<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

(Mark One)
[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999.

                                                 OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934
      FOR THE TRANSITION PERIOD FROM _______________ TO _______________ .

                         COMMISSION FILE NUMBER 0-23317

--------------------------------------------------------------------------------

                                 GENE LOGIC INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

--------------------------------------------------------------------------------

            DELAWARE                                          06-1411336
  (STATE OR OTHER JURISDICTION OF                           (I.R.S. EMPLOYER
   INCORPORATION OR ORGANIZATION)                           IDENTIFICATION NO.)

                             708 QUINCE ORCHARD ROAD
                          GAITHERSBURG, MARYLAND 20878
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                 (301) 987-1700
                (REGISTRANT'S PHONE 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 [ ]

The number of shares outstanding of the Registrant's Common Stock, $.01 par
value, was 19,898,031 as of July 31, 1999.

================================================================================
<PAGE>   2
                                 GENE LOGIC INC.


                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                       <C>
PART I         FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets at June 30, 1999 and December 31, 1998..........................3
Consolidated Statements of Operations for the Three and Six Months Ended
        June 30, 1999 and 1998..............................................................4
Consolidated Statements of Cash Flows for the Six Months Ended
        June 30, 1999 and 1998..............................................................5
Notes to Consolidated Financial Statements..................................................6

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

Item 3. Quantitative and Qualitative Disclosure About Market Risk..........................15

PART II        OTHER INFORMATION

Item 1. Legal Proceedings..................................................................15

Item 2. Changes in Securities and Use of Proceeds..........................................15

Item 3. Defaults Upon Senior Securities....................................................15

Item 4. Submission of Matters to a Vote of Security Holders................................15

Item 5. Other Information..................................................................16

Item 6. Exhibits and Reports on Form 8-K...................................................17

Signatures.................................................................................18
</TABLE>



                                       2.
<PAGE>   3

PART I  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                 GENE LOGIC INC.
                           CONSOLIDATED BALANCE SHEETS
              (IN THOUSANDS, EXCEPT NUMBER OF SHARES AND PAR VALUE)

<TABLE>
<CAPTION>
                                                                               JUNE 30,        DECEMBER 31,
                                                                                 1999             1998
                                                                              -----------      ------------
                                                                              (Unaudited)
<S>                                                                           <C>              <C>
                                                    ASSETS

Current Assets:
    Cash and cash equivalents ..........................................       $   7,385        $  16,191
    Marketable securities available-for-sale ...........................          13,090           14,791
    Due from collaborators .............................................           3,774            3,779
    Prepaid expenses ...................................................             991              842
    Notes receivable from employees ....................................              39             --
    Other current assets ...............................................           1,213              875
                                                                               ---------        ---------
        Total Current Assets ...........................................          26,492           36,478
Property and Equipment, net ............................................          10,266           10,189
Notes Receivable from Employees ........................................             720               --
Goodwill, net ..........................................................           6,485            7,249
Intangible and Other Assets, net .......................................           1,880            1,650
                                                                               ---------        ---------
        Total Assets ...................................................       $  45,843        $  55,566
                                                                               =========        =========

                                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Accounts payable ..................................................       $   2,040        $   2,123
     Accrued expenses ..................................................           1,344            2,963
     Accrued restructuring .............................................              52              184
     Current portion of capital lease obligation .......................             130              124
     Current portion of long-term debt .................................           1,271            1,292
     Deferred revenue ..................................................           4,043            3,219
                                                                               ---------        ---------
        Total Current Liabilities .....................................           8,880            9,905
Capital Lease Obligation ...............................................              34              100
Long-Term Debt .........................................................           3,552            3,789
Other Noncurrent Liabilities ...........................................             527              484
                                                                               ---------        ---------
        Total Liabilities .............................................          12,993           14,278
                                                                               ---------        ---------
Commitments and Contingencies
Stockholders' Equity:
     Common Stock, $.01 par value; 60,000,000 shares authorized;
      19,855,540 and 19,651,756 shares issued and outstanding as of
       June 30, 1999 and December 31, 1998, respectively ...............             199              197
     Preferred Stock, $.01 par value; 10,000,000 shares
      authorized; no shares issued and outstanding as of June 30,
      1999 and December 31, 1998 .......................................              --               --
     Additional paid-in capital ........................................         102,870          102,670
     Deferred compensation on stock options, net .......................          (3,237)          (3,986)
     Accumulated other comprehensive loss ..............................            (100)             (46)
     Accumulated deficit ...............................................         (66,882)         (57,547)
                                                                               ---------        ---------
        Total Stockholders' Equity .....................................          32,850           41,288
                                                                               ---------        ---------
        Total Liabilities and Stockholders' Equity .....................       $  45,843        $  55,566
                                                                               =========        =========
</TABLE>


                             See accompanying notes.



                                       3.
<PAGE>   4

                                 GENE LOGIC INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                       JUNE 30,                        JUNE 30,
                                                               ------------------------        ------------------------
                                                                 1999            1998            1999            1998
                                                               --------        --------        --------        --------
<S>                                                            <C>             <C>             <C>             <C>

Revenues ...............................................       $  5,212        $  3,680        $  9,279        $  5,875
Expenses:
  Research and development .............................          7,454           3,907          14,486           7,144
  General and administrative ...........................          1,986           1,722           3,759           3,318
  Amortization of goodwill .............................            381              --             762              --
                                                               --------        --------        --------        --------
      Total expenses ...................................          9,821           5,629          19,007          10,462
                                                               --------        --------        --------        --------
      Loss from operations .............................         (4,609)         (1,949)         (9,728)         (4,587)
Interest income, net ...................................            224             491             463           1,099
Other income (expense) .................................             --              --              30             (80)
                                                               --------        --------        --------        --------
      Loss before income tax expense ...................         (4,385)         (1,458)         (9,235)         (3,568)
Income tax expense .....................................             --              --             100              --
                                                               --------        --------        --------        --------
      Net loss .........................................       $ (4,385)       $ (1,458)       $ (9,335)       $ (3,568)
                                                               ========        ========        ========        ========
Basic and Diluted Net Loss Per Common Share ............       $  (0.22)       $  (0.10)       $  (0.47)       $  (0.25)
                                                               ========        ========        ========        ========
Shares Used In Computing Basic and Diluted Net Loss
      Per Common Share .................................         19,797          14,219          19,754          14,060
                                                               ========        ========        ========        ========
</TABLE>



                             See accompanying notes.



                                       4.
<PAGE>   5

                                 GENE LOGIC INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                             SIX MONTHS ENDED
                                                                                 JUNE 30,
                                                                         ------------------------
                                                                           1999            1998
                                                                         --------        --------
<S>                                                                      <C>             <C>
 Cash Flows From Operating Activities:
 Net loss ........................................................       $ (9,335)       $ (3,568)
 Adjustments to reconcile net loss to net cash flows from
     operating activities:
     Depreciation and amortization ...............................          1,495             692
     Amortization of goodwill ....................................            762              --
     Amortization of deferred compensation .......................            749             828
     Loss on disposal of property and equipment ..................             --              81
 Changes in operating assets and liabilities:
     Due from collaborators ......................................              5          (1,357)
     Prepaid expenses ............................................           (149)            (29)
     Other current assets ........................................           (338)           (427)
     Intangibles and other assets ................................           (303)           (312)
     Accounts payable ............................................            (83)            565
     Accrued expenses ............................................         (1,619)            458
     Accrued restructuring .......................................           (132)             --
     Deferred revenue ............................................            824          (2,019)
     Other noncurrent liabilities ................................             43              59
                                                                         --------        --------
        Net Cash Flows From Operating Activities .................         (8,081)         (5,029)
                                                                         --------        --------
 Cash Flows From Investing Activities:
     Purchases of property and equipment .........................         (1,496)         (4,859)
     Increase in notes receivable from employees .................           (759)             --
     Proceeds from sale and maturity of marketable securities
       available-for-sale ........................................          1,646              --
     Purchase of marketable securities available-for-sale ........             --          (4,198)
                                                                         --------        --------
        Net Cash Flows From Investing Activities .................           (609)         (9,057)
                                                                         --------        --------
 Cash Flows From Financing Activities:
     Proceeds from issuance of common stock ......................            202             183
     Proceeds from equipment loans ...............................             --           3,577
     Proceeds from notes payable .................................            425              --
     Repayments of financing agreement ...........................            (98)            (90)
     Repayments of capital lease obligation and
       equipment loans ...........................................           (645)           (257)
                                                                         --------        --------
        Net Cash Flows From Financing Activities .................           (116)          3,413
                                                                         --------        --------
 Net Decrease in Cash and Cash Equivalents .......................         (8,806)        (10,673)
 Cash and Cash Equivalents, beginning of period ..................         16,191          46,522
                                                                         --------        --------
 Cash and Cash Equivalents, end of period ........................       $  7,385        $ 35,849
                                                                         ========        ========
 Supplemental Disclosure:
     Interest expense paid .......................................       $    211        $     63
                                                                         ========        ========
</TABLE>



                             See accompanying notes.



                                       5.
<PAGE>   6

                                 GENE LOGIC INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999
                                   (UNAUDITED)


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

        The unaudited consolidated financial statements include the accounts of
Gene Logic Inc. and its wholly owned subsidiary (the "Company"). The
accompanying unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. The consolidated balance sheet as of June 30, 1999, consolidated statements
of operations for the three and six months ended June 30, 1999 and 1998 and the
consolidated statements of cash flows for the six months ended June 30, 1999 and
1998 are unaudited, but include all adjustments (consisting of normal recurring
adjustments) which the Company considers necessary for a fair presentation of
the financial position, operating results and cash flows for the periods
presented. Although the Company believes that the disclosures in these financial
statements are adequate to make the information presented not misleading,
certain information and footnote information normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission.

        Results for any interim period are not necessarily indicative of results
for any future interim period or for the entire year. The accompanying unaudited
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1998.

Comprehensive Loss

        The Company accounts for comprehensive loss as prescribed by Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("SFAS No. 130"). Comprehensive income is the total net income (loss) plus all
changes in equity during the period except those changes resulting from
investment by owners and distribution to owners. The Company's other
comprehensive loss includes unrealized holding losses from marketable securities
available-for-sale for the three and six months ended June 30, 1999 and 1998 as
follows:

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED             SIX MONTHS ENDED
                                                                JUNE 30,                      JUNE 30,
                                                         ----------------------        ----------------------
                                                          1999           1998           1999           1998
                                                         -------        -------        -------        -------
                                                             (in thousands)                 (in thousands)
<S>                                                      <C>            <C>            <C>            <C>
Net loss .........................................       $(4,385)       $(1,458)       $(9,335)       $(3,568)
Other comprehensive loss, net of tax:
Unrealized losses on marketable securities .......           (37)            (6)           (54)           (12)
Less - Reclassification adjustment for losses ....            --             --             --              2
                                                         -------        -------        -------        -------
Total other comprehensive loss ...................           (37)            (6)           (54)           (10)
                                                         -------        -------        -------        -------
Comprehensive loss ...............................       $(4,422)       $(1,464)       $(9,389)       $(3,578)
                                                         =======        =======        =======        =======
</TABLE>



                                       6.
<PAGE>   7

Goodwill

        Goodwill, from the acquisition of Oncormed, Inc. ("Oncormed") in
September 1998, represents the excess of the purchase price over the fair market
value of the net assets acquired. Goodwill is being amortized over five years at
a rate of approximately $1.5 million per year. Amortization expense was $381,000
and $762,000 for the three and six months ended June 30, 1999, respectively.
Accumulated amortization of goodwill was $1.1 million at June 30, 1999.


Revenue Recognition

        Technology and database access fees are recognized evenly over the term
of the Company's collaboration agreements. Revenues from research and
development support are recognized when they are earned which is ordinarily when
the work is performed or costs are incurred. Milestone payments are recognized
as revenue in accordance with the applicable performance requirements and
contractual terms. Revenues from pharmacogenomic services are recognized upon
completion of the services. Revenues for such amounts are deferred until earned.

        Nonrefundable upfront payments received for the value of transferred
technology or other contractual rights that are not contingent upon future
performance under the terms of the collaboration agreements are recognized as
revenue upon execution of the agreements. Under collaboration agreements in
which the Company creates a research database in exchange for a fixed fee,
revenues from such collaborations are recognized on the percentage-of-completion
method, primarily based on man-months incurred to date compared with total
estimated man-months for development of such database.

NOTE 2.  NOTES RECEIVABLE FROM EMPLOYEES

        During April 1999, the Company issued promissory notes to three officers
of the Company totaling $750,000 to offset tax liabilities for unrealized
capital gains resulting from stock option exercises. One of the notes will be
repaid in four equal annual installments together with accrued interest. The
other two notes are due and payable in April 2004. All promissory notes bear
interest at 5.25% and are secured by either the Company's common stock or
proceeds from the sale of the Company's common stock owned by the officer. The
Company estimates the total fair value of such promissory notes to be $663,000
using a discounted cash flow analysis.

NOTE 3.  ACCRUED RESTRUCTURING

        In connection with the acquisition of Oncormed, the Company recorded a
restructuring liability of approximately $1.6 million. The objective of the
restructuring plan was to eliminate redundant general and administrative
employees of Oncormed and terminate contracts that the Company deemed to have no
on-going economic value to the Company. The restructuring liability consisted of
$373,000 in costs associated with the involuntary termination of ten Oncormed
employees and approximately $1.2 million in contract termination costs. This
liability was included in the purchase price allocation performed in connection
with the acquisition. Management anticipates the restructuring activities as a
result of the acquisition will be substantially completed in 1999.



                                       7.
<PAGE>   8

        The following table details the major components of the restructuring
liability relating to the Oncormed acquisition:

<TABLE>
<CAPTION>
                                                                       CONTRACT
                                                                      TERMINATION
                                                     PERSONNEL           COSTS             TOTAL
                                                     ---------       --------------      ---------
                                                                     (in thousands)
<S>                                                  <C>             <C>                 <C>
         Restructuring liability ............        $     373         $   1,224         $   1,597
         1998 activity ......................             (239)           (1,174)           (1,413)
                                                     ---------         ---------         ---------
         Balance at December 31, 1998 .......              134                50               184
         Activity through June 30, 1999 .....             (132)               --              (132)
                                                     ---------         ---------         ---------
         Balance at June 30, 1999 ...........        $       2         $      50         $      52
                                                     =========         =========         =========
</TABLE>


NOTE 4.  LONG-TERM DEBT

        In June 1999, the Company and the Maryland Economic Development
Corporation ("MEDCO") entered into a Loan Agreement (the "MEDCO Loan") for the
financing of the Company's tenant improvements related to its office and
research laboratory facility. The Company borrowed $425,000 under this
agreement, bearing interest at 5.0% per annum. The MEDCO Loan will be repaid in
equal quarterly installments over ten years beginning in September 1999;
however, the unpaid principal and interest may be due upon demand if the Company
relocates its corporate headquarters outside of Montgomery County, Maryland. The
Company granted MEDCO a security interest collateralized by certain furniture.

NOTE 5.  SEGMENT INFORMATION

        At December 31, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, "Disclosure about Segments of an Enterprise and
Related Information" ("SFAS No. 131"). SFAS No. 131 established standards for
reporting information about operating segments in annual and interim financial
statements and related disclosures about its products, services, geographic
areas and major customers. The Company's operations are treated as one operating
segment--genomic information products, software and research services--as the
Company only reports loss information on an aggregate basis to chief operating
decision makers of the Company.

        The following is a breakdown of revenue by major collaborators exceeding
ten percent (10%) of such revenues and geographic areas:

<TABLE>
<CAPTION>
                                                      MAJOR COLLABORATORS                            GEOGRAPHIC AREA
                                         ---------------------------------------------       --------------------------------
                                           A            B            C            D          JAPAN        EUROPE         US
                                         ------       ------       ------       ------       ------       ------       ------
<S>                                      <C>          <C>          <C>          <C>          <C>          <C>          <C>
For the three months ended:
   June 30, 1999 ..................          38%          21%          12%          11%          38%          23%          21%
   June 30, 1998 ..................          27%          14%          19%          39%          27%          58%          14%

For the six months ended:
   June 30, 1999 ..................          38%          23%          14%          12%          38%          26%          23%
   June 30, 1998 ..................          37%          17%          21%          24%          37%          45%          17%
</TABLE>



                                       8.
<PAGE>   9

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

        The following Management's Discussion and Analysis of Financial
Condition and Results of Operations contains forward-looking statements,
including statements as to the timing of availability of products under
development, the ability to commercialize products developed under
collaborations, the performance and utility of the Company's products and
services, and the adequacy of capital resources. Such statements reflect
management's current views of future events and are subject to risks and
uncertainties that could cause actual results to differ materially from those
projections. These risks and uncertainties include, but are not limited to, the
extent of utilization of genomic information by the pharmaceutical industry in
both research and development, risks relating to the development of genomic
database products and their use by existing and potential collaborators and
customers of the Company, the Company's ability to manage and maintain multiple,
concurrent collaborations, the Company's reliance on collaborators for
development and commercialization of products, the impact of technological
advances and competition, the Company's ability to enforce its intellectual
property rights, the impact of the intellectual property rights of others, the
Company's ability to obtain additional financing on terms favorable to the
Company and the Company's ability to enter into arrangements with new
collaborators and to maintain new and existing collaborations, the ability of
the Company to implement in a timely manner the programs and actions related to
the Year 2000 issue, as well as other risks and uncertainties included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998 filed
with the Securities and Exchange Commission.

        GeneExpress(TM) and Flow-thru Chip(TM) are trademarks of the Company.
GeneChip(R) is a registered trademark of Affymetrix, Inc. ("Affymetrix").

OVERVIEW

        The Company was incorporated in September 1994 and has devoted
substantially all of its resources to the development of its genomics
technologies, bioinformatics systems and database products for use in
pharmaceutical, diagnostic and agricultural product research and development.
The Company has collaborations with the American Home Products Corp.'s
Wyeth-Ayerst Laboratories, Hoechst Schering AgrEvo GmbH, Japan Tobacco Inc.,
Merck & Company Inc., NV Organon, a pharmaceutical unit of Akzo Nobel NV,
Procter & Gamble Pharmaceuticals, Rhone-Poulenc Rorer Inc., Schering-Plough
Corp. and SmithKline Beecham PLC.

        These agreements provide the Company with various combinations of
recurring technology and database access fees, research funding and fees for
pharmacogenomic services, certain additional payments upon the attainment of
research and product development milestones, royalty payments based on sales of
any products resulting from the collaborations, and non refundable upfront
payments. Technology and database access fees are recognized evenly over the
term of the Company's collaboration agreements. Revenues from research and
development support are recognized when they are earned which is ordinarily when
the work is performed or costs are incurred. Revenues from pharmacogenomic
services are recognized upon completion of the services. Milestone payments and
royalties are recognized when they are earned in accordance with the applicable
performance requirements and contractual terms. Revenues for such amounts are
deferred until earned. Nonrefundable upfront payments received for the value of
transferred technology or other contractual rights that are not contingent upon
future performance under the terms of the collaboration agreements are
recognized as revenue upon execution of the agreements. The loss of revenues
from any individual material collaboration agreement, if terminated, could have
a material adverse effect on the Company's business, financial condition and
results of operations.

        In an effort to address the growing needs of research and development in
the pharmaceutical industry, the Company is investing significant resources in
building its GeneExpress(TM) databases. These databases will contain expression
information from a wide variety of tissues from healthy, diseased and
drug-treated patients and from experimental animals. The initial GeneExpress
database will incorporate



                                       9.
<PAGE>   10

data obtained from GeneChip(R) probe arrays under an agreement with Affymetrix.
The Company commenced marketing the GeneExpress databases to pharmaceutical
companies and expects to receive subscriptions fees from such database users in
late 1999.

        Gene Logic's future profitability will depend in part on the successful
establishment of collaborations which include various combinations of genomic
databases, bioinformatics software and genomics technology and the successful
commercialization of its GeneExpress databases. Payments through collaborations
and subscriptions to the GeneExpress databases are expected to be the Company's
primary sources of revenue for the foreseeable future. Significant royalties or
other revenues from commercial sales of products developed from any therapeutic,
diagnostic or agricultural product identified using the Company's technologies
are not expected for several years, if at all. Through June 30, 1999, royalties
or other revenues from commercial sales of products paid to Gene Logic were
immaterial. Revenues under collaborations may be subject to significant
fluctuation in both timing and amount, and, therefore, the Company's results of
operations for any period may not be comparable to the results of operations for
any other period. Furthermore, the generation of significant revenues and
profitability will depend upon the Company's ability to enter into additional
collaborations and successfully commercialize its GeneExpress databases. There
can be no assurance that the Company will enter into additional collaborations
on acceptable terms, if at all, or that current or future collaborations will be
successful or that the Company will be able to successfully commercialize its
GeneExpress databases.

        The Company has incurred operating losses in each year since its
inception. At June 30, 1999, excluding the $35.2 million non-recurring charge
incurred in connection with the acquisition of Oncormed, the Company had
accumulated operating losses of approximately $31.7 million. The Company's
losses have resulted principally from costs incurred in research and development
and from general and administrative costs associated with the Company's
operations, in addition to the charge incurred in connection with the
acquisition of Oncormed. These costs have exceeded the Company's revenues which,
to date, have been generated principally from collaborations. The Company
expects to incur additional operating losses at least through 1999, primarily as
a result of increases in its expenses for research and development.

        The Company's quarterly operating results may fluctuate significantly as
a result of a variety of factors, including changes in the demand for the
Company's technologies and products, variations in revenues under
collaborations, including milestone payments, royalties, license fees and other
contract revenues, and the timing of new product introductions, if any, by the
Company. The Company's quarterly operating results may also fluctuate
significantly depending on changes in the research and development budgets of
the Company's collaborative partners, the introduction of new products by the
Company's competitors and other competitive factors, the adoption of new
technologies, and the cost, quality and availability of cell and tissue samples
and related reagents.

UPDATE ON IN-PROCESS RESEARCH AND DEVELOPMENT

        In connection with the acquisition of Oncormed in September 1998, the
Company allocated $35.2 million of the $39.2 million purchase price to
in-process research and development projects. This allocation represents the
estimated fair value based on discounted cash flows related to the incomplete
research and development projects. At the time of acquisition, the progress of
these projects had not yet reached technological feasibility and the projects
had no alternative future uses. Accordingly, these costs were expensed as of the
acquisition date. The in-process research and development value consists of four
technology projects that involve the development of technologies for either
genomic databases or pharmacogenomics.

        At June 30, 1999, additional progress had been achieved on each of the
four technology projects that were underway as of the acquisition. In general,
the Company believes that these research and development projects are on track
with management's plans at the time the acquisition occurred. Through



                                      10.
<PAGE>   11

June 30, 1999, no significant adjustments have been made in the economic
assumptions or expectations that underlie the Company's acquisition decision and
related purchase accounting. All four in-process research and development
projects are active, and the Company is advancing the technology at a rate
consistent with originally projected completion dates. Specifically, the SNP
Analysis Project, Recognizer Project and Gene Chip / Gene Expression Database
Development Project are substantially complete and the Biorepository Project is
expected to be substantially complete during 1999. Because these technologies
are interrelated with respect to the development of genomic database and
pharmacogenomic products, the Company does not expect to derive any significant
economic benefits from them until late 1999.

        Remaining development efforts for the projects which are still
incomplete are highly complex and include the development and validation of the
necessary biochemistry, molecular biology and bioinformatic tools and
information, as well as small-scale deployment and commercial introduction.
Funding for such projects has been and is expected to continue from existing
cash balances. The Company estimates the costs to complete the remaining
projects at approximately $443,000 for the remainder of 1999. Total costs to
complete the projects from the date of acquisition are estimated to be
approximately $3.3 million.

        Although the Company has substantially completed three of the projects
and intends to complete the development of the remaining project and in-process
technologies and although, management believes in the likelihood of their
feasibility, there can be no assurance that such remaining project or
in-process technologies will be completed successfully, or that any of the
in-process technologies will achieve commercial success. If, at a later date,
the Company decides to no longer pursue one or all of these technologies,
decides to indefinitely postpone the research effort related to one or all of
the technologies, or determines that the discounted expected cash flows will no
longer meet projections, it will disclose that fact to investors--explaining
why it will not pursue commercialization or why the research has been postponed
(and when the research is expected to resume) and how much of the purchase
price the technologies (or projects) represent. If these technologies are not
successfully developed or commercially successful, future results of operations
of the Company may be adversely affected. Additionally, the value of other
intangible assets acquired may become impaired.

        Descriptions of the Company's estimates used to determine the value
assigned to the in-process technologies and costs, timing and anticipated
benefits of completing the development of the in-process technologies are
forward-looking statements that involve risks and uncertainties. The Company's
actual costs and timing to complete development of the remaining technologies
and any benefits derived therefrom or from completed technologies will depend on
many factors, including the Company's ability to complete development of the
remaining technologies successfully, to overcome remaining technical obstacles
and competing technologies, to gain market acceptance of products using such
technologies and to adapt to market developments and the availability to the
Company of adequate capital resources to commercialize such technologies. If the
Company is unsuccessful in developing or commercializing such technologies, the
Company will not achieve the benefits expected from acquiring such technologies
or obtain a return on its investment in connection with the acquisition and
would likely discontinue its operations with respect to such technologies.
Additionally, even if successfully completed, these projects will require
maintenance research and development after they have reached a state of
technological and commercial feasibility.

RESULTS OF OPERATIONS

        Three Months and Six Months Ended June 30, 1999 and 1998

        Revenues increased to $5.2 million and $9.3 million for the three and
six months ended June 30, 1999, respectively, from $3.7 million and $5.9 million
for the same periods in 1998. The increase in revenues was the result of the
addition of new customers and expansion of prior customer relationships. Of the
revenues from major collaborators for the three months ended June 30, 1999,
thirty-eight percent



                                      11.
<PAGE>   12

(38%) was received from Japan Tobacco; twenty-one percent (21%) was received
from Procter & Gamble; twelve percent (12%) was received from Organon; and
eleven percent (11%) was received from AgrEvo. In addition, the Company received
8% of its revenue under a one-time evaluation agreement. Revenue percentages by
major collaborator for the six months ended June 30, 1999 were comparable to
those of the three month period ended June 30, 1999. Revenues received from
other sources were not material.

        Research and development expenses increased to $7.5 million and $14.5
million for the three and six months ended June 30, 1999, respectively, from
$3.9 million and $7.1 million for the same periods in 1998. The increase in
research and development expenses for the three and six months ended June 30,
1999 as compared to the same periods in 1998 was primarily attributable to
approximate increases of: (i) fifty percent (50%) in research agreement
expenses, (ii) twenty percent (20%) in personnel expenses, (iii) ten percent
(10%) in laboratory supplies, and (iv) ten percent (10%) in depreciation
expense. The increase in research and development expenses primarily relates to
the Company's efforts in building its GeneExpress databases which started in
1999, expansion of its target discovery and bioinformatics businesses to
accommodate new and expanded collaborations, and further development of its
Flow-thru Chip(TM) program. The Company expects research and development
expenses to increase as the Company expands its GeneExpress databases, maintains
new and expanding target discovery collaborations, and further develops the
Flow-thru Chip.

        General and administrative expenses increased to $2.0 million and $3.8
million for the three and six months ended June 30, 1999, respectively, from
$1.7 million and $3.3 million for the same periods in 1998. These costs include
the costs of corporate operations, finance and accounting, human resources and
other general operations. For the three and six months ended June 30, 1999 as
compared to the same periods in 1998, the increase in general and administrative
expenses was primarily attributable to the Company's expansion of its business
development efforts through increased staffing and other general costs necessary
to support the expansion of the Company's operations. The Company expects that
general and administrative expenses will increase as the Company expands its
product line and business development and marketing efforts.

        Amortization of goodwill was $381,000 and $762,000 for the three and six
months ended June 30, 1999, respectively, as a result of the acquisition of
Oncormed in September 1998.

        Net interest income decreased to $224,000 and $463,000 for the three and
six months ended June 30, 1999, respectively, from $491,000 and $1.1 million for
the same periods in 1998 primarily due to the smaller cash and investment
balance on hand as a result of funding the Company's operating losses through
June 30, 1999.

LIQUIDITY AND CAPITAL RESOURCES

        From inception through June 30, 1999, the Company financed its
operations through the sale of equity securities, payments under collaborative
agreements and equipment and tenant improvement financing. In connection with
its collaboration with Procter & Gamble, the Company holds a promissory note of
$500,000 that is due in December 1999. The Company has also obtained $471,000 of
capital lease financing and $6.3 million under equipment and tenant improvement
loans. As of June 30, 1999, the Company had approximately $20.5 million in cash
and marketable securities, compared to $31.0 million as of December 31, 1998.

        In connection with the acquisition of Oncormed, the Company acquired
in-process research and development, which is comprised of several technology
projects. The Company expects to spend approximately $3.3 million in total to
develop commercially viable products using such technologies and to begin to
generate revenues from them. Costs to complete the development of these
remaining technologies are estimated to be $443,000 for the remainder of 1999.
Funding for such efforts has been and is expected to continue from existing cash
balances. These estimates are subject to change, given the



                                      12.
<PAGE>   13

uncertainties of the development process, and no assurance can be given that
deviations from these estimates will not occur.

        In connection with the acquisition of Oncormed, the Company recorded a
restructuring liability of approximately $1.6 million. The objective of the
restructuring plan was to eliminate redundant general and administrative
employees of Oncormed and terminate contracts that the Company deemed to have no
on-going economic value to the Company. The restructuring liability consisted of
$373,000 in costs associated with the involuntary termination of ten Oncormed
employees and approximately $1.2 million in contract termination costs. At June
30, 1999, approximately $2,000 and $50,000 of the restructuring charge remained
unpaid relating to involuntary employment and contract terminations,
respectively. Management anticipates the restructuring activities as a result of
the acquisition will be substantially completed in 1999.

        Net cash used in operating activities was $8.1 million for the six
months ended June 30, 1999 compared to $5.0 million for the six months ended
June 30, 1998. The Company has primarily used cash during 1999 and 1998 to fund
the Company's operating losses in addition to expenditures relating to
intangibles and other assets.

        During the six months ended June 30, 1999 and 1998, the Company had
expenditures relating to intangibles and other assets of approximately $303,000
and $312,000, respectively. These expenditures were primarily for patent costs
and license fees. The Company amortizes such patent costs to research and
development expense over the useful life of the underlying patent upon its
issuance. License fees are amortized to research and development expense over
periods of approximately one to seventeen years. These expenditures are
necessary and are expected to increase to protect the Company's intellectual
property and to secure rights to current technology.

        The Company's investing activities, other than sales, maturities and
purchases of available-for-sale securities, consisted of capital expenditures,
which totaled $1.5 million and $4.9 million for the six months ended June 30,
1999 and 1998, respectively, and the issuance of promissory notes to three
officers of the Company totaling $750,000 during the six months ended June 30,
1999. The decrease in capital expenditures from year to year was primarily due
to the funding of tenant improvements and furniture purchases in the first
quarter of 1998 relating to the completion of the Company's new office and
research laboratory facility. The Company expects to have additional capital
expenditures in 1999 as it expands its facility requirements and acquires
laboratory and computer equipment to support expanding research and development
activities. The Company's capital expenditures in 1999 are expected to be less
than those in 1998.

        Net cash used in financing activities was $116,000 for the six months
ended June 30, 1999 compared to net cash provided by financing activities of
$3.4 million in the six months ended June 30, 1998. During June 1999, the
Company obtained $425,000 to finance tenant improvements compared to $3.6
million of equipment financing received during the same period of 1998. The cash
obtained to finance tenant improvements in 1999 was offset by repayments under
equipment loans and a capital lease obligation.

        In June 1998, the Company entered into a loan agreement for the
financing of laboratory, computer and office equipment. Under the loan
agreement, the Company may borrow up to $5.0 million through June 1999. At June
30, 1999, the Company had borrowed approximately $4.8 million. The Company
expects to extend the borrowing period and increase the borrowing amount under
the loan agreement or obtain financing from additional sources in 1999.

        In January 1999, the Company entered into a three year agreement with
Affymetrix, pursuant to which Affymetrix will supply its GeneChip probe arrays
to the Company for the development of gene expression databases. Under the terms
of the agreement, the Company will pay Affymetrix subscription fees for access
to the probe arrays, purchase the probe arrays and related instrumentation and
software,



                                      13.
<PAGE>   14

and pay royalties to Affymetrix on revenues generated from certain database
subscriptions fees. The Company's commitments under other research and license
agreements do not represent a significant expenditure in relation to the
Company's total research and development expense.

        To date, all revenue received by the Company has been generated
principally from its collaborations. The Company expects that substantially all
revenue for the foreseeable future will come from collaborative partners and
subscriptions to its GeneExpress databases. Furthermore, the Company's ability
to achieve profitability will be dependent upon the ability of the Company to
enter into additional collaborations and successfully commercialize its
GeneExpress databases. There can be no assurance that the Company will be able
to negotiate additional collaborations in the future on acceptable terms, if at
all, or that current or future collaborations will be successful and provide the
Company with expected benefits or that the Company will be able to successfully
commercialize its GeneExpress databases.

        The Company believes that existing cash and marketable securities and
anticipated cash flow from its current collaborations will be sufficient to
support the Company's operations at least through the middle of the year 2000.
The estimate for the period for which the Company expects its available cash
balances and estimated cash flow from its current collaborations to be
sufficient to meet its capital requirements is a forward-looking statement that
involves risks and uncertainties. The Company's actual future capital
requirements and the adequacy of its available funds will depend on many
factors, including progress of its discovery programs, the number and breadth
of these programs, the ability of the Company to establish and maintain
additional collaboration and licensing arrangements, the commercial success of
the in-process technologies acquired in the acquisition of Oncormed and the
progress of the development and commercialization efforts of the Company's
collaborative partners. These factors also include the level of the Company's
activities relating to its independent discovery programs and to the
development and commercialization rights it retains in its collaboration
arrangements, competing technological and market developments, the costs
associated with obtaining access to tissue samples and related information and
the costs involved in preparing, filing, prosecuting, maintaining and enforcing
patent claims and other intellectual property rights. The Company expects that
it will require significant additional financing in the future, which it may
seek to raise through public or private equity offerings, debt financing or
additional collaboration and licensing arrangements. No assurance can be given
that additional financing or collaboration and licensing arrangements will be
available when needed, if at all, or that, if available, will be obtained on
terms favorable to the Company and its stockholders. To the extent that the
Company raises additional capital by issuing equity or convertible debt
securities, ownership dilution to stockholders will result. If adequate
financing is not available when needed, the Company may be required to curtail
significantly one or more of its research and development programs or to obtain
funds through arrangements with collaborative partners or others that may
require the Company to relinquish rights to certain of its technologies,
discoveries or potential products, or to grant licenses on terms that are not
favorable to the Company, any of which could have a material adverse effect on
the Company's business, financial condition and results of operations. In the
event that adequate funds are not available, the Company's business would be
adversely affected.

YEAR 2000 COMPLIANCE

        Many computer systems and software products are coded to accept two
digit entries in the date code field. These date code fields will need to accept
four digit entries to distinguish 21st century dates from 20th century dates. As
a result, at the end of this year, computer systems and software used by many
companies may need to be upgraded to comply with such "Year 2000" requirements.
The Company uses a significant number of computer software programs and
operating systems in connection with its database products, services and
internal operations. Such software and systems were purchased and installed with
a view towards Year 2000 compliance. Nevertheless, Year 2000 problems could
affect the Company's research and development, financial, administrative and
communication operations.

        The Company has implemented a program designed to address Year 2000
problems. A cross-functional Year 2000 project team has performed a
comprehensive review of internal computer systems, electronic devices and
software. In addition, the Company has identified material third parties which
the



                                      14.
<PAGE>   15

Company relies upon for its operations. The Company is performing internal and
external compliance audits and Year 2000 validation testing. The Company is in
the process of receiving Year 2000 certifications from third parties the Company
has material agreements with and formulating contingency plans. Systems critical
to the Company's business that are not Year 2000 compliant are being replaced or
corrected as they are identified through programming modifications and/or
software upgrades. The Company expects these projects to be successfully
completed in the second half of 1999. The estimated timing of completion of
these efforts is a forward-looking statement that involves risk and
uncertainties, including the risk that such efforts will not adequately address
such Year 2000 problems and that, as a result, the Company's business will be
adversely affected.

        External and internal costs specifically associated with modifying
internal software for Year 2000 compliance are expensed as incurred. To date,
costs have not been material and are not expected to be in the future. Such
costs do not include normal system upgrades and replacements. Based on the
Company's current plans and efforts to date, the Company believes that changes
mandated by the Year 2000 issue will not cause any material adverse effects on
the Company's business, financial condition and results of operations. There is
no guarantee, however, that all problems will be foreseen and corrected, or that
no material disruption of the Company's business will occur.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

        The Company does not hold any financial instruments subject to
significant market risk.



PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

        The Company is not a party to any legal proceedings.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

        During the quarter ended June 30, 1999, the Company has sold and issued
the following securities which were not registered under the Securities Act of
1933, as amended (the "Securities Act"):

        On June 3, 1999, the Company sold 25,437 shares of the Company's common
stock to Oxford Bioscience Partners L.P. ("Oxford") and 7,057 shares to Oxford
Bioscience Partners (Bermuda) Limited Partnership ("Oxford Bermuda") pursuant to
their exercise of warrants dated August 31, 1995, at a purchase price of $1.60
per share. The sale and issuance of the securities to Oxford and Oxford Bermuda
were deemed to be exempt from registration under the Securities Act by virtue of
Section 4(2) promulgated thereunder.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None.

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

        The Company held its Annual Meeting of Stockholders on June 8, 1999 (the
"Annual Meeting"). At the Annual Meeting, the Company's stockholders elected two
directors to the Company's Board of Directors and approved the proposals as more
fully described below.

        At the Annual Meeting, 16,778,495 shares out of a total of 19,738,358
shares of Common Stock outstanding at the record date were represented in person
or by proxy.



                                      15.
<PAGE>   16

        The proposals considered at the Annual Meeting were voted on as follows:

1.      Election of Directors

        Proposal to elect two directors to hold office until the 2002 Annual
        Meeting of Stockholders or his earlier resignation or removal.

<TABLE>
<CAPTION>
        Nominee                            Votes For           Votes Withheld
        -------                            ---------           --------------
<S>                                        <C>                 <C>
        Jeffrey D. Sollender               16,508,191             270,304
        Alan G. Walton, Ph.D., D.Sc.       16,650,113             128,382
</TABLE>

        The following individuals' term of office as a director continue after
        the meeting: Charles L. Dimmler III, G. Anthony Gorry, Ph.D., Jules
        Blake, Ph.D. and Michael J. Brennan, M.D., Ph.D.

2.      Approve the Company's 1997 Equity Incentive Plan, as Amended

        Proposal to approve the Company's 1997 Equity Incentive Plan, as
        amended, to increase the aggregate number of shares of Common Stock
        authorized for issuance under such plan by 1,000,000 shares. The
        proposal was approved by a vote of 11,841,917 shares in favor and
        1,362,792 shares against.

3.      Approve the Company's 1997 Non-Employee Directors' Stock Option Plan, as
        Amended

        Proposal to approve the Company's 1997 Non-Employee Directors' Stock
        Option Plan, as amended, to increase the aggregate number of shares of
        Common Stock authorized for issuance under such plan by 200,000 shares
        and to increase the number of shares underlying the options which are
        automatically granted each year to each non-employee director by 7,500
        shares. The proposal was approved by a vote of 11,959,154 shares in
        favor and 1,245,555 shares against.

4.      Appointment of Independent Auditors

        Proposal to ratify the selection of Arthur Andersen LLP as independent
        auditors of the Company for its fiscal year ending December 31, 1999.
        Proposal was approved by a vote of 16,730,639 shares in favor and 47,856
        shares against.

ITEM 5. OTHER INFORMATION

        None.



                                      16.
<PAGE>   17

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        A)     EXHIBITS:

<TABLE>
<S>                          <C>
               *10.45        Amended and Restated Employment Agreement, dated
                             April 1, 1999, between the Registrant and Douglas
                             Dolginow.

               *10.51        Promissory Note, dated April 14, 1999, between the
                             Registrant and Michael J. Brennan.

               *10.52        Promissory Note, dated April 14, 1999, between the
                             Registrant and Mark D. Gessler.

               *10.53        Promissory Note, dated April 8, 1999, between the
                             Registrant and Douglas Dolginow.

               *10.54        Pledge and Security Agreement, dated April 8, 1999,
                             between the Registrant and Douglas Dolginow.

               11.1          Statement regarding computation of net loss per
                             share

               27.1          Financial Data Schedule
</TABLE>

              * Indicates management compensatory plan, contract or arrangement.

        B)     REPORTS ON FORM 8-K:

               No reports on Form 8-K were filed during the three months ended
June 30, 1999.



                                      17.
<PAGE>   18

                                   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.


                                        GENE LOGIC INC.


Date:   August 13, 1999                 By: /s/ Michael J. Brennan, M.D., Ph.D.
                                            ------------------------------------
                                            Michael J. Brennan, M.D., Ph.D.
                                            Chief Executive Officer and Director
                                            (Principal Executive Officer)


Date:   August 13, 1999                 By: /s/ Mark D. Gessler
                                            ------------------------------------
                                            Mark D. Gessler
                                            President, Chief Operating Officer,
                                            Chief Financial Officer and
                                            Secretary (Principal Financial and
                                            Accounting Officer)



                                      18.