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002 | 
|---- |  | ------------------------------------------------------------------------------------------------------------------ | 

|32.1 |  | Certification
        by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | 
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|32.2 |  | Certification
        by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | 
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

24

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(b) Reports on
Form 8-K.

On
February 11, 2004 the Company furnished a current report on Form 8-K disclosing
a press release regarding the Companys forth quarter and year-end 2003
financial results and developments.

On
April 30, 2004 the Company filed a current report on form 8-K announcing that
the United States Food and Drug Administration (FDA) had posted on its website
briefing documents for the Oncologic Drugs Advisory Committee (ODAC) meeting on
Monday, May 3, 2004

25

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