<PAGE>
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                                   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 March 31, 1998  

                                         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 14,175,207 as of April 30, 1998.

===============================================================================

<PAGE>

                                   GENE LOGIC INC.

                                 TABLE OF CONTENTS


PART I        FINANCIAL INFORMATION

Item 1.  Financial Statements

          Balance Sheets at March 31, 1998 and December 31, 1997 . . . . .  3
              
          Statements of Operations for the three months ended 
          March 31, 1998 and 1997. . . . . . . . . . . . . . . . . . . . .  4

          Statements of Cash Flows for the three months ended 
          March 31, 1998 and 1997. . . . . . . . . . . . . . . . . . . . .  5

          Notes to Financial Statements. . . . . . . . . . . . . . . . . .  6

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

Item 3.   Quantitative and Qualitative Disclosure About Market Risk. . . . 11

PART II       OTHER INFORMATION

Item 1.   Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 11

Item 2.   Changes in Securities and Use of Proceeds. . . . . . . . . . . . 11

Item 3.   Defaults Upon Senior Securities. . . . . . . . . . . . . . . . . 12

Item 4.   Submission of Matters to a Vote of Security Holders. . . . . . . 12

Item 5.   Other Information. . . . . . . . . . . . . . . . . . . . . . . . 12

Item 6.   Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 13

          Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

                                       2


<PAGE>

PART I        FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS


                                   GENE LOGIC INC.
                                    BALANCE SHEETS
                         (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                                                                   MARCH 31,     DECEMBER 31,
                                                                                      1998          1997
                                                                                  ----------     -----------
                                                                                  (Unaudited)
<S>                                                                               <C>            <C>
                                         ASSETS
Current Assets:
  Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . .        $   37,455     $   46,522
  Marketable securities available for sale . . . . . . . . . . . . . . . .             4,362             99
  Due from strategic partner . . . . . . . . . . . . . . . . . . . . . . .               353          1,000
  Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .               472            481
  Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . .             1,137            890
                                                                                  ----------     ----------
     Total Current Assets. . . . . . . . . . . . . . . . . . . . . . . . .            43,779         48,992
Property and Equipment, net. . . . . . . . . . . . . . . . . . . . . . . .             7,620          4,211
Intangible and Other Assets, net . . . . . . . . . . . . . . . . . . . . .               903            769
                                                                                  ----------     ----------
     Total Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $   52,302     $   53,972
                                                                                  ----------     ----------
                                                                                  ----------     ----------


                          LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              $627           $181
    Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .             2,882          1,371
    Current portion of capital lease obligation. . . . . . . . . . . . . .               117            115
    Current portion of long-term debt. . . . . . . . . . . . . . . . . . .               443            434
    Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .             2,476          4,436
                                                                                  ----------     ----------
      Total Current Liabilities. . . . . . . . . . . . . . . . . . . . . .             6,545          6,537
Deferred Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               117           --  
Capital Lease Obligation . . . . . . . . . . . . . . . . . . . . . . . . .               195            225
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               663            777
Other Noncurrent Liabilities . . . . . . . . . . . . . . . . . . . . . . .               395            366
                                                                                  ----------     ----------
    Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . .             7,915          7,905
                                                                                  ----------     ----------
Stockholders' Equity:
     Common Stock, $.01 par value; 60,000,000 shares authorized; 
      13,900,333 and 13,899,250 shares issued and outstanding as of 
      March 31, 1998 and December 31, 1997, respectively . . . . . . . . .               139            139
     Preferred Stock, $.01 par value; 10,000,000 shares authorized; 
      no shares issued and outstanding as of March 31, 1998 and 
      December 31, 1997. . . . . . . . . . . . . . . . . . . . . . . . . .                --             --
     Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . .            64,882         64,882
     Deferred compensation on stock options, net . . . . . . . . . . . . .            (5,845)        (6,278)
     Unrealized loss on marketable securities. . . . . . . . . . . . . . .                (4)            (2)
     Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . .           (14,785)       (12,674)
                                                                                  ----------     ----------
        Total Stockholders' Equity . . . . . . . . . . . . . . . . . . . .            44,387         46,067
                                                                                  ----------     ----------
        Total Liabilities and Stockholders' Equity . . . . . . . . . . . .           $52,302        $53,972
                                                                                  ----------     ----------
                                                                                  ----------     ----------
</TABLE>
                                 See accompanying notes.


                                             3


<PAGE>

                                     GENE LOGIC INC.
                                 STATEMENTS OF OPERATIONS
                         (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                       (UNAUDITED)
<TABLE>
<CAPTION>
                                                                               THREE MONTHS ENDED
                                                                                    MARCH 31,
                                                                          ----------------------------
                                                                            1998                1997
                                                                          --------             -------
<S>                                                                       <C>                  <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . .          $  2,196             $    --
Expenses:
 Research and development. . . . . . . . . . . . . . . . . . . .             3,237                 915
 General and administrative. . . . . . . . . . . . . . . . . . .             1,596                 476
                                                                          --------             -------
    Total expenses . . . . . . . . . . . . . . . . . . . . . . .             4,833               1,391
                                                                          --------             -------
    Loss from operations . . . . . . . . . . . . . . . . . . . .            (2,637)             (1,391)
Interest income, net . . . . . . . . . . . . . . . . . . . . . .               607                  61
Other expense. . . . . . . . . . . . . . . . . . . . . . . . . .               (81)               --  
                                                                          --------             -------
    Loss before income tax expense . . . . . . . . . . . . . . .            (2,111)             (1,330)
Income tax expense . . . . . . . . . . . . . . . . . . . . . . .              --                  --  
                                                                          --------             -------
    Net loss . . . . . . . . . . . . . . . . . . . . . . . . . .            (2,111)             (1,330)
Accretion of mandatory redemption of Preferred Stock . . . . . .              --                   186
                                                                          --------             -------
    Net loss attributable to common stockholders . . . . . . . .           $(2,111)            $(1,516)
                                                                          --------             -------
Basic and Diluted Net Loss Per Common Share. . . . . . . . . . .           $ (0.15)            $ (2.38)
                                                                          --------             -------
Shares Used In Computing Basic and Diluted Net Loss
  Per Common Share . . . . . . . . . . . . . . . . . . . . . . .            13,900                 638
                                                                          --------             -------
Pro Forma Net Loss Per Common Share. . . . . . . . . . . . . . .           $ (0.15)            $ (0.24)
                                                                          --------             -------
Shares Used in Computing Pro Forma Net Loss
  Per Common Share . . . . . . . . . . . . . . . . . . . . . . .            13,900               5,474
                                                                          --------             -------
                                                                          --------             -------
</TABLE>
                                  See accompanying notes.

                                            4

<PAGE>

                                     GENE LOGIC INC.
                                 STATEMENTS OF CASH FLOWS
                                      (IN THOUSANDS)
                                       (UNAUDITED)
<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED
                                                                               MARCH 31,
                                                                         ------------------------
                                                                            1998           1997
                                                                         ---------      ---------
<S>                                                                      <C>            <C>
Cash Flows From Operating Activities:

  Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $  (2,111)     $  (1,330)
  Adjustments to reconcile net loss to net cash flows from
    operating activities:
    Depreciation and amortization  . . . . . . . . . . . . . . . .             292            102
    Cancellation of note receivable. . . . . . . . . . . . . . . .              --             43
    Amortization of deferred compensation  . . . . . . . . . . . .             433             --
    Loss on disposal of property and equipment . . . . . . . . . .              81             --
Changes in operating assets and liabilities:
    Due from strategic partner . . . . . . . . . . . . . . . . . .             647             --
    Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . .              10            (78)
    Other current assets . . . . . . . . . . . . . . . . . . . . .            (247)            32
    Intangibles and other assets . . . . . . . . . . . . . . . . .            (156)           (65)
    Accounts payable . . . . . . . . . . . . . . . . . . . . . . .             445             39
    Accrued expenses . . . . . . . . . . . . . . . . . . . . . . .           1,511           (777)
    Deferred revenue . . . . . . . . . . . . . . . . . . . . . . .          (1,843)            --
    Other noncurrent liabilities . . . . . . . . . . . . . . . . .              30             --
                                                                         ---------      ---------
      Net Cash Flows From Operating Activities . . . . . . . . . .            (908)        (2,034)
                                                                         ---------      ---------
Cash Flows From Investing Activities:
    Purchases of property and equipment  . . . . . . . . . . . . .          (3,760)          (353)
    Increase in notes receivable from employees. . . . . . . . . .              --            (20)
    Purchase of marketable securities for sale . . . . . . . . . .          (4,266)            --
    Proceeds from sale and maturity of marketable securities
     available for sale. . . . . . . . . . . . . . . . . . . . . .              --          1,394
                                                                         ---------      ---------
      Net Cash Flows From Investing Activities . . . . . . . . . .          (8,026)         1,021
                                                                         ---------      ---------
Cash Flows From Financing Activities:
    Proceeds from issuance of common stock . . . . . . . . . . . .              --             --
    Repayments of financing agreement. . . . . . . . . . . . . . .             (44)            --
    Repayments of capital lease obligation and equipment loan. . .             (89)           (26)
                                                                         ---------      ---------
      Net Cash Flows From Financing Activities . . . . . . . . . .            (133)           (26)
                                                                         ---------      ---------
Net Decrease in Cash and Cash Equivalents. . . . . . . . . . . . .          (9,067)        (1,039)
Cash and Cash Equivalents, beginning of period . . . . . . . . . .          46,522          1,137
                                                                         ---------      ---------
Cash and Cash Equivalents, end of period . . . . . . . . . . . . .       $  37,455       $     98
                                                                         ---------      ---------
                                                                         ---------      ---------
Supplemental Disclosure:
    Interest expense paid. . . . . . . . . . . . . . . . . . . . .       $      34       $      9
                                                                         ---------      ---------
                                                                         ---------      ---------
</TABLE>
                               See accompanying notes.

                                          5


<PAGE>
                                  GENE LOGIC INC.
                           NOTES TO FINANCIAL STATEMENTS
                                   MARCH 31, 1998
                                    (UNAUDITED)

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

          The accompanying unaudited 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 balance sheet as of March 31, 1998, statements of 
operations for the three months ended March 31, 1998 and 1997 and the 
statements of cash flows for the three months ended March 31, 1998 and 1997 
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 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, 1997 filed with the
Securities and Exchange Commission.

NEW PRONOUNCEMENTS

           In March 1997, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" 
("SFAS No. 128").  SFAS No. 128 simplifies the standards for computing 
earnings per share previously found in Accounting Principles Board Opinion 
No. 15, "Earnings Per Share" ("APB Opinion No. 15").  It replaces the 
presentation of primary and fully diluted EPS with a presentation of basic 
and diluted EPS and requires a reconciliation of the numerator and 
denominator of the basic EPS calculation to the numerator and denominator of 
the diluted EPS calculation.  Basic EPS excludes dilution and is computed by 
dividing income available to common stockholders by the weighted average 
number of common shares outstanding for the period.  Diluted EPS is computed 
similarly to primary EPS pursuant to APB Opinion No. 15.

           SFAS No. 128 is effective for interim periods and fiscal years 
ending after December 15, 1997.  EPS for the three months ended March 31, 
1997 has been restated in accordance with SFAS 128. 

           In June 1997, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive 
Income" ("SFAS No. 130"). SFAS No. 130 sets standards for reporting and 
presentation of comprehensive income and its components in financial 
statements. SFAS No. 130 is effective for fiscal years beginning after 
December 15, 1997. Once adopted, it requires reclassification adjustments and 
changes in presentation for all prior periods shown. The impact of the 
adoption of SFAS No. 130 on the Company was not material. 


                                       6


<PAGE>

           In June 1997, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 131, "Disclosure About 
Segments of an Enterprise and Related Information", which establishes 
standards for reporting information about operating segments in annual and 
interim financial statements issued to shareholders.  This statement also 
establishes standards for related disclosures about products and services, 
geographic areas and major customers.  The Company plans to adopt this 
statement in 1998.

MARKETABLE SECURITIES AVAILABLE FOR SALE

           All marketable securities are classified as available-for-sale. 
Available-for-sale securities are carried at fair value, with unrealized 
gains and losses reported as a separate component of stockholders' equity.  
Realized gains and losses and declines in value judged to be other than 
temporary for available for sale securities are included in other income.  As 
of March 31, 1998 and 1997, all of the Company's investments were classified 
as current as the Company may not hold investments until maturity in order to 
take advantage of market conditions.

REVENUE RECOGNITION

           The Company recognizes revenue from research and development 
support and technology and database access fees as they are earned under the 
terms of the agreement.  Revenue is deferred for fees received before they 
are earned. Revenues related to the achievement of certain milestones are 
recognized when earned. 

PRO FORMA NET LOSS PER COMMON SHARE

          Pro forma net loss per common share is computed using the weighted 
average number of shares of common stock outstanding giving effect to the 
conversion of convertible preferred shares that automatically converted to 
common stock upon completion of the Company's initial public offering (the 
"IPO") using the if-converted method from the original date of issuance.  
Common equivalent shares from stock options and warrants are excluded from 
the computation for all periods as their effect is antidilutive. 

NOTE 2.  STOCKHOLDERS' EQUITY

          During July 1997, the Company sold 4,444,443 shares of Series C 
Convertible Preferred Stock in a private placement for net proceeds of 
approximately $19.1 million.  During November 1997, the Company completed an 
IPO of 3,347,000 shares of Common Stock (including exercise of the 
underwriters' over-allotment option) at $8.00 per share, generating net 
proceeds of approximately $23.9 million.  In conjunction with the Company's 
IPO, all outstanding shares of preferred stock were converted to common stock 
on a one-to-one basis.

          The Company continues to apply the provisions of Accounting 
Principles Board Opinion No 25, "Accounting for Stock Issued to Employees", 
and related interpretations for its stock option plans.  As such, the Company 
has recorded compensation expense for the three months ended March 31, 1998 
as follows:

<TABLE>
<CAPTION>
                                                               DEFERRED 
                                                             COMPENSATION
                                                             ------------
<S>                                                          <C>
Balance at December 31, 1997                                   $ (6,278)
Amortization of deferred compensation                               433
                                                               --------
Balance at March 31, 1998                                      $ (5,845)
                                                               --------
                                                               --------
</TABLE>

                                       7


<PAGE>

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

           THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
AND RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE MANAGEMENT'S 
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AND 
THE FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED IN THE COMPANY'S 
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997 FILED WITH 
THE SECURITIES AND EXCHANGE COMMISSION.

           THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
CONDITION AND RESULTS OF OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS THAT 
INVOLVE RISKS AND UNCERTAINTIES.  WORDS SUCH AS "ANTICIPATES," "BELIEVES," 
"ESTIMATES," "EXPECTS," "INTENDS" AND OTHER SIMILAR EXPRESSIONS ARE INTENDED 
TO IDENTIFY FORWARD-LOOKING STATEMENTS, BUT ARE NOT THE EXCLUSIVE MEANS OF 
IDENTIFYING SUCH STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO RISKS AND 
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE 
PROJECTED.  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 DATABASES AND THEIR USE BY POTENTIAL COLLABORATORS OF THE COMPANY, 
THE IMPACT OF TECHNOLOGICAL ADVANCES AND COMPETITION, AS WELL AS OTHER RISKS 
AND UNCERTAINTIES SET FORTH IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 
THE YEAR ENDED DECEMBER 31, 1997 FILED WITH THE SECURITIES AND EXCHANGE 
COMMISSION. 

           Flow-thru Chip-TM- and ACCELERATED DRUG DISCOVERY-TM- are 
trademarks of the Company. Tradenames and trademarks of other companies 
appearing in this Form 10-Q are the property of their respective holders.

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 used to identify 
the expression of genes, drug targets and drug leads.  During 1997, the 
Company entered into strategic alliances with Procter & Gamble 
Pharmaceuticals, Inc. ("Procter & Gamble"), Japan Tobacco Inc. ("Japan 
Tobacco") and N.V. Organon ("Organon"), a pharmaceutical business unit of 
Akzo Nobel NV. These agreements provide the Company with various combinations 
of technology and database access fees and research funding and provide 
certain additional payments upon the attainment of research and product 
development milestones and royalty payments based on sales of any products 
resulting from the strategic alliances.  Procter & Gamble and Japan Tobacco 
each have the option to expand the alliances to cover additional research 
areas. Japan Tobacco purchased $3.0 million of the Company's Common Stock in 
a private placement that closed simultaneously with the Company's initial 
public offering. 

           Gene Logic's future profitability will depend in part on the 
successful establishment of strategic alliances, marketing of genomic 
databases and bioinformatics software, and development of the Flow-thru Chip. 
 Payments from strategic alliance partners and interest income are expected 
to be the only sources of revenue for the foreseeable future.  Such revenue 
is dependent in large part on the discovery of genes, drug targets and drug 
leads using the Company's technologies. Royalties or other revenue from 
commercial sales of products developed from any therapeutic or diagnostic 
product identified using the Company's technologies are not expected for at 
least several years, if at all. Payments under strategic alliances 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 
entering into additional alliances. There can be no assurance that the 
Company will enter into additional alliances on acceptable terms, if at all, 
or that current or future alliances will be successful. 

                                       8


<PAGE>

           The Company has incurred operating losses in each year since its 
inception, and, at March 31, 1998, the Company had an accumulated deficit of 
approximately $14.8 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. These costs 
have exceeded the Company's revenues which to date have been generated 
principally from strategic alliances. The Company expects to incur additional 
operating losses over the next few years as a result of increases in its 
expenses for research and development capabilities. 

           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 payments 
under strategic alliances, 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 strategic partners, the introduction 
of new products by the Company's competitors and other competitive factors, 
adoption of new technologies, and the cost, quality and availability of cell 
and tissue samples and related reagents. 

RESULTS OF OPERATIONS

           THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997

           Revenue was $2.2 million for the three months ended March 31, 
1998. There was no revenue for the three months ended March 31, 1997.  The 
increase in revenues resulted from the Company's strategic alliance 
agreements with Procter & Gamble, Japan Tobacco and Organon, which were 
entered into subsequent to March 31, 1997.  Under the terms of the strategic 
alliance agreements, payments for technology and database access fees and 
research funding are recognized ratably over the period for which the 
payments are made.  Payments related to the achievement of certain milestones 
are recognized as revenue when the milestones are achieved.

           Research and development expenses increased to $3.2 million for 
the three months ended March 31, 1998 compared to $915,000 for the same 
period in 1997. The increase in research and development expenses was 
attributable to increased personnel expenses, laboratory supplies and 
facility costs as a result of the Company expanding its target discovery 
programs, Flow-thru Chip development and bioinformatics business.  The 
Company expects research and development expenses to continue to increase as 
personnel and research and development facilities are expanded to accommodate 
new and existing strategic alliances.

           General and administrative expenses increased to $1.6 million for 
the three months ended March 31, 1998 compared to $476,000 for the same 
period in 1997. The increase is due primarily to increased personnel 
expenses, professional fees and facility costs as a result of the Company's 
overall scale-up of operations and business development efforts.  The Company 
expects that general and administrative expenses will continue to increase as 
the Company continues to expand its operations.

           Net interest income increased to $607,000 for the three months 
ended March 31, 1998 from $61,000 for the same period in 1997 due to 
investment of proceeds from the Company's private placement of equity 
securities and initial public offering in 1997.

LIQUIDITY AND CAPITAL RESOURCES

           From inception through March 31, 1998, the Company financed its 
operations through proceeds from the Company's initial public offering and 
private placements of equity securities, payments from 

                                       9

<PAGE>

strategic alliance partners, a capital lease and an equipment loan. In 
November 1997, the Company completed an initial public offering of 3,347,000 
shares of its Common Stock (including exercise of the underwriters' 
over-allotment option), generating net proceeds of approximately $23.9 
million.  The private placements of equity securities have provided the 
Company with aggregate gross proceeds of approximately $33.2 million. The 
Company has received, as of March 31, 1998, $6.5 million under its strategic 
alliances for technology and database access fees and research funding.  The 
Company has also obtained $471,000 of capital lease financing and $1.1 
million under an equipment loan. As of March 31, 1998, the Company had 
approximately $41.8 million in cash and marketable securities, compared to 
$46.6 million as of December 31, 1997. 

           Net cash used in operating activities was $908,000 for the three 
months ended March 31, 1998, as compared to net cash used in operating 
activities of $2.0 million for the three months ended March 31, 1997.  The 
decrease in net cash used in operating activities resulted from a payment 
received from a strategic partner, revenue recognized under strategic 
alliances and timing of payments relating to the Company's obligations.  The 
Company's investing activities, other than purchases, sales and maturities of 
available-for-sale securities, primarily consisted of capital expenditures, 
which totaled $3.8 million and $353,000 for the three months ended March 31, 
1998 and 1997, respectively.  The increase was primarily due to funding 
tenant improvements relating to the completion of the Company's new office 
and research laboratory facility in February 1998 and laboratory and computer 
equipment and furniture purchases to support the Company's expanding 
business.  Net cash used in financing activities was $133,000 and $26,000 for 
the three months ended March 31, 1998 and 1997, respectively. The increase is 
due to repayments under an equipment loan that was entered into in April 1997.

           As of December 31, 1997, the Company had net operating loss 
carryforwards of approximately $10.4 million to offset federal and state 
income taxes. The Company's research and development tax credit carryforwards 
were estimated to be approximately $279,000 as of December 31, 1997 for 
federal income tax purposes. If not utilized, the federal and state net 
operating loss carryforwards will expire through 2012. 

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

           The Company believes that existing cash and marketable securities 
and anticipated cash flow from its current strategic alliances will be 
sufficient to support the Company's operations for at least the next 24 
months. The estimate for the period for which the Company expects its 
available cash balances and estimated cash flow from its current strategic 
alliances to be sufficient to meet its capital requirements is a 
forward-looking statement that involves risks and uncertainties as set forth 
herein and elsewhere in this Quarterly Report on Form 10-Q. 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 strategic alliance and licensing 
arrangements and the progress of the development and commercialization 
efforts of the Company's strategic 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 strategic alliance 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

                                      10

<PAGE>

rights. The Company expects that it will require significant additional 
financings in the future, which it may seek to raise through public or 
private equity offerings, debt financing or additional strategic alliance and 
licensing arrangements. No assurance can be given that additional financing 
or strategic alliance 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 strategic 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 currently installed 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, in less than two years, 
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, including 
applications used in financial business systems and various administration 
functions.  The Company is in the process of formulating and implementing a 
program designed to ensure that all software used in connection with the 
Company's database products, services and internal operations systems will 
manage and manipulate data involving the transition of dates from 1999 to 
2000 without functional or data abnormality and without inaccurate results 
related to such dates.  The Company currently anticpates that it will not 
incur material costs in connection with such program.

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

        RECENT SALES OF UNREGISTERED SECURITIES

      Since January 1, 1998, the Company has sold and issued the following 
securities which were not registered under the Securities Act of 1933, as 
amended (the "Securities Act"):

      (1)  During the period, the Company granted stock options to employees, 
officers and directors of the Company under its 1997 Equity Incentive Plan 
covering an aggregate of 305,500 shares of the Company's Common Stock.  
Certain of these options vest over a period of time following their 
respective dates of grant. During the period, 100 shares of Common Stock were 
issued pursuant to the exercise of stock options granted under the 1997 
Equity Incentive Plan and 275,857 shares of Common Stock were

                                      11

<PAGE>

issued pursuant to the exercise of stock options granted under the 1996 Stock 
Plan (such plan was amended and restated in September 1997 as the 1997 Equity 
Incentive Plan.). 

       The issuance of Common Stock described in paragraph (1) above was 
deemed to be exempt from registration under the Securities Act by virtue of 
Rule 701 promulgated thereunder in that they were offered and sold either 
pursuant to written compensatory benefit plans or pursuant to a written 
contract relating to compensation, as provided by Rule 701.  

      On November 20, 1997, the Company's Form S-1 Registration Statement 
(File no. 333-37317) was declared effective by the Securities and Exchange 
Commission.  The Registration Statement, as amended, covered the offering of 
3,000,000 shares of the Company's Common Stock, $.01 par value.  The offering 
commenced on November 21, 1997 and the sale to the public of 3,000,000 shares 
of Common Stock at $8.00 per share was completed on November 26, 1997 for an 
aggregate price of $24.0 million. The Registration Statement covered an 
additional 450,000 shares of Common Stock that the underwriters had the 
option to purchase solely to cover over-allotments. The managing underwriters 
for the offering were BancAmerica Robertson Stephens, Hambrecht & Quist LLC 
and UBS Securities LLC.  On December 22, 1997, the underwriters exercised 
their option to purchase 347,000 additional shares of Common Stock.  A total 
of 3,347,000 shares of Common Stock were sold in the offering at an aggregate 
price of approximately $26.8 million. All of the shares sold in the offering 
were sold by the Company.

       Expenses incurred by the Company through December 31, 1997 in 
connection with the issuance and distribution of Common Stock in the offering 
included underwriting discounts, commissions and allowances and other 
expenses of approximately $1.9 million and $1.0 million, respectively. Total 
offering expenses of approximately $2.8 million resulted in net offering 
proceeds to the Company of approximately $23.9 million.  No expenses were 
paid to directors, officers or affiliates of the Company or 10% owners of any 
class of equity securities of the Company.

        Of the net offering proceeds to the Company of approximately $23.9 
million, through March 31, 1998, approximately $1.4 million had been used to 
fund tenant improvements, approximately $1.5 million had been used to fund 
capital expenditures, approximately $133,000 had been used to repay capital 
lease and equipment loan obligations, approximately $3.3 million had been 
used for expansion of internal research and development capabilities and 
approximately $1.7 million had been used for general corporate purposes.  No 
payments were made to directors, officers or affiliates of the Company or 10% 
owners of any class of equity securities of the Company.  Approximately $15.9 
million of the net offering proceeds remain as working capital.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

        None.

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

        None.

ITEM 5. OTHER INFORMATION.

        None.

                                      12

<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        A)    EXHIBITS:

              11.1        Statement regarding computation of net loss per share

              27.1        Financial Data Schedule

        B)    REPORTS ON FORM 8-K:
              
              No reports on Form 8-K were filed during the three months ended 
              March 31, 1998.

                                     13

<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.

                                        GENE LOGIC INC.


Date:  May 14, 1998                     By:  /S/ MICHAEL J. BRENNAN
                                             ------------------------------
                                             Michael J. Brennan, M.D., Ph.D.
                                             President, Chief Executive Officer
                                             and Director
                                             (PRINCIPAL EXECUTIVE OFFICER)


Date:  May 14, 1998                     By:  /S/ MARK D. GESSLER
                                             ------------------------------
                                             Mark D. Gessler
                                             Senior Vice President, Corporate
                                             Development,
                                             Chief Financial Officer and
                                             Secretary
                                             (PRINCIPAL FINANCIAL AND 
                                              ACCOUNTING OFFICER)
                                      14