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 0-13634

                              MACROCHEM CORPORATION
                              ---------------------
                          (Exact name of registrant as
                            specified in its charter)


         DELAWARE                                            04-2744744
---------------------------------                        -------------------
 (State or Other Jurisdiction                             (I.R.S. Employer
of Incorporation or Organization)                        Identification No.)

               110 HARTWELL AVENUE, LEXINGTON, MASSACHUSETTS 02173
               ---------------------------------------------------
               (Address of principal executive offices, Zip Code)

                                  781-862-4003
                                  ------------
              (Registrant's telephone number, including area code)

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

Yes    X          No
      ---              ---

     As of March 31, 1998, there were 22,202,865 shares of Common Stock, $.01
par value per share, of the Registrant outstanding.




<PAGE>
                              MACROCHEM CORPORATION

                                      INDEX
                                      -----

                                                                PAGE NUMBER
                                                                -----------
PART I     Financial Information

Item 1     Unaudited Financial Statements

               Balance Sheets
               March 31, 1998 and December 31, 1997                3-4

               Statements of Operations
               Three Months Ended March 31, 1998 and 1997           5

               Statements of Cash Flows
               Three Months Ended March 31, 1998 and 1997          6-7

               Notes to Unaudited Financial Statements              8


Item 2     Management's Discussion and Analysis of
           Financial Condition and Results of Operations           8-11



PART II    Other Information

Item 6     Exhibits and Reports on Form 8-K                         11



<PAGE>
                         PART I - FINANCIAL INFORMATION


ITEM 1.  UNAUDITED FINANCIAL STATEMENTS


                              MACROCHEM CORPORATION
                            UNAUDITED BALANCE SHEETS

                                     ASSETS
                                     ------


                                                 March 31,         December 31,
                                                   1998                1997
                                                -----------        ------------

CURRENT ASSETS:

   Cash and cash equivalents                    $24,296,277        $24,952,121
   Prepaid expenses and other
     current assets                                 141,564            117,683
                                                 ----------         ----------

TOTAL CURRENT ASSETS                             24,437,841         25,069,804
                                                 ----------         ----------

PROPERTY AND EQUIPMENT, 
   net of accumulated depreciation:
     1998-$603,395; 1997-$582,769                   416,829            281,216
                                                 ----------         ----------

OTHER ASSETS:

   Patents, net of accumulated amortization: 
     1998-$68,385; 1997-$59,603                     290,745            268,356
   Deposits                                           4,460              4,460
                                                 ----------         ----------

TOTAL ASSETS                                    $25,149,875        $25,623,836
                                                 ==========         ==========


                                                                     (Continued)


<PAGE>
                              MACROCHEM CORPORATION
                            UNAUDITED BALANCE SHEETS


                      LIABILITIES AND STOCKHOLDERS' EQUITY


                                              March 31,           December 31,
                                                1998                 1997
                                            -------------      ----------------

CURRENT LIABILITIES:

   Capitalized lease obligations            $     14,013        $     18,408
   Accounts payable and accrued
     expenses                                    536,630             204,352
   Deferred compensation and related
     accrued interest                             91,586              90,140
                                              ----------          ----------

     TOTAL CURRENT LIABILITIES                   642,229             312,900
                                              ----------          ----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

   Preferred Stock                                   ---                 ---
   Common Stock, $.01 par value;
     authorized 60,000,000 shares; 
     issued and outstanding 22,202,865
     shares and 22,182,865 shares at 
     March 31, 1998 and December 31,
     1997, respectively.                         222,029             221,829
   Additional paid-in capital                 46,985,290          46,923,677
   Unearned compensation                     (   123,169)        (   169,322)
   Accumulated deficit                       (22,576,504)        (21,665,248)
                                              ----------          ----------

TOTAL STOCKHOLDERS' EQUITY                    24,507,646          25,310,936
                                              ----------          ----------

TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                     $ 25,149,875        $ 25,623,836
                                              ----------          ----------

The accompanying notes are an integral part of these unaudited financial
statements.
                                                                     (Concluded)


<PAGE>
                              MACROCHEM CORPORATION
                       UNAUDITED STATEMENTS OF OPERATIONS


                                         FOR THE THREE MONTHS ENDED MARCH 31,
                                         ------------------------------------
                                              1998                   1997
                                              ----                   ----
REVENUES:

   Research contracts                     $        ---         $     50,000
   Product sales                                   ---                  650
                                            ----------           ----------
     TOTAL REVENUES                       $        ---         $     50,650
                                            ----------           ----------
OPERATING EXPENSES:

   Marketing, general and administrative       482,744              401,807
   Research and development                    724,846              444,818
   Consulting fees with related parties         12,000                3,000
                                            ----------           ----------
     TOTAL OPERATING EXPENSES                1,219,590              849,625
                                            ----------           ----------
     LOSS FROM OPERATIONS                  ( 1,219,590)         (   798,975)
                                            ----------           ----------
OTHER INCOME (EXPENSE):

   Interest Income                             310,299               88,861
   Interest Expense                        (     1,965)         (     2,202)
                                            ----------           ----------
     TOTAL OTHER INCOME                        308,334               86,659
                                            ----------           ----------
NET LOSS                                  $(   911,256)        $(   712,316)
                                            ==========           ==========
BASIC AND DILUTED NET LOSS
   PER SHARE                              $(      0.04)        $(      0.05)
                                            ==========           ==========
SHARES USED TO COMPUTE
   BASIC AND DILUTED NET LOSS
   PER SHARE                                22,200,690           15,732,443
                                            ==========           ==========






The accompanying notes are an integral part of these unaudited financial
statements.
<PAGE>
                              MACROCHEM CORPORATION
                       UNAUDITED STATEMENTS OF CASH FLOWS

                                            FOR THE THREE MONTHS ENDED MARCH 31,
                                            ------------------------------------
                                                  1998              1997
                                                  ----              ----

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                    $(911,256)        $(712,316)
                                                 -------           -------
   Adjustments to reconcile net loss to 
     net cash used by operating
     activities:
       Depreciation and amortization              42,275            30,953
       Stock-based compensation                   46,153            41,313
       Amortization of discounts on 
         marketable securities                       ---          (    176)

   Increase (decrease) in cash from:
     Accounts receivable                             ---            43,977
     Prepaid expenses and other current 
       assets                                   ( 23,881)         ( 49,264)
     Accounts payable and accrued expenses       332,278            35,710
     Deferred compensation and related 
       accrued interest                            1,446               665
     Deferred rent                                   ---          (  1,014)
                                                 -------           -------
       Total adjustments                         398,271           102,164
                                                 -------           -------
       Net cash used by operating activities    (512,985)         (610,152)
                                                 -------           -------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from maturities of marketable 
     securities                                      ---            22,000
   Expenditures for property and equipment      (169,106)         ( 10,354)
   Additions to patents                         ( 31,171)         ( 21,020)
                                                 -------           -------

       Net cash used for investing activities   (200,277)         (  9,374)
                                                 -------           -------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Principal payments on capital lease          (  4,395)         (  9,315)
   Proceeds from exercise of common stock 
     options                                      61,813           135,033
   Proceeds from exercise of common  stock 
     warrants                                        ---           264,800
   Proceeds from exercise of unit purchase 
     options                                         ---           315,000
                                                 -------           -------

       Net cash provided from financing 
         activities                               57,418           705,518
                                                 -------           -------


                                                                     (Continued)
<PAGE>
                              MACROCHEM CORPORATION
                 UNAUDITED STATEMENTS OF CASH FLOWS (Continued)



                                   FOR THE THREE MONTHS ENDED MARCH 31,
                                   ------------------------------------
                                      1998                      1997
                                      ----                      ----

NET INCREASE (DECREASE) IN    
   CASH AND CASH EQUIVALENTS    $(   655,844)               $   85,992

CASH AND CASH EQUIVALENTS,
   BEGINNING OF PERIOD            24,952,121                 7,329,881
                                  ----------                 ---------

CASH AND CASH EQUIVALENTS,
   END OF PERIOD                $ 24,296,277                $7,415,873
                                  ==========                 =========


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid for interest aggregated $519 and $1,536 for the three months ended
March 31, 1998 and 1997, respectively.

The Company did not pay any income taxes during those periods.














The accompanying notes are an integral part of these unaudited financial
statements.


                                                                     (Concluded)


<PAGE>
                              MACROCHEM CORPORATION
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

(1)  As permitted by the rules of the Securities and Exchange Commission (the
     "Commission") applicable to quarterly reports on Form 10-Q, these notes are
     condensed and do not contain all disclosures required by generally accepted
     accounting principles. Reference should be made to the financial statements
     and related notes included in the Company's Annual Report on Form 10-K for
     the year ended December 31, 1997.

     In the opinion of management of the Company, the accompanying unaudited
     financial statements reflect all adjustments which were of a normal
     recurring nature necessary for a fair presentation of the Company's
     financial position, results of operations and cash flows for the three
     months ended March 31, 1998 and 1997.

     The results disclosed in the Statement of Operations for the three months
     ended March 31, 1998 are not necessarily indicative of the results to be
     expected for the full year.

(2)  Certain prior year amounts have been reclassified to conform to their
     current presentation.

(3)  In March 1997, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards No. 128, "Earnings Per Share", which was
     effective for periods ending after December 15, 1997. SFAS No. 128 requires
     the Company to restate amounts previously reported as earnings per share to
     comply with the requirements of SFAS No. 128. The Company has determined
     that the adoption of SFAS No. 128 has had no effect on previously reported
     earnings per share since the results would be anti-dilutive.

(4)  The Company granted 75,000 Common Stock Options under the 1994 Equity
     Incentive Plan during the three months ended March 31, 1998. During this
     same period, 12,000 options under the 1984 Non-Qualified Stock Option Plan
     and 8,000 options under the 1994 Equity Incentive Plan were exercised. In
     addition, during this period, no options were canceled. All options were
     issued with an exercise price at the fair market value of the underlying
     common stock determined on the date of grant.

(5)  In March 1998, the Company adopted Financial Accounting Standards No. 130,
     "Reporting Comprehensive Income." The Company has determined that the
     adoption of SFAS No. 130 had no effect on the accompanying financial
     statements.


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

GENERAL

     MacroChem Corporation's primary business is the development of
pharmaceutical products for commercialization by applying SEPA(R) (Soft Enhancer
of Percutaneous Absorption), its patented topical drug delivery technology. SEPA
compounds, when properly combined with drugs, provide pharmaceutical
formulations (creams, gels, solutions, etc.) that enhance the transdermal
delivery of drugs into the skin or into the bloodstream. The Company currently
derives no revenue from product sales, royalties or license fees. The Company
plans to develop specific SEPA formulations for use with proprietary and
non-proprietary drugs manufactured by pharmaceutical companies, and to
commercialize these products through the formation of partnerships, strategic
alliances and license agreements with those companies. In order to attract
strategic partners, the Company is conducting clinical testing of certain
SEPA-enhanced drugs.

     The Company's results of operations can vary significantly from year to
year and quarter to quarter, and depend, among other factors, on the signing of
new licenses and product development agreements, the timing of revenues
recognized pursuant to license agreements, the achievement of milestones by
licensees, the progress of clinical trials conducted by the licensees and the
Company and the degree of research, marketing and administrative effort. The
timing of the Company's revenues may not match the timing of the Company's
associated product development expenses. To date, research and development
expenses have generally exceeded revenue in any particular period and/or fiscal
year.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997

     During the three months ended March 31, 1998, the Company had no revenues
as compared to $50,650 of revenues during the same period in 1997. $50,000 (of
the 1997 revenue) represented one completed research contract related to the
Company's proprietary SEPA technology.

     Marketing, general and administrative expenses increased approximately
$81,000 (20%) over the comparable 1997 period. Expenses associated with listing
of the Company's common stock on the NASDAQ National Market were the primary
reason for this increase.

     Research and development expenses in the 1998 period increased
approximately $280,000 (63%) over the comparable 1997 period. Increased clinical
trial efforts and costs related to the hiring of key research and regulatory
affairs executives accounted for most of this increase over 1997.

     Other income increased approximately $222,000, resulting primarily from
interest income earned on increased cash and cash equivalents.

LIQUIDITY AND CAPITAL RESOURCES

     Since inception, the primary source of funding for the Company's operations
has been the private and public sale of its securities, and to a lesser extent,
the licensing of its proprietary technology and products, research contracts and
the limited sales of products and test materials.

     The Company's working capital decreased approximately $961,000 from
December 31, 1997 to March 31, 1998. This reduction resulted primarily from the
impact of the net loss for the quarter in addition to the expenditures related
to fixed assets and patents.

     Until such time as the Company obtains agreements with third-party
licensees or partners to provide funding for the Company's anticipated business
activities or the Company is able to obtain funds through the private or public
sale of its securities, the Company's working capital will be utilized to fund
its activities.

     Capital expenditures and additional patent development costs for the three
months ended March 31, 1998 aggregated approximately $200,000. The Company
expects additional capital expenditures and patent development costs for the
remainder of the year to aggregate approximately $370,000.

     The Company's long term capital requirements will depend upon numerous
factors, including the progress of the Company's research and development
programs; the resources that the Company devotes to self-funded clinical testing
of SEPA enhanced compounds; proprietary manufacturing methods and advanced
technologies; the ability of the Company to enter into additional licensing
arrangements or other strategic alliances; the ability of the Company to
manufacture products under those arrangements; and the demand for its products
or the products of its licensees or strategic partners if and when approved for
sale by regulatory authorities. In any event, substantial additional funds will
be required before the Company is able to generate revenues sufficient to
support its long term operations. There is no assurance that the Company will be
able to obtain such additional funds on favorable terms, if at all. The
Company's inability to raise sufficient funds could require it to delay, scale
back or eliminate certain research and development programs.

     The Company believes that its existing cash and cash equivalents will be
sufficient to meet its operating expenses and capital expenditure requirements
for at least the next twelve months. The Company's cash requirements may vary
materially from those now planned because of potential changes in focus and
direction of the Company's research and development programs, competitive and
technical advances, patent developments or other developments. It is not
believed that inflation will have any significant effect on the results of the
Company's operations.

     THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE
RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS IN THIS REPORT AND IN
FORWARD-LOOKING STATEMENTS MADE FROM TIME TO TIME BY THE COMPANY ON THE BASIS OF
MANAGEMENT'S THEN-CURRENT EXPECTATIONS. FACTORS THAT MIGHT CAUSE SUCH A
DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO THE FOLLOWING: THE COMPANY'S HISTORY
OF OPERATING LOSSES AND NEED FOR CONTINUED WORKING CAPITAL; TECHNOLOGICAL
UNCERTAINTY RELATING TO TRANSDERMAL DRUG DELIVERY SYSTEMS AND THE EARLY STAGE OF
DEVELOPMENT OF THE COMPANY'S PROPOSED PRODUCTS; THE COMPANY'S NEED FOR
SIGNIFICANT ADDITIONAL PRODUCT DEVELOPMENT EFFORTS AND ADDITIONAL FINANCING;
UNCERTAINTIES RELATED TO CLINICAL TRIALS OF THE COMPANY'S PROPOSED PRODUCTS; THE
COMPANY'S DEPENDENCE ON THIRD PARTIES FOR COMMERCIALIZATION; NO ASSURANCE OF
LICENSE ARRANGEMENTS; THE LACK OF SUCCESS OF THE COMPANY'S PRIOR DEVELOPMENT
EFFORTS; UNCERTAINTIES RELATING TO GOVERNMENT REGULATION AND REGULATORY
APPROVALS; THE COMPANY'S DEPENDENCE ON THIRD PARTIES FOR THE FDA APPLICATION
PROCESS; THE COMPANY'S LACK OF EXPERIENCED MARKETING PERSONNEL AND DEPENDENCE ON
THIRD PARTIES FOR MARKETING AND DISTRIBUTION; THE COMPANY'S DEPENDENCE ON THIRD
PARTIES FOR MANUFACTURING; THE COMPANY'S RELIANCE ON KEY EMPLOYEES, THE LIMITED
PERSONNEL OF THE COMPANY AND ITS DEPENDENCE ON ACCESS TO SCIENTIFIC TALENT;
UNCERTAINTIES RELATING TO COMPETITION, PATENTS AND PROPRIETARY TECHNOLOGY;
UNCERTAINTIES RELATING TO RISKS OF PRODUCT LIABILITY CLAIMS, LACK OF PRODUCT
LIABILITY INSURANCE, AND EXPENSE AND DIFFICULTY OF OBTAINING ADEQUATE INSURANCE
COVERAGE; UNCERTAINTY OF PHARMACEUTICAL PRICING AND RELATED MATTERS; AND OTHER
FACTORS. ADDITIONAL INFORMATION ON THESE AND OTHER FACTORS WHICH COULD AFFECT
THE COMPANY'S ACTUAL RESULTS AND EXPERIENCE ARE INCLUDED IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997 AND, IN PARTICULAR, THE
SECTION ENTITLED "RISK FACTORS".

                                     PART II

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)    The following exhibits are filed herewith:

                27. Financial Data Schedule

         (b)    No reports on Form 8-K were filed during the quarter
                for which this report is filed.


                                   SIGNATURES
                                   ----------

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

                                                    MACROCHEM CORPORATION
                                                    ---------------------
                                                    (Registrant)

May 6, 1998                                        /S/ ALVIN J. KARLOFF
                                                    --------------------
                                                    Alvin J. Karloff
                                                    Chief Executive Officer and
                                                    Principal Financial Officer
<PAGE>