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


                                    FORM 10-Q

                                   (Mark One)

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

                  For the quarterly period ended March 31, 1999

                                       OR

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

                         Commission File Number 0-19635


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

                   Delaware                                33-0326866        
       (State or other jurisdiction of                  (I.R.S. Employer     
        incorporation or organization)               Identification Number)  
                                                                      
                                           
        99 Hayden Avenue, Suite 200
          Lexington, Massachusetts                         02421-7966     
 (Address of principal executive offices)                  (Zip Code)     


                                 (781) 860-5150
              (Registrant's telephone number, including area code)


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

                         Yes _X_                  No ___

     As of May 3, 1999, the  registrant  had  15,401,275  shares of common stock
outstanding.


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<PAGE>

                               Genta Incorporated
                               INDEX TO FORM 10-Q



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

            Condensed Consolidated Balance Sheets at December 31, 1998
                     and March 31, 1999                                       3

            Condensed Consolidated Statements of Operations for the
                     Three  Months Ended March 31, 1998 and 1999              4

            Condensed Consolidated Statements of Cash Flows for the
                     Three Months Ended March 31, 1998 and 1999               5

            Notes to Condensed Consolidated Financial Statements              6

Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations                                   9


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                   22

Item 6.  Exhibits and Reports on Form 8-K                                    23



SIGNATURES                                                                   24



                                        2

<PAGE>



                               Genta Incorporated
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  December 31,        March 31,
                                                                                 ------------------------------
                                     ASSETS                                           1998             1999
                                                                                 ------------------------------
<S>                                                                              <C>              <C>
Current assets:
   Cash and cash equivalents .................................................   $   1,566,288    $     638,990
   Short term investments ....................................................         892,372             --
   Other receivables .........................................................            --            261,000
   Prepaid expenses ..........................................................         405,700          177,515
   Property held for sale ....................................................         290,000             --
   Other current assets ......................................................         176,700          437,492
   Net current assets of discontinued operations .............................       2,606,304        2,536,846
                                                                                 ------------------------------
Total current assets .........................................................       5,937,364        4,051,843
                                                                                 ------------------------------
Property and equipment, net ..................................................         148,245           27,799
Intangibles, net .............................................................       1,460,383        1,360,824
Deposits and other assets ....................................................           5,301            6,501
                                                                                 ------------------------------
Total assets .................................................................   $   7,551,293    $   5,446,967
                                                                                 ==============================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable ..........................................................   $     432,116    $     359,863
   Payable to research institutions ..........................................         635,661          635,661
   Accrued compensation ......................................................          84,888          137,076
   Other accrued expenses ....................................................         580,779          779,450
   Net liabilities of liquidated foreign subsidiary ..........................         574,812          574,812
                                                                                 ------------------------------
Total current liabilities ....................................................       2,308,256        2,486,862
                                                                                 ------------------------------

Deficit in joint venture .....................................................       2,284,018             --
Stockholders' equity:
   Preferred stock; 5,000,000 shares authorized, convertible
     preferred shares outstanding:
     Series A convertible preferred stock, $.001 par value;
       447,600 and 429,600 shares issued and outstanding at
       December 31, 1998 and March 31, 1999, respectively, liquidation
       value is $25,776,000 at March 31, 1999 ................................             448              430
     Series D convertible preferred stock, $.001 par value; 186,021 and 144,341
       shares issued and outstanding at December 31, 1998 and March 31, 1999,
       respectively; liquidation value is $20,207,740 at March 31, 1999 ......             186              144
   Common stock, $.001 par value; 70,000,000 shares authorized;
     10,426,215 and 15,030,423 shares issued and outstanding at
     December 31, 1998 and March 31, 1999, respectively ......................          10,426           15,030
   Additional paid-in capital ................................................     130,627,251      131,594,944
   Accumulated deficit .......................................................    (132,053,657)    (132,258,847)
   Accrued dividends payable .................................................       5,108,790        5,271,199
   Deferred compensation .....................................................        (734,425)      (1,662,795)
                                                                                 ------------------------------
Total stockholders' equity ...................................................       2,959,019        2,960,105
                                                                                 ------------------------------
Total liabilities and stockholders' equity ...................................   $   7,551,293    $   5,446,967
                                                                                 ==============================
</TABLE>

                            See accompanying notes.
                                        3

<PAGE>



                               Genta Incorporated
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                   Three Months Ended March 31,
                                                  -----------------------------
                                                      1998             1999
                                                  ------------     ------------
                                                   (restated)
Revenues:
   Collaborative research and development ....    $     17,396     $       --
                                                  ------------     ------------
                                                        17,396             --

Cost and expenses:
   Research and development ..................         813,691        1,089,966
   General and administrative ................         995,723        1,112,412
                                                  ------------     ------------
                                                     1,809,414        2,202,378
                                                  ------------     ------------
Loss from operations .........................      (1,792,018)      (2,202,378)
Equity in net (loss) income of
  joint venture ..............................        (155,744)       2,284,018
Other income (expense):
   Interest income ...........................          85,767           51,864
   Interest expense ..........................          (3,430)            (173)
   Other expense .............................            --           (149,114)
                                                  ------------     ------------
Net loss from continuing operations ..........      (1,865,425)         (15,783)
Income (loss) from discontinued operations ...         103,060         (189,407)
                                                  ------------     ------------
Net loss .....................................      (1,762,365)        (205,190)
Dividends accrued on preferred stock .........            --           (342,409)
                                                  ============     ============
Net loss applicable to common shares .........    $ (1,762,365)    $   (547,599)
                                                  ============     ============
Net (loss) income per share
  Continuing operations ......................    $      (0.33)    $      (0.03)
  Discontinued operations ....................            0.02            (0.01)
                                                  ------------     ------------
Net loss per common share ....................    $      (0.31)    $      (0.04)
                                                  ============     ============
Shares used in computing net
  loss per common share ......................       5,727,035       12,902,237
                                                  ============     ============


                            See accompanying notes.
                                        4

<PAGE>


                               Genta Incorporated
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                 Three Months Ended March 31,
                                                                 ---------------------------
                                                                    1998           1999
                                                                 -----------    -----------
                                                                  (restated)
<S>                                                              <C>            <C>         
Operating activities
Net loss .....................................................   $(1,762,365)   $  (205,190)
Items reflected in net loss not requiring cash:           
   Depreciation and amortization .............................       289,782        259,862
   Equity in net loss (gain) of joint venture ................       155,744     (2,284,018)
   Compensation expense related to stock options .............          --           76,134
   Loss on sale of fixed assets ..............................          --          149,026
Changes in operating assets and liabilities ..................      (295,783)       218,286
                                                                 -----------    -----------
Net cash used in operating activities ........................    (1,612,622)    (1,785,900)

Investing activities
Maturities of short-term investments .........................       873,039        892,372
Purchase of property and equipment ...........................          --          (24,551)
Sale of property and equipment ...............................          --            5,087
Purchase of intangibles ......................................          --          (99,635)
Investment in and advances to joint venture ..................        (9,665)          --
Deposits and other ...........................................          --           (1,200)
                                                                 -----------    -----------
Net cash provided by investing activities ....................       863,374        772,073

Financing activities
Issuance of common stock upon exercise of warrants ...........          --           35,391
Proceeds from equipment conversion to lease ..................          --           60,085
Other ........................................................          --             --
                                                                 -----------    -----------
Net cash provided by financing activities ....................          --           95,476
                                                                 -----------    -----------
Increase/(Decrease) in cash and cash equivalents .............      (749,248)      (918,351)
Less cash at liqidated foreign subsidiary ....................          --           (8,947)
Cash and cash equivalents at beginning of period .............     1,202,668      1,566,288
                                                                 -----------    -----------
Cash and cash equivalents at end of period ...................   $   453,420    $   638,990
                                                                 ===========    ===========

Supplemental disclosures of cash flow information:
Interest paid ................................................   $     3,430    $       173
Supplemental schedule of noncash investing and
  financing activities:
Preferred stock dividends accrued ............................          --          342,409
Common stock issued in payment of dividends on preferred stock          --           18,597
</TABLE>


                            See accompanying notes.
                                        5

<PAGE>



                               Genta Incorporated
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1999
                                   (Unaudited)


(1)  Basis of Presentation

     The  unaudited  condensed   consolidated   financial  statements  of  Genta
Incorporated, a Delaware corporation (the "Company"), presented herein have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q. Accordingly,  they
do not  include  all of the  information  and note  disclosures  required  to be
presented  for  complete  financial  statements.   The  accompanying   financial
statements  reflect  all  adjustments   (consisting  only  of  normal  recurring
accruals)  which  are,  in  the  opinion  of  management,  necessary  for a fair
presentation of the results for the interim periods presented.  Certain balances
in 1998  have  been  reclassified  to  conform  with the  presentation  in 1999.
Research and development and general and  administrative  expenses were restated
for the three months ended March 31, 1998 to properly  reflect  amortization and
depreciation expense. Also, equity in net loss of joint venture was restated for
the three months ended March 31, 1998.

     These 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, 1998, as amended (the "1998
Form 10-K").

     The Company has experienced significant quarterly fluctuations in operating
results and it expects that these fluctuations in revenues,  expenses and losses
will  continue,  although, as a  result  of  the  sale  of the  business  of JBL
Scientific,  Inc. ("JBL"),  a subsidiary of the Company which was engaged in the
specialty chemicals business, revenues are expected to decrease.

(2)  Discontinued Operations

     On March 19, 1999,  the Company  entered into an Asset  Purchase  Agreement
with  Promega  Corporation  ("Promega"),  whereby a wholly owned  subsidiary  of
Promega acquired substantially all of the assets and assumed certain liabilities
of JBL for approximately  $5.0 million in cash,  including  $250,000 that may be
withheld  by Promega  while the closing  balance  sheet of JBL is  evaluated,  a
promissory   note  for  $1.2  millon   maturing   in  June  2000,   and  certain
pharmaceutical  development  services  in support of the  Company's  development
activities.  The  purchase  price may be reduced  as a result of a  post-closing
audit of JBL's  balance  sheet as at the closing  date (which  would result in a
dollar-for-dollar  reduction  of the  purchase  price to the extent that the net
book value of the  purchased  assets is less than  $1,768,000)  adjustments  and
indemnification obligations.

     As a  result  of the  sale  of  JBL's  business,  the  Company's  specialty
biochemical  manufacturing  segment  (JBL) has been  presented  as  discontinued
operations.  The assets and liabilities relating to the discontinued  operations
are  included  in net  assets of  discontinued  operations  in the  consolidated
balance  sheets at  December  31,  1998 and  March  31,  1999.  The  results  of
operations for the discontinued segment are included in discontinued  operations
in the  consolidated  statements of operations  for the three months ended March
31,  1998 and 1999  (any  loss  incurred  from  March  19,  1999 was  considered
immaterial).  In  connection  with the sale of JBL's  business and pursuant to a
lease  termination  agreement,  the  Company  granted  stock  options to acquire
450,000 shares of the Company's common stock, par value $.001 per share ("Common
Stock"),  to the owners of the building  previously leased to JBL. Those options
will  be  accounted  for  pursuant  to  guidelines  in  Statement  of  Financial
Accounting   Standards   ("SFAS")   No.   123,   "Accounting   for   Stock-Based
Compensation,"  using the Black-Scholes  method and have an approximate value of
$1.1  million  which will be  charged  against  the gain on the sale of JBL.  In
addition,  there were 252,300  options  granted to the employees of JBL upon the
closing of the sale of JBL in  connection  with an ongoing  service  arrangement
between Promega and the Company, which will be accounted for under variable plan
accounting pursuant to SFAS No. 123 and the Black-


                                        6

<PAGE>



Scholes  guidelines.  The  estimated  value of these  options will be charged to
Research and Development  expense until the vesting date, which will be no later
than one year from the closing date of the sale.

     The  closing  of the  sale of JBL was  completed  on May 10,  1999  with an
estimated  gain on the  sale of  approximately  $1.5  million,  based  upon  the
purchase price of JBL less its net assets and costs and expenses associated with
the sale.  Because the Company is  continuing to evaluate the costs and expenses
associated with the sale of JBL, the gain on the sale is subject to change.

     Net current assets of discontinued operations consisted of the following:

                                        December 31, 1998       March 31, 1999
                                        -----------------       --------------
Accounts receivable, net ............     $   832,018             $   494,859
Inventories, net ....................         963,611                 971,573
Property and equipment, net .........         763,082                 626,681
Other assets ........................         897,399                 958,034
Liabilities .........................        (849,806)               (514,301)
                                          -----------             -----------
         Total ......................     $ 2,606,304             $ 2,536,846
                                          ===========             ===========

     Operating results of the discontinued segment consisted of the following:

                                                  Three Months Ended
                                                      March 31,
                                            ------------------------------
                                                1998               1999
                                            -----------        -----------
     Product sales ..................       $ 1,602,179        $ 1,273,598
     Operating expenses .............        (1,499,869)        (1,461,553)
     Other income (expense) .........               750             (1,452)
                                            -----------        -----------
     Income (loss) ..................       $   103,060        $  (189,407)
                                            ===========        ===========


     Three customers  accounted for an aggregate of approximately 37% and 39% of
product   sales  during  the  three  months  ended  March  31,  1998  and  1999,
respectively.  One other  customer,  who  accounted for less than 10% of product
sales in 1998, accounted for approximately 27% of product sales during the three
months ended March 31, 1999.

(3)  Net Loss Per Common Share

     Under SFAS No.  128,  "Earnings  per  Share,"  the  Company is  required to
present basic and diluted  earnings per share if applicable.  Basic earnings per
share  includes the weighted  average  number of shares  outstanding  during the
period.  Diluted  earnings per share  includes the  weighted  average  number of
shares  outstanding and gives effect to potentially  dilutive common shares such
as options, warrants and convertible debt and preferred stock outstanding.

     Net loss per common  share for the three  months  ended  March 31, 1998 and
1999 is  based  on the  weighted  average  number  of  shares  of  Common  Stock
outstanding  during the  periods.  Basic and diluted loss per share are the same
for all periods presented as potentially


                                        7

<PAGE>



dilutive  securities,  including  options,  warrants and  convertible  preferred
stock,  have not been  included  in the  calculation  of the net loss per common
share as their effect is antidilutive.

(4)  Stockholders' Equity

     During the three months ended March 31, 1999, an aggregate of 41,680 shares
of the Company's Series D Convertible Preferred Stock, par value $.001 per share
("Series D Preferred  Stock"),  were  converted at the option of the  respective
holders  thereof  into an  aggregate  of  4,436,118  shares of Common Stock at a
conversion  price of $0.94375 per share.  An  aggregate of 18,000  shares of the
Company's  Series A  Preferred  Stock,  par value  $.001 per  share  ("Series  A
Preferred  Stock"),  were  converted  at the option of the holders of the shares
into an  aggregate of 130,590  shares of Common  Stock at a conversion  price of
$8.27 per share.  An  aggregate  of 37,500  shares of Common  Stock were  issued
pursuant to warrant  exercises.  In addition to the option  grants  described in
Note 2 above, to the owners of the building  previously leased by JBL and to the
employees of JBL, options to acquire 675,000 shares of Common Stock were granted
to an employee of the  Company at an exercise  price below fair market  value at
the date of grant resulting in deferred compensation of approximately  $987,000.
This deferred compensation will be amortized over a period of four years.

     In 1999,  the Board of  Directors  of the Company  and  certain  holders of
Common Stock, Series A Preferred Stock and Series D Preferred Stock approved, in
accordance with Delaware law, an amendment to the Company's Restated Certificate
of  Incorporation  to remove the  "Fundamental  Change"  redemption  right.  The
Company  recently  distributed to its  stockholders an Information  Statement on
Form 14C  describing  this  stockholder  action  and has  formally  amended  the
Restated  Certificate of Incorporation after the expiration of the 20-day period
provided  for in Rule 14c-5  promulgated  under the  Securities  Exchange Act of
1934, as amended (the "Exchange Act").

(5)  Genta Jago

     On March 4, 1999,  the Company and  SkyePharma (on behalf of itself and its
affiliates)  entered  into an interim  agreement  (the  "Interim JV  Agreement")
pursuant to which the Company was released from all liability relating to unpaid
development  costs and  funding  obligations  of Genta Jago,  the joint  venture
between the Company and  SkyePharma.  SkyePharma  agreed to be  responsible  for
substantially  all the obligations of the joint venture to third parties and for
the further  development of the joint  venture's  products,  with any net income
resulting  therefrom  to be  allocated in  agreed-upon  percentages  between the
Company and  SkyePharma.  As a result of the Interim JV  Agreement,  the Company
wrote off its equity interest in the net loss of the joint venture and, as such,
recorded a gain of  approximately  $2.3 million for the three months ended March
31, 1999.

(6)  Legal Proceedings

     On June 4, 1998, the Company's  statutory  process agent received a Summons
and Complaint in a lawsuit brought by Johns Hopkins University ("Johns Hopkins")
against the  Company in  Maryland  Circuit  Court for  Baltimore  City (Case No.
98120110).  Johns Hopkins alleges in the Complaint that the Company has breached
the Johns  Hopkins  Agreement  and owes it  licensing  royalty  fees and related
expenses in the amount of $308,832.  Johns Hopkins also alleges the existence of
a separate March 1993 letter  agreement  wherein the Company agreed to support a
fellowship  program at the Johns Hopkins School of Hygiene and Public Health and
the Company's breach thereof,  with damages of $326,829. On August 10, 1998, the
Company's  statutory process agent received a Summons and Complaint in a related
lawsuit brought by the Ts'o/Miller Partnership and others against the Company in
the same court (Case No. 98182113).  The Ts'o/Miller  Partnership claims that it
is owed  licensing  royalty  fees in the  amount of  $287,671.  The  Company  is
currently  in  settlement  negotiations.  The Company  believes  that no further
accrual should be necessary in connection with this settlement.

     In October 1996, JBL retained a chemical  consulting firm to advise it with
respect to an  incident of soil and  groundwater  contamination  (the  "Spill").
Sampling  conducted at the JBL facility  revealed the presence of chloroform and
perchloroethylenes  ("PCEs")  in the  soil  and  groundwater  at  this  site.  A
quarterly  groundwater   monitoring  program  is  being  conducted,   under  the
supervision  of the  California  Regional  Water  Quality  Control Board for the
purposes of determining whether the levels of chloroform and PCEs have


                                        8

<PAGE>



decreased over time. The results of the latest sampling conducted show that PCEs
and  chloroform  have  decreased  in all but one of the  monitoring  sites.  The
Company has agreed to indemnify  Promega in respect of this matter.  The Company
believes that any costs stemming from further  investigating or remediating this
contamination  will not have a material  adverse  effect on the  business of the
Company, although there can be no assurance thereof.

     JBL received notice on October 16, 1998 from Region IX of the Environmental
Protection  Agency  (the  "EPA") that it had been  identified  as a  potentially
responsible  party ("PRP") at the Casmalia  Disposal  Site,  which is located in
Santa Barbara,  California.  JBL has been  designated as a de minimis PRP by the
EPA. The EPA currently  estimates that de minimis PRPs will be require to pay as
little as $75,000 and as much as $750,000 to settle their  potential  liability,
depending upon the volume of wastes  attributed to them. The Company received an
estimated volume calculation from the EPA, and a response,  which is due on June
9, 1999,  is currently  under review.  While the terms of a settlement  have not
been finalized, they should contain standard contribution protection and release
language. The Company has accrued $75,000 during 1998. The Company believes that
any costs stemming from further  investigating or remediating this contamination
will not have a material adverse effect on the business of the Company, although
there can be no assurance  thereof.  The Company has agreed to indemnify Promega
in respect of this matter.

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

Overview

     Since its inception in February 1988, the Company has devoted its principal
efforts toward drug discovery,  research and  development.  The Company has been
unprofitable  to  date  and,  even  if it  obtains  financing  to  continue  its
operations,  expects to incur substantial  operating losses for the next several
years  due to  continued  requirements  for  ongoing  research  and  development
activities,   preclinical  and  clinical  testing  activities,   and  regulatory
activities, and for the possible establishment of manufacturing activities and a
sales and marketing  organization.  From the period since its inception to March
31, 1999, the Company has incurred a cumulative net loss of approximately $132.3
million.  The Company has  experienced  significant  quarterly  fluctuations  in
operating results and it expects that these  fluctuations in revenues,  expenses
and losses will continue,  although,  as a result of the sale of JBL's business,
revenues are expected to decrease.

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

Results of Operations

     The following  discussion of results of operations relates to the Company's
continuing business.

     Operating  revenues  totaled  $17,396 for the three  months ended March 31,
1998 and  decreased to $0 for the same period in 1999.  The changes in operating
revenue have largely reflected the Company's lessened


                                        9

<PAGE>



involvement in Genta Jago development activities. The expenses relating to these
revenues are  recognized  as Costs and Expenses in the same period such that the
net effect on the  Company's  consolidated  financial  statements  is zero.  The
Company has reduced the breadth of its activities and focused its  resources  on
development of its lead AnticodeTM oligonucleotide, G3139.

     On March 19, 1999,  the Company  entered into an Asset  Purchase  Agreement
with  Promega,   whereby  a   wholly-owned   subsidiary   of  Promega   acquired
substantially all of the assets and assumed certain liabilities of JBL for cash,
a promissory note and certain pharmaceutical  development services in support of
the Company's development  activities.  See Note 2 to the Company's consolidated
financial  statements.  The sale of the assets of JBL was  completed  on May 10,
1999, and will result in a significant  decrease in ongoing revenues,  as all of
the Company's product sales have been attributable to JBL.

     Costs and expenses totaled  approximately  $1.8 million in the three months
ended March 31, 1998, and increased to  approximately  $2.2 million for the same
period in 1999.  Primarily,  the overall  increase  reflects greater activity in
clinical trials along with an increase in general and  administrative  for legal
and consulting expenses.

     Research and development expenses totaled approximately $0.8 million in the
three months ended March 31, 1998, and increased to  approximately  $1.1 million
for the same period in 1999. The increase in research and  development  expenses
is primarily  attributable to the cost associated with clinical trials including
related drug  supplies.  During the three months ended March 31, 1999,  $748,000
was recorded for clinical trials and for related drug supplies.

     It is anticipated  that research and  development  expenses may increase in
the  future,   assuming  the  Company  obtains  sufficient  financing,   as  the
development  program for G3139 expands and more patients are treated in clinical
trials at  higher  doses,  through  longer or more  treatment  cycles,  or both.
Furthermore,  the  Company  is  pursuing  other  opportunities  for new  product
development  candidates which, if successful,  will require additional  research
and development  expenses.  There can be no assurance,  however, that the trials
will  proceed in this manner or that the Company will  initiate new  development
programs.

     General and administrative expenses were approximately $1.0 million for the
three months ended March 31,  1998,  and  increased to $1.1 million for the same
period  in 1999.  The  increase  reflects  higher  legal  and  consulting  costs
associated  with  the  Company's   filings  with  the  Securities  and  Exchange
Commission  (the  "SEC") and  the costs  associated  with the relocation  of its
headquarters from California to Massachusetts.

     On March 4, 1999,  the Company and  SkyePharma (on behalf of itself and its
affiliates)  entered into the Interim JV Agreement pursuant to which the Company
was released from all liability relating to unpaid development costs and funding
obligations of Genta Jago, the joint venture between the Company and SkyePharma.
SkyePharma agreed to be responsible for substantially all the obligations of the
joint  venture to third  parties  and for the further  development  of the joint
venture's  products,  with any net income resulting therefrom to be allocated in
agreed-upon  percentages between the Company and SkyePharma.  As a result of the
Interim JV Agreement,  the Company wrote off its equity interest in the net loss
of the joint venture and, as such, recorded income of approximately $2.3 million
for the three months ended March 31, 1999.

     Other  expenses  include a loss on the sale of fixed  assets as a result of
the headquarter relocation.

     The Company's net loss from continuing  operations before accrued dividends
totaled approximately $0.02 million, or $0.00 per share of Common Stock, for the
three  months  ended  March 31,  1999  compared  to a net loss  from  continuing
operations of  approximately  $1.9 million,  or $0.33 per share of Common Stock,
for the same period in 1998.  During the three months ended March 31, 1999, as a
result of accrued  dividends on the Company's  preferred stock of  approximately
$0.34 million and a loss from  discontinued  operations of  approximately  $0.19
million the  Company's  net loss per common share was $0.04.  The  Company's net
loss for the three months ended March 31, 1999 was lower than those reported for
the comparable  period of 1998  primarily as a result of recording  nonrecurring
income of approximately  $2.3 million relating to its equity interest in the net
loss of the joint venture.



                                       10

<PAGE>



     Since the  formation  of Genta  Jago,  no products  have been  successfully
developed and marketed. Since the initial plans called for earlier introductions
and since there have been significant  changes in the market  environment  since
the Company entered into the joint venture,  there is reason to believe that any
products that may be marketed in the future could represent significantly poorer
financial  opportunities  than those that were anticipated in the earlier plans.
This  reduction  in  opportunity  derives  from  factors such as the presence of
direct  competitors  to Genta Jago's  products being in the  marketplace  before
Genta Jago, and increasing  pricing pressures on  pharmaceuticals,  particularly
multisource or generic products,  from payors such as reimbursers and government
buyers. On May 20, 1998, Genta Jago received notice from Apothecon that they had
terminated the agreement for the  development of  ketoprofen.  Apothecon  stated
that their decision to terminate was based on the facts that a competing generic
is already being  successfully  marketed,  other competitors  already have ANDAs
pending for their own generic  formulations  of such drug and they  consider the
GEOMATRIX(R)  capsule  size  competitively  disadvantageous.  These  factors may
adversely affect Genta Jago even if it is successful in developing products that
obtain  regulatory  approval.  As a result and in consideration of the Company's
need to reduce expenses and focus its efforts,  the Company is seeking to direct
its resources away from the joint venture to its Anticode(TM)  drug development,
specifically G3139, for the immediate future. On July 27, 1998,  SkyePharma PLC,
the parent  company to SkyePharma,  announced  that an ANDA for naproxen  sodium
filed by Brightstone Pharma, its U.S. sales and marketing  subsidiary,  had been
accepted  for filing by the FDA.  Brightstone  has a license  from Genta Jago to
market this product.

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

Liquidity and Capital Resources

     Since  inception,  the Company has financed its  operations  primarily from
private and public offerings of its equity securities.  Cash provided from these
offerings totaled  approximately $124.5 million through March 31, 1999. At March
31, 1999, the Company had cash,  cash  equivalents  and  short-term  investments
totaling  approximately  $0.6 million compared to approximately  $2.5 million at
December 31, 1998.

     The Company will need substantial  additional funds before it can expect to
realize significant  product revenue.  The Company projects that, at its current
rate of spending and for its current activities,  funds from the consummation of
the JBL sale and its existing cash funds will enable the Company to maintain its
present  operations  into the first  quarter  of 2000.  To the  extent  that the
Company is successful in accelerating  its  development of G3139,  expanding its
development  portfolio or acquiring or adding new  development  candidates,  the
current  cash  resources  will be consumed  at a greater  rate.  Similarly,  the
Company has recently hired additional  senior managers to direct the business of
the Company.  This will cause the rate of cash utilization to increase.  Certain
parties with whom the Company has agreements  have claimed  default and,  should
the Company be obligated to pay these claims or should the Company  engage legal
services to defend or negotiate its  positions or both,  its ability to continue
operations could be significantly reduced or shortened.  See "Certain Trends and
Uncertainties--Claims  of the Company's  Default Under Various  Agreements." The
Company anticipates that significant additional sources of financing,  including
equity  financings,  will be required  in order for the Company to continue  its
planned principal  operations.  The Company also anticipates  seeking additional
product development  opportunities from external sources.  Such acquisitions may
consume  cash  reserves  or require  additional  cash or equity.  The  Company's
working capital and additional  funding  requirements  will depend upon numerous
factors,  including:  (i) the progress of the Company's research and development
programs;  (ii) the  timing and  results of  preclinical  testing  and  clinical
trials;  (iii) the level of  resources  that the  Company  devotes  to sales and
marketing  capabilities;  (iv)  technological  advances;  (v) the  activities of
competitors;  and (vi) the  ability of the  Company to  establish  and  maintain
collaborative  arrangements with others to fund certain research and development
efforts, to conduct clinical trials, to obtain regulatory approvals and, if such
approvals are obtained, to manufacture and market products.  See "Certain Trends
and Uncertainties--Need for Additional Funds; Risk of Insolvency."

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


                                       11

<PAGE>



preclinical and clinical testing  activities,  the  manufacturing  and/or market
introduction  of  potential   products  and  expansion  of  its   administrative
activities.

     In the first three months ended March 31, 1999, the holders of an aggregate
of 41,680  shares of Series D Preferred  Stock  converted  those  shares into an
aggregate of 4,436,118  shares of Common Stock,  and the holders of an aggregate
of 18,000  shares of Series A Preferred  Stock  converted  those  shares into an
aggregate of 130,590 shares of Common Stock.

     As discussed in Note 2 to the Company's  consolidated financial statements,
the Company  entered into an Asset Purchase  Agreement with Promega on March 19,
1999.  Under the  agreement,  a  wholly-owned  subsidiary  of  Promega  acquired
substantially  all of the  assets and  assumed  certain  liabilities  of JBL for
approximately  $5.0 million in cash,  including $250,000 that may be withheld by
Promega  for  up to  sixty  days  while  the  closing  balance  sheet  of JBL is
evaluated,  a promissory note for $1.2 millon maturing in June 2000, and certain
pharmaceutical  development  services  in support of the  Company's  development
activities.  The  purchase  price may be reduced  as a result of a  post-closing
audit of JBL's  balance  sheet as at the closing  date (which  would result in a
dollar-for-dollar  reduction  of the  purchase  price to the extent that the net
book value of the purchased assets is less than $1,768,000) and  indemnification
obligations.

Impact of Year 2000

     Some older computer programs were written using two digits rather than four
to define  the  applicable  year.  As a result,  those  computer  programs  have
sensitive  software that recognizes a date using 00 as the year 1900 rather than
the year 2000 (the "Year 2000  Issue").  This  could  cause a system  failure or
miscalculations   causing  disruption  of  operations,   including  a  temporary
inability  to  process   transactions  or  engage  in  similar  normal  business
activities.

     The Company has completed its  assessment of whether it will have to modify
or replace  portions of its software so that its computer  systems will function
properly with respect to dates in the year 2000 and  thereafter.  The Company is
currently  implementing a plan to acquire and install new computer  hardware and
upgraded  software in its facilities that will  accommodate  dating beyond 1999.
The total year 2000  project cost is not expected to be material and is expected
to be  completed  not  later  than  October  31,  1999,  which  is  prior to any
anticipated impact on its operating systems.  The Company believes that with the
modifications to existing software and conversions to new software the Year 2000
Issue will not pose significant  operational  problems for its computer systems.
However,  if  such  modifications  and  conversions  are  not  made,  or are not
completed  timely,  the Year 2000 Issue could have a material  adverse effect on
the operations of the Company.

     The Company has initiated formal communications with all of its significant
suppliers to determine the extent to which the Company's  interface  systems are
vulnerable to the failure of those third-party  suppliers to remediate their own
Year 2000 Issues. If through such communication or otherwise the Company becomes
aware of any such  failure  and is not  satisfied  that  such  failure  is being
adequately  addressed,  it will  take  appropriate  steps  to  find  alternative
suppliers.  There is no assurance  that the systems of other  companies on which
the Company's systems rely will be timely converted and will not have a material
adverse effect on the Company's  systems.  The costs of the project and the date
on which the Company believes it will complete the Year 2000  modifications  are
based  on  management's  best  estimates,  which  were  derived  using  numerous
assumptions of future events,  including the continued  availability  of certain
resources and factors.  However,  there can be no assurance that these estimates
will  be  achieved  and  actual  results  could  differ  materially  from  those
anticipated.  Specific  factors  that  might  cause  such  material  differences
include,  but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer codes, and
similar uncertainties.

     It has  been  acknowledged  by  governmental  authorities  that  year  2000
problems have the  potential to disrupt  global  economies,  that no business is
immune from the potentially far-reaching effects of year 2000 problems, and that
it is difficult to predict with  certainty  what will happen after  December 31,
1999. Consequently,  it is possible that year 2000 problems will have a material
effect on the  Company's  business  even if the  Company  takes all  appropriate
measures to ensure that it and its key suppliers are year 2000 compliant.




                                       12

<PAGE>

Certain Trends and Uncertainties

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

Need for Additional Funds; Risk of Insolvency

     The Company's operations to date have consumed substantial amounts of cash.
The Company's  independent  auditors have included an  explanatory  paragraph in
their  report to the 1998 Form 10-K with  respect  to the  Company's  ability to
continue as a going concern.  See "Liquidity and Capital preclinical  [Global]."
The Company  will need to raise  substantial  additional  funds to continue  its
operations  and conduct  the costly and  time-consuming  research,  pre-clinical
development and clinical trials necessary to bring its products to market and to
establish  production and marketing  capabilities.  The Company  intends to seek
additional  funding  through  public or  private  financings,  including  equity
financings,  and through  collaborative  arrangements or the sale of key assets.
Adequate funds for these purposes, whether obtained through financial markets or
collaborative  or other  arrangements  with  corporate  partners  or from  other
sources, may not be available when needed or on terms acceptable to the Company.
Insufficient  funds may require the Company:  to delay,  scale back or eliminate
some or all of its research and product development  programs;  to license third
parties  to  commercialize  products  or  technologies  that the  Company  would
otherwise  seek to develop  itself;  to sell itself to a third  party;  to cease
operations;  or to declare  bankruptcy.  The Company's future cash  requirements
will be affected by results of research and development, results of pre-clinical
studies and  bioequivalence  and clinical trials,  relationships  with corporate
collaborators,  changes in the focus and direction of the Company's research and
development  programs,  competitive  and  technological  advances,  the  FDA and
foreign regulatory processes, and other factors.

Loss History; Uncertainty of Future Profitability.

     The Company has been unprofitable to date, incurring  substantial operating
losses associated with ongoing research and development activities, pre-clinical
testing,  clinical trials,  manufacturing  activities and development activities
undertaken by Genta Jago. From the period since its inception to March 31, 1999,
the Company has incurred a cumulative net loss of approximately  $132.3 million.
The Company has  experienced  significant  quarterly  fluctuations  in operating
results and expects that these  fluctuations  in  revenues,  expenses and losses
will continue, although, as a result of the sale of JBL's business, revenues are
expected to decrease. See "Certain Trends and Uncertainties--Need for Additional
Funds; Risk of Insolvency."

Subordination of Common Stock to Series A Preferred Stock and Series D Preferred
Stock; Risk of Dilution; Anti-Dilution Adjustments.

     In the event of the liquidation,  dissolution or winding up of the Company,
the Common Stock is expressly  subordinate  to the  approximately  $25.8 million
preference of the 429,600 outstanding shares of Series A Preferred Stock and the
approximately  $20.2  million  preference of the 144,341  outstanding  shares of
Series D Preferred Stock (not including an additional  40,395 shares of Series D
Preferred Stock that are issuable upon exercise of certain warrants).  Dividends
may not be paid on the Common  Stock  unless full  cumulative  dividends  on the
Series A Preferred  Stock and Series D  Preferred  Stock have been paid or funds
have been set aside, for such preferred dividends by the Company.

     The  conversion  rate  of the  Series  A  Preferred  Stock  is  subject  to
adjustment,  among other  things,  upon  certain  issuances  of Common  Stock or
securities  convertible into Common Stock at $67.50 per share or less. As of May
10,  1999,  each  share  of  Series  A  Preferred  Stock  is  convertible   into
approximately  7.430 shares of Common  Stock at a conversion  price of $8.08 per
share.  Each share of Series D Preferred  Stock is  presently  convertible  into
approximately  106 shares of Common Stock at a conversion  price of $0.94375 per
share of  Common  Stock,  and the  exercise  price of the  Class D  Warrants  is
presently  $0.94375  per share.  The  conversion  rate of the Series D Preferred
Stock and the exercise price of the Series D Warrants are subject to adjustment,
among  other  things,  upon  certain  issuances  of Common  Stock or  securities
convertible  into Common Stock at prices per share below certain  levels.  There
are 1,578,300 Class D Warrants  outstanding and another 201,975 Class D Warrants
issuable  upon the  exercise  of certain  warrants.  Finally,  the  Company  has
outstanding  Bridge  Warrants to purchase an aggregate  of  6,357,616  shares of
Common Stock at an exercise price


                                       13

<PAGE>



of  $0.471875  per share,  Line of Credit  Warrants to purchase an  aggregate of
50,000  shares of Common  Stock at an  exercise  price of $2.50 per  share,  LBC
Warrants  to  purchase  an  aggregate  of 700,000  shares of Common  Stock at an
exercise  price of $0.52 per share,  warrants to purchase an aggregate of 95,768
shares of Common Stock at various exercise prices between  approximately $13 and
$21 per share,  134,238  outstanding  employee stock options under the Company's
Amended and Restated 1991 Stock Plan at various  exercise  prices  between $3.13
and $26.25 per share, and 5,681,263 outstanding employee stock options under the
Company's  1998 Stock  Incentive  Plan and  Non-Employee  Directors'  1998 stock
Option Plan at various  exercise  prices between $0.88 and $2.41 per share.  The
Note and Warrant Purchase  Agreement provides that a number of additional Bridge
Warrants  ("Penalty  Warrants")  equal to 1.5% of the number of Bridge  Warrants
then held by the  Aries  Funds  shall be issued to the Aries  Funds for each day
beyond 30 days after the final  closing of the  Private  Placement  that a shelf
registration  statement  covering the Common  Stock  underlying  the  securities
purchased  pursuant to the Note and Warrant Purchase Agreement is not filed with
the  SEC and for  each  day  beyond  210  days  after  the  closing  date of the
investment  contemplated  by the Note and Warrant  Purchase  Agreement that such
shelf  registration  statement is not declared effective by the SEC. The Company
filed such shelf  registration  statement with the SEC on September 9, 1997, but
such shelf registration statement has not been declared effective by the SEC. As
a result,  the Company could be obligated to issue Penalty Warrants to the Aries
Funds. The Aries Funds have not, to date,  requested that the Company issue such
Penalty  Warrants.  The  Company and the Aries  Funds are  currently  conducting
negotiations to determine whether, and to what extent,  Penalty Warrants will be
issued.

Claims of the Company's Default Under Various Agreements.

     On May 15,  1997,  Johns  Hopkins  University  ("Johns  Hopkins")  sent the
Company a letter  stating  that the license  agreement  entered into between the
Company  and Johns  Hopkins  in May 1990 (the  "Johns  Hopkins  Agreement")  was
terminated.  On November  26,  1997,  Drs.  Paul O.P.  Ts'o and Paul Miller (the
"Ts'o/Miller  Partnership")  sent the Company a letter claiming that the Company
was in  material  breach of the  February  1989  license  agreement  between the
Company  and the  Ts'o/Miller  Partnership  (the  "Ts'o/Miller  Agreement")  for
failing to pay royalties from 1995 through 1997. By letter dated April 28, 1998,
the  Ts'o/Miller  Partnership  advised the Company that it was  terminating  the
license  granted  pursuant to the  Ts'o/Miller  Agreement.  On June 4, 1998, the
Company's  statutory process agent received a Summons and Complaint in a lawsuit
brought by Johns  Hopkins  against  the Company in  Maryland  Circuit  Court for
Baltimore City (Case No. 98120110).  Johns Hopkins alleges in the Complaint that
the Company has  breached  the Johns  Hopkins  Agreement  and owes it  licensing
royalty fees and related expenses in the amount of $308,832.  Johns Hopkins also
alleges the  existence  of a separate  March 1993 letter  agreement  wherein the
Company  agreed to support a fellowship  program at the Johns Hopkins  School of
Hygiene and Public  Health and the  Company's  breach  thereof,  with damages of
$326,829.  On August 10, 1998, the Company's  statutory process agent received a
Summons  and  Complaint  in  a  related   lawsuit  brought  by  the  Ts'o/Miller
Partnership  and  others  against  the  Company  in the  same  court  (Case  No.
98182113).  The Ts'o/Miller Partnership claims that it is owed licensing royalty
fees  in the  amount  of  $287,671.  The  Company  is  currently  in  settlement
negotiations. See "Legal Proceedings."

     The French government agency ANVAR asserted, in a letter dated February 13,
1998, that Genta Europe was not in compliance with the ANVAR Agreement, and that
ANVAR might request the immediate repayment of such loan. On July 1, 1998, ANVAR
notified Genta Europe by letter of its claim that the Company remains liable for
4,187,423 FF (as of May 10, 1999, approximately $688,412) and is required to pay
this amount immediately. The Company is working with ANVAR to achieve a mutually
satisfactory  resolution;  however,  there  can  be no  assurance  that  such  a
resolution will be obtained. There can be no assurance that the Company will not
incur  material  costs in relation to these  terminations  and/or  assertions of
default or liability.

Early Stage of Development; Technological Uncertainty.

     The  Company  is at an early  stage of  development.  All of the  Company's
potential  therapeutic products are in research or development,  and no revenues
have  been  generated  from  therapeutic  product  sales.  To date,  most of the
Company's  resources  have been  dedicated  to  applying  molecular  biology and
medicinal  chemistry to the research and  development of potential  Anticode(TM)
pharmaceutical products based upon oligonucleotide technology. While the Company
has  demonstrated  the activity of  Anticode(TM)  oligonucleotide  technology in
model systems in


                                       14

<PAGE>



vitro and the activity of  antisense  technology  in animals and has  identified
compounds that the Company believes are worthy of additional  testing,  only one
of these potential Anticode(TM)  oligonucleotide products has begun to be tested
in humans, with such testing in its early stages. There can be no assurance that
the novel approach of  oligonucleotide  technology  will result in products that
will  receive  necessary   regulatory  approvals  or  that  will  be  successful
commercially.  Further,  results  obtained  in  pre-clinical  studies  or  early
clinical  investigations  or pilot  bioequivalence  trials  are not  necessarily
indicative  of results  that will be  obtained  in  pivotal  human  clinical  or
bioequivalence  trials.  There can be no assurance  that any of the Company's or
Genta Jago's potential products can be successfully developed.  Furthermore, the
Company's  products in research or development may prove to have undesirable and
unintended side effects or other characteristics that may prevent or limit their
commercial  use.  There can be no assurance  that any of the  Company's or Genta
Jago's  products  will  obtain  FDA  or  foreign  regulatory  approval  for  any
indication or that an approved  compound  would be capable of being  produced in
commercial quantities at reasonable costs and successfully  marketed.  Products,
if any,  resulting from the Company's or Genta Jago's  research and  development
programs are not expected to be  commercially  available  for a number of years.
Certain competitive products have already been filed with and/or approved by the
FDA.  See  "Certain  Trends  and  Uncertainties--Potential   Adverse  Effect  of
Technological Change and Competition."

Limited Availability of Net Operating Loss Carryforwards.

     At December 31, 1998,  the Company has federal and California net operating
loss   carryforwards   of   approximately   $82.0  million  and  $14.7  million,
respectively.  The  difference  between  the  federal  and  California  tax loss
carryforwards is primarily  attributable to the  capitalization  of research and
development   expenses  for  California  tax  purposes  and  the  fifty  percent
limitation on California loss carryforwards  prior to 1997. The federal tax loss
carryforwards   will  begin  expiring  in  2003,  unless  previously   utilized.
Approximately  $2.8  million  and  $0.5  million  of  the  California  tax  loss
carryforward  expired  during  1997  and  1998,  respectively,  and the  related
deferred  tax  asset  and  tax  loss  carryforward  amounts  have  been  reduced
accordingly.  The remaining California tax loss will continue to expire in 1999,
unless  utilized.  The  Company  also has federal and  California  research  and
development  tax  credit   carryforwards  of  $3.2  million  and  $1.3  million,
respectively, which will begin expiring in 2003, unless previously utilized.

     Federal and  California  tax laws limit the  utilization  of income tax net
operating loss and credit  carryforwards  that arise prior to certain cumulative
changes  in a  corporation's  ownership  resulting  in change of  control of the
Company.  The future annual use of net operating loss carryforwards and research
and  development  tax credits will be limited due to the ownership  changes that
occurred during 1990, 1991,  1993, 1996, 1997 and 1998.  Because of the decrease
in value of the Company's stock,  the ownership  changes which occurred in 1996,
1997 and 1998 will have a material  adverse  impact on the Company's  ability to
utilize these carryforwards.

Dividends.

     The Company has never paid cash  dividends on its Common Stock and does not
anticipate paying any such dividends in the foreseeable future. In addition, the
Company is restricted  from paying cash dividends on its Common Stock until such
time as all cumulative  dividends  have been paid on  outstanding  shares of its
Series A Preferred  Stock and Series D Preferred  Stock.  The Company  currently
intends  to  retain  its  earnings,  if  any,  after  payment  of  dividends  on
outstanding shares of Series A Preferred Stock and Series D Preferred Stock, for
the development of its business.

No Assurance of Regulatory Approval; Government Regulation.

     The FDA and comparable  agencies in foreign  countries  impose  substantial
premarket approval  requirements on the introduction of pharmaceutical  products
through lengthy and detailed  pre-clinical and clinical  testing  procedures and
other costly and time-consuming procedures.  Satisfaction of these requirements,
which  includes  demonstrating  to the  satisfaction  of  the  FDA  and  foreign
regulatory agencies that the product is both safe and effective, typically takes
several years or more  depending  upon the type,  complexity  and novelty of the
product. There can be no assurance that such testing will show any product to be
safe or efficacious or, in the case of certain of Genta Jago's  products,  to be
bioequivalent to a currently marketed pharmaceutical. Government regulation also


                                       15

<PAGE>



affects the manufacture and marketing of pharmaceutical  products. The effect of
government  regulation  may be to  delay  marketing  of any new  products  for a
considerable or indefinite  period of time, to impose costly procedures upon the
Company's or Genta Jago's  activities and to diminish any competitive  advantage
that the  Company or Genta  Jago may have  attained.  It may take  years  before
marketing approvals are obtained for the Company's or Genta Jago's products,  if
at all. There can be no assurance that FDA or other regulatory  approval for any
products  developed  by the  Company  or Genta  Jago will be granted on a timely
basis, if at all, or, if granted, that such approval will cover all the clinical
indications for which the Company or Genta Jago is seeking  approval or will not
sustain  significant  limitations  in  the  form  of  warnings,  precautions  or
contraindications  with respect to conditions of use.  Further,  with respect to
the reformulated versions of currently available pharmaceuticals being developed
through  Genta  Jago,  there is a  substantial  risk that the  manufacturers  or
marketers  of such  currently  available  pharmaceuticals  will seek to delay or
block regulatory approval of any reformulated  versions of such  pharmaceuticals
through  litigation  or other means.  Any  significant  delay in  obtaining,  or
failure  to  obtain,  such  approvals  could  materially  adversely  affect  the
Company's or Genta Jago's revenue.  Moreover,  additional  government regulation
from future legislation or administrative  action may be established which could
prevent or delay  regulatory  approval of the Company's or Genta Jago's products
or further  regulate the prices at which the Company's or Genta Jago's  proposed
products may be sold.

     The Company is also subject to various  foreign,  federal,  state and local
laws, regulations and recommendations  (collectively "Governmental Regulations")
relating to safe working conditions, laboratory and manufacturing practices, the
experimental  use of animals and the use,  manufacture,  storage,  handling  and
disposal of hazardous or potentially hazardous substances, including radioactive
compounds and infectious  disease agents,  used in connection with the Company's
research and development work and manufacturing  processes. In October 1996, JBL
retained a chemical  consulting firm to advise it with respect to an incident of
soil and groundwater contamination (the "Spill").  Sampling conducted at the JBL
facility  revealed  the  presence  of  chloroform  and  PCEs  in  the  soil  and
groundwater  at this site. Six soil borings were drilled and  groundwater  wells
were installed at several  locations  around the site. The Company has agreed to
indemnify Promega in respect of the matter.  The Company believes that the costs
associated with further  investigation  or remediation  will not have a material
adverse  effect  on  the  business  of the  Company,  although  there  can be no
assurance thereof.  The Company believes that it is in material  compliance with
Governmental  Regulations;  however,  there can be no assurance that the Company
will not be required  to incur  significant  costs to comply  with  Governmental
Regulations in the future.  See Note 6 to the Company's  consolidated  financial
statements.

     JBL received notice on October 16, 1998 from Region IX of the Environmental
Protection  Agency  ("EPA")  that  it  had  been  identified  as  a  potentially
responsible  party ("PRP") at the Casmalia  Disposal  Site,  which is located in
Santa Barbara,  California.  JBL has been  designated as a de minimis PRP by the
EPA. The EPA  currently  estimates  that the de minimis PRPs will be required to
pay as little as  $75,000  and as much as  $750,000  to settle  their  potential
liability, depending upon the volume of wastes attributed to them. On this basis
the Company  accrued $75,000 in 1998. The Company  received an estimated  volume
calculation  from  the EPA and a  response,  which  is due on June 9,  1999,  is
currently  under  review.  While  the  terms  of the  settlement  have  not been
finalized,  they should  contain  standard  contribution  release and protection
language.  The Company has agreed to indemnify Promega in respect of the matter.
See Note 6 to the Company's consolidated financial statements.

Uncertainty Regarding Patents and Proprietary Technology.

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


                                       16

<PAGE>



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

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

Dependence on Others.

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

Technology Licensed From Third Parties.

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

Potential Adverse Effect of Technological Change and Competition.

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


                                       17

<PAGE>



the Company's and Genta Jago's competitors have substantially greater financial,
technical,  marketing  and human  resources  than the Company or Genta Jago.  In
addition,  many of those competitors have significantly  greater experience than
the Company or Genta Jago in undertaking pre-clinical testing and human clinical
trials of new  pharmaceutical  products and obtaining  FDA and other  regulatory
approvals of products for use in healthcare. Accordingly, the Company's or Genta
Jago's  competitors  may succeed in obtaining  regulatory  approval for products
more rapidly than the Company or Genta Jago and such  competitors may succeed in
delaying or blocking  regulatory  approvals  of the  Company's  or Genta  Jago's
products.  As competitors  of the Company or of Genta Jago receive  approval for
products that share the same  potential  market as the Company's or Genta Jago's
potential products, the market share available to the Company or Genta Jago will
likely  be  reduced,  thereby  reducing  the  potential  revenues  and  earnings
available  to  the  Company  or  Genta  Jago.  In  addition,  increased  pricing
competition would also likely result, further reducing the earnings potential of
the  Company's  or Genta  Jago's  products.  The  Company is aware that  certain
competitors  of Genta Jago have filed,  and received  approval of, an ANDA for a
generic  formulation of drugs of which Genta Jago was working to develop generic
formulations. Furthermore, if the Company or Genta Jago is permitted to commence
commercial  sales  of  products,  it will  also be  competing  with  respect  to
marketing  capabilities,  an area in which it has limited or no experience,  and
manufacturing  efficiency.  There are many public and private companies that are
conducting  research  and  development  activities  based  on drug  delivery  or
antisense technologies.  The Company believes that the industry-wide interest in
such  technologies  will  accelerate  and  competition  will  intensify  as  the
techniques which permit drug design and development  based on such  technologies
are more widely understood.

Uncertainty of Clinical Trials and Results.

     The  results of  clinical  trials and  pre-clinical  testing are subject to
varying  interpretations.  Even if the  development  of the  Company's  or Genta
Jago's  respective  products  advances to the  clinical  stage,  there can be no
assurance that such products will prove to be safe and  effective.  The products
that are successfully developed, if any, will be subject to requisite regulatory
approval prior to their  commercial sale, and the approval,  if obtainable,  may
take several years. Generally, only a very small percentage of the number of new
pharmaceutical  products  initially  developed  is  approved  for sale.  Even if
products  are approved  for sale,  there can be no  assurance  that they will be
commercially  successful.  The Company or Genta Jago may encounter unanticipated
problems  relating to development,  manufacturing,  distribution  and marketing,
some of which may be beyond the Company's or Genta Jago's  respective  financial
and technical capacity to solve. The failure to address such problems adequately
could have a material adverse effect on the Company's or Genta Jago's respective
businesses,  financial  conditions,  prospects  and  results of  operations.  No
assurance  can be given  that the  Company  or Genta  Jago will  succeed  in the
development  and  marketing of any new drug  products,  or that they will not be
rendered  obsolete  by  products  of  competitors.   "See  "Certain  Trends  and
Uncertainties--Potential    Adverse   Effect   of   Technological   Change   and
Competition."

Difficult Manufacturing Process; Access to Certain Raw Materials.

     The manufacture of Anticode(TM)  oligonucleotides  is a time-consuming  and
complex process. Management believes that the Company has the ability to acquire
or produce  quantities  of  oligonucleotides  sufficient  to support its present
needs for research and its projected needs for its initial clinical  development
programs.  However, in order to obtain  oligonucleotides  sufficient to meet the
volume and cost  requirements  needed for  certain  commercial  applications  of
Anticode(TM)  oligonucleotide  products,  the  Company  requires  raw  materials
currently  provided by a single  supplier  which is itself a  development  stage
biotechnology  company  (and a  competitor  of the  Company)  and is  subject to
uncertainties  including  the  potential  for a  decision  by such  supplier  to
discontinue  production of such raw materials,  the insolvency of such supplier,
or the failure of such  supplier  to follow  applicable  regulatory  guidelines.
Products  based  on  chemically  modified   oligonucleotides   have  never  been
manufactured on a commercial  scale. The manufacture of all of the Company's and
Genta Jago's products will be subject to current GMP requirements  prescribed by
the FDA or other standards  prescribed by the appropriate  regulatory  agency in
the  country of use.  There can be no  assurance  that the Company or Genta Jago
will be able to manufacture products, or have products manufactured for it, in a
timely  fashion at  acceptable  quality  and  prices,  that they or third  party
manufacturers can comply with GMP or that they or third party manufacturers will
be able to manufacture an


                                       18

<PAGE>



adequate  supply of product.  Failure to  establish  compliance  with GMP to the
satisfaction of the FDA can result in delays in, or prohibition from, initiating
clinical trials or commercial marketing of a product.

Limited Sales, Marketing and Distribution Experience.

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

Uncertainty of Product Pricing, Reimbursement and Related Matters.

     The  Company's  and  Genta  Jago's  business  may be  materially  adversely
affected by the  continuing  efforts of  governmental  and third party payers to
contain or reduce the costs of healthcare through various means. For example, in
certain foreign markets the pricing or profitability  of healthcare  products is
subject to government  control.  In the United States,  there have been, and the
Company  expects  that there will  continue to be, a number of federal and state
proposals to implement similar  governmental  control.  While the Company cannot
predict whether any such legislative or regulatory  proposals or reforms will be
adopted,  the adoption of any such proposal or reform could adversely affect the
commercial  viability of the Company's and Genta Jago's potential  products.  In
addition, in both the United States and elsewhere,  sales of healthcare products
are dependent in part on the  availability of reimbursement to the consumer from
third party payers,  such as government and private insurance plans. Third party
payers are increasingly  challenging the prices charged for medical products and
services,  and therefore significant  uncertainty exists as to the reimbursement
of existing and newly-approved healthcare products. If the Company or Genta Jago
succeeds in bringing one or more  products to market,  there can be no assurance
that these products will be considered cost effective and that  reimbursement to
the consumer  will be available  or will be  sufficient  to allow the Company or
Genta Jago to sell its products on a competitive basis. Finally, given the above
potential  market  constraints  on  pricing,  the  availability  of  competitive
products in these  markets  may further  limit the  Company's  and Genta  Jago's
flexibility in pricing and in obtaining adequate reimbursement for its potential
products.  See "Certain  Trends and  Uncertainties--Potential  Adverse Effect of
Technological Change and Competition."

Need for and Dependence on Qualified Personnel.

     The  Company's  success is highly  dependent on the hiring and retention of
key personnel and scientific  staff. The loss of key personnel or the failure to
recruit necessary  additional  personnel or both is likely further to impede the
achievement  of  development  objectives.   There  is  intense  competition  for
qualified personnel in the areas of the Company's  activities,  and there can be
no assurance  that the Company will be able to attract and retain the  qualified
personnel necessary for the development of its business.

Product Liability Exposure; Limited Insurance Coverage.

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

Hazardous Materials; Environmental Matters.

     The Company's research and development and manufacturing  processes involve
the  controlled  storage,  use and disposal of hazardous  materials,  biological
hazardous materials and radioactive compounds. The Company is


                                       19

<PAGE>



subject to  federal,  state and local laws and  regulations  governing  the use,
manufacture,  storage, handling and disposal of such materials and certain waste
products.  Although the Company believes that its safety procedures for handling
and disposing of such  materials  comply with the  standards  prescribed by such
laws and regulations,  the risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of such an accident, the
Company may be held liable for any damages that result,  and any such  liability
could exceed the  resources of the Company.  There can be no assurance  that the
Company  will  not be  required  to  incur  significant  costs  to  comply  with
environmental  laws and  regulations  in the  future,  nor that the  operations,
business or assets of the Company will not be materially  adversely  affected by
current or future  environmental  laws or  regulations.  See "Certain Trends and
Uncertainties--No Assurance of Regulatory Approval; Government Regulation" for a
discussion of the Spill.

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

     The market price of the  Company's  Common  Stock,  like that of the common
stock of many other  biopharmaceutical  companies,  has been highly volatile and
may be so in the future.  Factors  such as, among other  things,  the results of
pre-clinical  studies and clinical  trials by the  Company,  Genta Jago or their
competitors,  other  evidence  of the  safety or  efficacy  of  products  of the
Company,  Genta  Jago  or  their  competitors,  announcements  of  technological
innovations  or new  therapeutic  products by the  Company,  Genta Jago or their
competitors,   governmental   regulation,   developments   in  patent  or  other
proprietary rights of the Company,  Genta Jago or their respective  competitors,
including  litigation,  fluctuations  in the Company's  operating  results,  and
market  conditions  for  biopharmaceutical   stocks  in  general  could  have  a
significant  impact on the future price of the Common Stock.  As of May 3, 1999,
the Company had 15,401,275 shares of Common Stock  outstanding.  Future sales of
shares of Common Stock by existing stockholders,  holders of preferred stock who
might convert such  preferred  stock into Common  Stock,  and option and warrant
holders also could adversely affect the market price of the Common Stock.

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

Certain Interlocking Relationships; Potential Conflicts of Interest.

     The Aries  Funds have the  contractual  right to appoint a majority  of the
members  of the  Board  of  Directors  of the  Company.  The  Aries  Funds  have
designated Michael S. Weiss, Glenn L. Cooper, M.D., Donald G. Drapkin,  Bobby W.
Sandage,  Jr., Ph.D., and Andrew J. Stein as nominees to the Board of Directors.
Such persons were elected as Directors of the Company.  Paramount  Capital Asset
Management,  Inc. ("PCAM") is the investment  manager and general partner of The
Aries Trust and the Aries Domestic  Fund,  L.P.,  respectively.  The Aries Funds
have  the  present  right  to  convert  and  exercise  their  securities  into a
significant  portion of the  outstanding  Common Stock.  See "Certain Trends and
Uncertainties--Concentration  of Ownership and Control"  below.  Dr.  Lindsay A.
Rosenwald,  the President and sole stockholder of PCAM, is also the President of
Paramount Capital,  Inc. and of Paramount Capital Investments LLC ("PCI"), a New
York-based   merchant   banking  and  venture   capital  firm   specializing  in
biotechnology  companies. In the regular course of its business, PCI identifies,
evaluates and pursues investment  opportunities in biomedical and pharmaceutical
products, technologies and companies. Generally, Delaware corporate law requires
that any transactions  between the Company and any of its affiliates be on terms
that, when taken as a whole,  are  substantially  as favorable to the Company as
those then  reasonably  obtainable  from a person who is not an  affiliate in an
arms-length  transaction.  Nevertheless,  neither  such  affiliates  nor  PCI is
obligated  pursuant to any agreement or  understanding  with the Company to make
any additional products or technologies  available to the Company, nor can there
be any  assurance,  and the Company does not expect and investors in the Company
should not expect,  that any biomedical or pharmaceutical  product or technology
identified by such affiliates or PCI in the future will be made available to the
Company.  In  addition,  certain of the current  officers  and  directors of the
Company  or  certain of any  officers  or  directors  of the  Company  hereafter
appointed may from time to time serve as officers or directors of other


                                       20

<PAGE>



biopharmaceutical  or  biotechnology  companies.  There can be no assurance that
such other  companies  will not have  interests  in  conflict  with those of the
Company.

Concentration of Ownership and Control.

     The Company's directors,  executive officers and principal stockholders and
certain of their  affiliates  have the ability to influence  the election of the
Company's directors and most other stockholder  actions. See "Certain Trends and
Uncertainties--Certain   Interlocking  Relationships;   Potential  Conflicts  of
Interest."  Accordingly,  the Aries Funds have the ability to exert  significant
influence  over the  election  of the  Company's  Board of  Directors  and other
matters submitted to the Company's stockholders for approval. These arrangements
may  discourage  or prevent  any  proposed  takeover of the  Company,  including
transactions in which  stockholders  might otherwise receive a premium for their
shares over the then current  market  prices.  Such  stockholders  may influence
corporate actions,  including influencing elections of directors and significant
corporate events. See also "Certain Trends and  Uncertainties--Effect of Certain
Anti-Takeover Provisions" below.

Effect of Certain Anti-Takeover Provisions.

     The Company's  Restated  Certificate of  Incorporation  and By-laws include
provisions that could discourage  potential  takeover attempts and make attempts
by stockholders to change management more difficult.  The approval of 66-2/3% of
the Company's  voting stock is required to approve certain  transactions  and to
take certain stockholder actions, including the amendment of the By-laws and the
amendment,  if any, of the anti-takeover  provisions  contained in the Company's
Restated Certificate of Incorporation.

Risks of Low-Priced Stock; Possible Effect of "Penny Stock" Rules on Liquidity
for the Company's Securities.

     If the  Company's  securities  were not  listed  on a  national  securities
exchange nor listed on a qualified  automated  quotation system, they may become
subject to Rule 15g-9 under the Exchange  Act,  which imposes  additional  sales
practice  requirements  on  broker-dealers  that sell such securities to persons
other  than  established  customers  and  "accredited   investors"   (generally,
individuals with a net worth in excess of $1,000,000 or annual incomes exceeding
$200,000 or $300,000  together with their  spouses).  Rule 15g-9 defines  "penny
stock" to be any equity security that has a market price (as therein defined) of
less than  $5.00 per share or an  exercise  price of less than  $5.00 per share,
subject to certain  exceptions  including (i) the securities being quoted on the
Nasdaq National Market or SmallCap Market and (ii) the securities' issuer having
net  tangible  assets in excess of  $2,000,000  and  having  been in  continuous
operation  for at least  three  years  (both  exceptions  enumerated  above  are
currently  met by the  Company).  For  transactions  covered  by Rule  15g-9,  a
broker-dealer  must make a special  suitability  determination for the purchaser
and have received the purchaser's  written  consent to the transaction  prior to
sale. For any  transaction  involving a penny stock,  unless  exempt,  the rules
require  delivery,  prior to any  transaction in a penny stock,  of a disclosure
schedule  prepared by the SEC relating to the penny stock market.  Disclosure is
also  required  to  be  made  about  sales  commissions   payable  to  both  the
broker-dealer and the registered  representative  and current quotations for the
securities.  Finally,  monthly  statements  are  required to be sent  disclosing
recent price information for the penny stock held in the account and information
on the limited  market in penny  stock.  Consequently,  such Rule may affect the
ability of  broker-dealers  to sell the Company's  securities and may affect the
ability of purchasers  to sell any of the Company's  securities in the secondary
market.

     There can be no assurance  that the Company's  securities  will continue to
qualify for exemption from the penny stock  restrictions.  In any event, even if
the Company's  securities are exempt from such  restrictions,  the Company would
remain subject to Section  15(b)(6) of the Exchange Act, which gives the SEC the
authority to restrict any person from  participating  in a distribution of penny
stock, if the SEC finds that such a restriction would be in the public interest.

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



                                       21

<PAGE>



PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

     On June 4, 1998, the Company's  statutory  process agent received a Summons
and  Complaint  in a lawsuit  brought by Johns  Hopkins  against  the Company in
Maryland  Circuit Court for Baltimore  City (Case No.  98120110).  Johns Hopkins
alleges  in the  Complaint  that the  Company  has  breached  the Johns  Hopkins
Agreement and owes it licensing  royalty fees and related expenses in the amount
of $308,832.  Johns Hopkins also alleges the existence of a separate  March 1993
letter agreement  wherein the Company agreed to support a fellowship  program at
the Johns Hopkins  School of Hygiene and Public Health and the Company's  breach
thereof,  with damages of $326,829.  On August 10, 1998, the Company's statutory
process agent received a Summons and Complaint in a related  lawsuit  brought by
the  Ts'o/Miller  Partnership  and others  against the Company in the same court
(Case  No.  98182113).  The  Ts'o/Miller  Partnership  claims  that  it is  owed
licensing  royalty fees in the amount of  $287,671.  The Company is currently in
settlement negotiations.  The Company believes that no further accrual should be
necessary in connection with this settlement.

     In October 1996, JBL retained a chemical  consulting firm to advise it with
respect to an  incident of soil and  groundwater  contamination  (the  "Spill").
Sampling  conducted at the JBL facility  revealed the presence of chloroform and
perchloroethylenes  ("PCEs")  in the  soil  and  groundwater  at  this  site.  A
quarterly  groundwater   monitoring  program  is  being  conducted,   under  the
supervision of the California Regional Water Quality Control Board, for purposes
of  determining  whether the levels of chloroform  and PCEs have  decreased over
time. The results of the latest sampling conducted show that PCEs and chloroform
have decreased in all but one of the monitoring sites. The Company has agreed to
indemnify Promega in respect of this matter. The Company believes that any costs
stemming from further  investigating or remediating this  contamination will not
have a material  adverse  effect on the business of the Company,  although there
can be no assurance thereof.

     JBL received notice on October 16, 1998 from Region IX of the Environmental
Protection  Agency  ("EPA")  that  it  had  been  identified  as  a  potentially
responsible  party ("PRP") at the Casmalia  Disposal  Site,  which is located in
Santa Barbara,  California.  JBL has been  designated as a de minimis PRP by the
EPA. The EPA  currently  estimates  that the de minimis PRPs will be required to
pay as little as  $75,000  and as much as  $750,000  to settle  their  potential
liability,  depending upon the volume of wastes  attributed to them. The Company
received an estimated volume calculation from the EPA, and a response,  which is
due on June  9,  1999,  is  currently  under  review.  While  the  terms  of the
settlement  with the EPA have not been finalized,  they should contain  standard
contribution  protection and release  language.  The Company has accrued $75,000
during  1998.  The  Company  believes  that  any  costs  stemming  from  further
investigating or remediating this contamination will not have a material adverse
effect on the  business  of the  Company,  although  there  can be no  assurance
thereof. The Company has agreed to indemnify Promega in respect of this matter.



                                       22
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

          (a)  Exhibits.

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

10.1      Sublease,   dated  as  of  March   31,   1999,   between   Interneuron
          Pharmaceuticals, Inc. and the Company

10.2      Asset  Purchase  Agreement,  dated as of March  19,  1999,  among  JBL
          Acquisition Corp., Promega Corporation,  JBL Scientific,  Inc. and the
          Company

27        Financial Data Schedule

          (b)  Reports on Form 8-K.

(i)  A Current  Report on Form 8-K was filed by the  Company  on January 6, 1999
     regarding a settlement with LBC Capital Resources, Inc.

(ii) A Current  Report on Form 8-K was filed on February 10, 1999  regarding the
     engagement of Deloitte & Touche LLP as the Company's principal  independent
     accountant.




                                       23

<PAGE>



                                   SIGNATURES

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




                               GENTA INCORPORATED
                              (Registrant)





                               By:      /s/ Kenneth G. Kasses, Ph.D.
                                        ---------------------------------
                               Name:    Kenneth G. Kasses, Ph.D.
                               Title:   Chairman of the Board of Directors,
                                        President, Principal Executive Officer










                               By:      /s/ Gerald M. Schimmoeller
                                        ---------------------------------
                               Name:    Gerald M. Schimmoeller
                               Title:   Vice President,  Chief Financial Officer
                                        and Principal Accounting Officer

Date:    May 15, 1999


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