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, 2003

                                       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 02421-3134
            --------------------------------------------------------
               (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
    ---------        ---------

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

Yes               No     X
     --------        ---------

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

          Class                                    Outstanding at May 1, 2003:
----------------------------                       ---------------------------
Common Stock, $.01 par value                               28,327,654


                                     <PAGE>


                              MACROCHEM CORPORATION

                               INDEX TO FORM 10-Q
                               ------------------

                                                                     Page Number
PART I     FINANCIAL INFORMATION                                     -----------

Item 1     Financial Statements

               Condensed Balance Sheets (Unaudited)
               March 31, 2003 and December 31, 2002                       3

               Condensed Statements of Operations for the
               Three Months Ended March 31, 2003                          4
               and 2002 (Unaudited)

               Condensed Statements of Cash Flows for the
               Three Months Ended March 31, 2003
               and 2002 (Unaudited)                                       5

               Notes to Unaudited Condensed Financial
               Statements                                                6-10


Item 2     Management's Discussion and Analysis of
           Financial Condition and Results of Operations                10-14

Item 3     Quantitative and Qualitative Disclosures About Market Risk    14

Item 4     Control and Procedures                                       14-15

PART II    OTHER INFORMATION

Item 6     Exhibits and Reports on Form 8-K                              16

SIGNATURES                                                               17

CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002                                                             18-21

EXHIBIT INDEX                                                            22


                                       2
<PAGE>

ITEM 1.       FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                              MACROCHEM CORPORATION
                            CONDENSED BALANCE SHEETS
                                   (Unaudited)
                    (Amounts in thousands except share data)

                                                                            March 31,            December 31,
                                                                              2003                   2002
                                                                        ---------------        ---------------

                                     ASSETS
<S>                                                                     <C>                    <C>
Current assets:
       Cash and cash equivalents                                        $           369        $           771
       Short-term investments                                                     7,137                  8,118
       Accounts receivable                                                           13                     40
       Receivable due from related party                                             25                     25
       Prepaid expenses and other current assets                                    572                    166
                                                                        ---------------        ---------------
           Total current assets                                                   8,116                  9,120
                                                                        ---------------        ---------------

Property and equipment, net                                                         332                    376
                                                                        ---------------        ---------------

Other assets:
       Patents, net                                                                 599                    607
       Deposits                                                                      29                     29
                                                                        ---------------        ---------------
           Total other assets                                                       628                    636
                                                                        ---------------        ---------------

Total assets                                                            $         9,076        $        10,132
                                                                        ===============        ===============

                                   LIABILITIES
Current liabilities:
       Accounts payable                                                 $           146        $            19
       Accrued expenses                                                             249                    395
                                                                        ---------------        ---------------
           Total current liabilities                                                395                    414

Deferred rent                                                                        46                     48
                                                                        ---------------        ---------------

Total liabilities                                                                   441                    462
                                                                        ---------------        ---------------

Commitments and contingencies

                              STOCKHOLDERS' EQUITY
Preferred stock, authorized and unissued, 6,000,000 shares                          ---                    ---
Common stock, $.01 par value, 60,000,000 shares authorized;
       28,390,654 and 28,163,054
       shares issued at March 31, 2003
       and December 31, 2002, respectively                                          284                    282
Additional paid-in capital                                                       72,900                 72,949
Accumulated deficit                                                            (64,057)               (62,888)
Less treasury stock, at cost, 151,666 and 185,264
       shares at March 31, 2003 and
       December 31, 2002, respectively                                            (492)                  (673)
                                                                        ---------------        ---------------
           Total stockholders' equity                                             8,635                  9,670
                                                                        ---------------        ---------------
Total liabilities and stockholders' equity                              $         9,076        $        10,132
                                                                        ===============        ===============
</TABLE>

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

                                       3
<PAGE>

<TABLE>
<CAPTION>
                              MACROCHEM CORPORATION
                       CONDENSED STATEMENTS OF OPERATIONS
               For the three months ended March 31, 2003 and 2002
                                   (Unaudited)
             (Amounts in thousands except share and per share data)

                                                                   For the three months ended
                                                  ---------------------------------------------------------
                                                                          March 31,
                                                          2003                                2002
                                                          ----                                ----

<S>                                                 <C>                                  <C>
Research contract revenues                          $         ---                        $           43
                                                    -------------                        --------------


Operating expenses:
    Research and development                                  540                                 1,235
    Marketing, general and administrative                     644                                 1,064
    Consulting fees with related parties                        6                                    15
                                                    -------------                        --------------
       Total operating expenses                             1,190                                 2,314
                                                    -------------                        --------------

Loss from operations                                      (1,190)                               (2,271)
                                                    -------------                        --------------

Other income (expense):
    Interest income                                            21                                    67
                                                    -------------                        --------------
       Total other income                                      21                                    67
                                                    -------------                        --------------

Net loss                                            $     (1,169)                        $      (2,204)
                                                    =============                        ==============

Net loss per share -
    basic and diluted                               $      (0.04)                        $       (0.08)
                                                    =============                        ==============

Weighted average shares
outstanding (basic and diluted)                        28,003,000                            27,908,000

</TABLE>

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

                                       4
<PAGE>

<TABLE>
<CAPTION>
                              MACROCHEM CORPORATION
                       CONDENSED STATEMENTS OF CASH FLOWS
               For the three months ended March 31, 2003 and 2002
                                   (Unaudited)
                             (Amounts in thousands)

                                                                            For the three months ended March 31,
                                                                                   2003                 2002
                                                                                   ----                 ----

<S>                                                                          <C>                   <C>
Cash flows from operating activities:
       Net loss                                                              $    (1,169)          $   (2,204)
       Adjustments to reconcile net loss to net cash
         used by operating activities:
           Depreciation and amortization                                               53                   55
           Stock-based compensation                                                    19                  150
           401(k) contribution in Company common stock                                 15                   33
           Deferred rent                                                              (2)                    1
       Changes in assets and liabilities:
           Accounts receivable                                                         27                  375
           Prepaid expenses and other current assets                                (406)                (278)
           Accounts payable and accrued expenses                                     (19)                (263)
                                                                             ------------          -----------


Net cash used by operating activities                                             (1,482)              (2,131)
                                                                             ------------          ---- ------

Cash flows from investing activities:
       Sales of short-term investments                                                981                1,835
       Expenditures for property and equipment                                        ---                 (20)
       Additions to patents                                                           ---                 (38)
                                                                             ------------          -----------
Net cash provided by investing activities                                             981                1,777
                                                                             ------------          -----------

Cash flows from financing activities:
       Proceeds from exercise of common stock options                                  99                  ---
                                                                             ------------          -----------
Net cash provided by financing activities                                              99                  ---
                                                                             ------------          -----------

Net change in cash and cash equivalents                                             (402)                (354)
Cash and cash equivalents at beginning of period                                      771                  697
                                                                             ------------          -----------

Cash and cash equivalents at end of period                                   $        369          $       343
                                                                             ============          ===========

</TABLE>

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


                                       5
<PAGE>

                              MACROCHEM CORPORATION
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

(1)      BASIS OF PRESENTATION

         The financial statements included herein have been prepared by
         MacroChem Corporation ("MacroChem" or the "Company") without audit,
         pursuant to the rules and regulations of the Securities and Exchange
         Commission. Certain information and footnote disclosures normally
         included in financial statements prepared in accordance with accounting
         principles generally accepted in the United States of America have been
         condensed or omitted pursuant to such rules and regulations. In the
         opinion of management, the accompanying unaudited financial statements
         include all adjustments (consisting only of normal recurring
         adjustments) necessary to present fairly the financial position,
         results of operations and cash flows of the Company at the dates and
         for the periods indicated. The unaudited financial statements included
         herein should be read in conjunction with the audited financial
         statements and the notes thereto included in the Company's Annual
         Report on Form 10-K for the fiscal year ended December 31, 2002.

         The results disclosed in the Statement of Operations for the three
         months ended March 31, 2003 are not necessarily indicative of the
         results to be expected for the full year.

         MacroChem is a biopharmaceutical company engaged in the development and
         commercialization of a portfolio of products through the application of
         SEPA(R) (Soft Enhancer of Percutaneous Absorption), its patented
         topical drug delivery technology.

(2)      STOCK BASED COMPENSATION

         The Company applies the intrinsic value method of accounting for stock
         options and awards granted to employees. The Company accounts for stock
         options and awards to non-employees using the fair value method.

         Under the intrinsic value method, compensation associated with stock
         awards to employees is determined as the difference, if any, between
         the current fair value of the underlying common stock on the date
         compensation is measured and the price an employee must pay to exercise
         the award. The measurement date for employee awards is generally the
         date of grant. Under the fair value method, compensation associated
         with stock awards to non-employees is determined based on the estimated
         fair value of the award itself, measured using either current market
         data or an established option pricing model. The measurement date for
         non-employee awards is generally the date performance of services is
         complete.

                                       6
<PAGE>

         The Company intends to continue to use the intrinsic value method to
         account for stock-based compensation to employees and directors. The
         following table illustrates the effect on net loss and net loss per
         share if the Company had applied the fair value method to stock-based
         employee and director compensation:

<TABLE>
<CAPTION>
                                                                            Three Months Ended March 31,
                                                                            ----------------------------
                                                                          2003                       2002
                                                                          ----                       ----

<S>                                                                 <C>                        <C>
        Net loss as reported                                        $    (1,169,000)           $   (2,204,000)

        Additional stock compensation measured using the fair
             value method                                                  (682,000)                 (958,000)
                                                                    ----------------           ---------------

        Proforma net loss                                           $    (1,851,000)           $   (3,162,000)
                                                                    ================           ===============

        Basic and diluted net loss per share - as reported          $         (0.04)           $        (0.08)
                                                                    ================           ===============

        Basic and diluted net loss per share - proforma             $         (0.07)           $        (0.11)
                                                                    ================           ===============
</TABLE>

         The fair value of options on their grant date was measured using the
         Black/Scholes option pricing model. Key assumptions used to apply this
         pricing model are as follows:

<TABLE>
<CAPTION>
                                                                            Three Months Ended March 31,
                                                                            ----------------------------
                                                                          2003                       2002
                                                                          ----                       ----

        <S>                                                            <C>                        <C>
        Risk-free interest rate                                        4.08%-4.53%                4.08%-4.53%
        Expected life of option grants                                   6 years                    6 years
        Expected volatility of underlying stock                           128%                       128%

        Expected dividend payment rate, as a percentage of
             the stock price on the date of grant                          ---                        ---
</TABLE>

         The weighted average fair value of options granted during 2002 was
         $1.20. There have been no options granted in 2003.

         The option pricing model used was designed to value readily tradable
         stock options with relatively short lives. The options granted to
         employees are not tradable and have contractual lives of up to ten
         years.

(3)      REVENUE RECOGNITION

         Research contract revenues consist of non-refundable research and
         development funding under collaborative agreements with various
         corporate or government organizations. Research and development funding
         is generally recognized as revenue at the time the research and
         development activities are performed under the terms of the related
         agreements, when the corporate partner is obligated to pay and when no
         future performance obligations exist. Payments received in advance of
         services provided result in the deferral of revenue recognition to
         future periods.

                                       7
<PAGE>

(4)      BASIC AND DILUTED LOSS PER SHARE

         The following table sets forth the computation of basic and diluted
         loss per share:

<TABLE>
<CAPTION>
                                                                  Three Months Ended March 31,
                                                                  ----------------------------
                                                                    2003                2002
                                                                    ----                ----

           <S>                                                 <C>                  <C>
           Numerator for basic and diluted loss per share:
              Net loss                                         $ (1,150,000)        $ (2,204,000)
                                                               =============        =============

           Denominator for basic and diluted loss per share:
              Weighted average shares
                 outstanding                                      28,003,000           27,908,000
                                                               =============        =============

           Net loss per share - basic and
           diluted                                             $      (0.04)        $      (0.08)
                                                               =============        =============
</TABLE>

         Potential common shares are not included in the per share calculations
         for diluted EPS, because the effect of their inclusion would be
         anti-dilutive. Anti-dilutive potential shares not included in per share
         calculations for the three months ended March 31, 2003 and 2002 were
         4,593,110 and 4,772,575, respectively.

(5)      STOCKHOLDERS' EQUITY

         During the three months ended March 31, 2003, no options were granted
         or exercised under the 2001 Incentive Plan (the "Plan"). Also during
         the same period, 4,034 options were canceled under the Plan.

         Under the 1994 Equity Incentive Plan (the "1994 Plan"), no options were
         granted or exercised during the three-month period ended March 31,
         2003. During the same period, 42,333 options were canceled under the
         1994 Plan.

         During the three months ended March 31, 2003, 227,600 options were
         exercised and 192,400 options were canceled under the 1984 Non
         Qualified Plan.

         Warrants to purchase common stock were issued in connection with an
         October 2000 private placement to two institutional investors. The
         warrants issued consist of warrants to purchase an aggregate of 363,322
         shares of common stock at a purchase price of $5.90 per share for five
         years. Through March 31, 2003, none of the $5.90 warrants had been
         exercised. Additionally, each investor received a warrant to purchase
         additional shares of common stock at a purchase price of $.01 per share
         exercisable only upon certain conditions relating to the trading price
         of common stock during the period following the effectiveness of the
         related registration statement. A total of 880,314 of the $.01 warrants


                                       8
<PAGE>

         were exercised through June 30, 2001, and there are no further
         exercises available under these $.01 warrants. The placement agent
         received a warrant to purchase 108,999 shares of common stock at a
         purchase price of $7.43 for five years. Through March 31, 2003, 50,000
         of the $7.43 warrants had been exercised. None were exercised in the
         three months ended March 31, 2003.

         In July 2001, the Company sold 1,566,047 shares of its common stock for
         approximately $10,148,000 in gross proceeds ($9,406,000 net of issuance
         costs) in a private placement to institutional investors.

         The investors in the July 2001 common stock transaction received
         warrants to purchase an aggregate of 313,209 shares of common stock at
         a purchase price of $8.995 per share. These warrants expire five years
         from the closing date and are callable by the Company if the closing
         price of the stock is higher than $17.99 for 15 consecutive trading
         days at any time before expiration. As of March 31, 2003, none of the
         $8.995 warrants had been exercised.

(6)      COMPREHENSIVE INCOME

         The Company reports comprehensive income in accordance with Statement
         of Financial Accounting Standards ("SFAS") No. 130, "Reporting
         Comprehensive Income", which requires businesses to disclose
         comprehensive income and its components in their general-purpose
         financial statements. Comprehensive loss is equal to the Company's net
         loss for the three months ended March 31, 2003 and 2002.

(7)      RECENT ACCOUNTING PRONOUNCEMENTS

         In November 2002, the Emerging Issues Task Force ("EITF") issued EITF
         Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables"
         ("EITF 00-21"), which provides guidance on the timing and method of
         revenue recognition for sales arrangements that include the delivery of
         more than one product or service. EITF 00-21 is effective prospectively
         for arrangements entered into in fiscal periods beginning after June
         15, 2003. The Company will adopt the provisions of EITF 00-21 for new
         contracts entered into beginning in the third quarter of 2003.

(8)      SUBSEQUENT EVENTS

         On April 10, 2003, MacroChem Corporation announced that the United
         States Food and Drug Administration (FDA) had lifted the October 2002
         clinical hold on human trials of MacroChem's drugs containing its
         absorption enhancer SEPA(R). Previously, on October 11, 2002, MacroChem
         Corporation had announced that the FDA had advised the Company that
         further clinical trials of MacroChem's drugs containing SEPA(R) had
         been placed on clinical hold until issues regarding a transgenic mouse
         carcinogenicity study had been resolved. In removing the clinical hold,
         the FDA requested additional information on that study, which was
         conducted by MacroChem in 1999 and reported to the FDA in February
         2000. MacroChem has agreed to provide that information and will
         continue to work with the FDA to address its questions.

                                       9
<PAGE>

         There can be no assurance that the FDA will ultimately approve any of
         MacroChem's investigational drugs. Certain risks and uncertainties
         associated with the filing and the FDA review of any future NDA and FDA
         regulation of the Company's proposed products are described or
         referenced elsewhere in this Quarterly Report on Form 10-Q and in the
         section entitled "Risk Factors" contained in the Company's Annual
         Report on Form 10-K for the year ended December 31, 2002.

         On November 11, 2002, the Company had received a notification from
         NASDAQ indicating that, for the previous thirty consecutive trading
         days, the Company's common stock had not satisfied the minimum bid
         price requirement of $1.00 per share required for continued inclusion
         on the NASDAQ National Market. On April 29, 2003, the Company received
         a notification from NASDAQ indicating that the closing bid price of the
         Company's common stock had been at $1.00 per share or greater for at
         least ten consecutive trading days prior to May 12, 2003, and that, as
         a result, the Company had regained compliance with the minimum bid
         price requirement.

         On March 31, 2003, the Company received a notification from NASDAQ
         indicating that, as of December 31, 2002, the Company's stockholders'
         equity did not comply with the minimum $10,000,000 stockholders' equity
         requirement for continued inclusion on the NASDAQ National Market. The
         NASDAQ notification further requested that the Company submit a
         specific plan to achieve and sustain compliance with NASDAQ National
         Market Listing Requirements. The Company has been in contact with
         NASDAQ concerning this matter. If the Company is unable to regain
         compliance, the Company will consider other potential actions,
         including applying to transfer its common stock to The NASDAQ SmallCap
         Market. A delisting of the Company's common stock from the NASDAQ
         National Market could reduce the liquidity of an investment in the
         Company's common stock and affect the Company's ability to raise
         additional funds in the future.

         On April 10, 2003, the Company announced that Robert J. Palmisano had
         resigned as President, Chief Executive Officer and Director of the
         Company and that Robert J. DeLuccia had been appointed Vice Chairman of
         the Company's Board and interim President and Chief Executive Officer.

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

GENERAL
-------

MacroChem's primary business is the development of pharmaceutical products for
commercialization by employing SEPA(R) (Soft Enhancer of Percutaneous
Absorption), its patented drug delivery technology. SEPA compounds, when
properly combined with drugs, provide pharmaceutical formulations (creams, gels,
lacquers, solutions, etc.) that enhance the transdermal delivery of drugs into
the skin or into the bloodstream. The Company currently derives no significant
revenue from product sales, royalties or license fees. The Company is developing
specific SEPA formulations for use with proprietary and non-proprietary drugs
manufactured by other pharmaceutical companies, and seeks to commercialize these
products through the formation of partnerships, strategic alliances and
licensing arrangements with those companies.

                                       10
<PAGE>

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 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 revenues in any particular period and/or fiscal year.

CRITICAL ACCOUNTING POLICIES
----------------------------

Note 1 of the consolidated financial statements included within the Company's
Form 10-K for the year ended December 31, 2002, includes a summary of the
significant accounting policies and methods used in the preparation of our
consolidated financial statements. The following is a brief discussion of the
more significant accounting policies and methods used by the Company.

The Company's discussion and analysis of its financial condition and results of
operations are based upon its financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires the Company to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses.

The Company believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its financial
statements. As more fully described in the notes to the consolidated financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2002, we derive revenue from research and development
programs. Research and development funding is generally recognized as revenue at
the time the research and development activities are performed under the terms
of the related agreements, when the counter-party is obligated to pay, and when
no future performance obligation exists. Research and development revenue is
billed on a cost reimbursement basis, which includes direct costs incurred in
connection with research activities and an allocation of certain other costs
incurred by the Company.

Costs and expenses incurred in connection with pending patent applications are
deferred. Costs related to successful patent applications are amortized over the
estimated useful lives of the patents using the straight-line method.
Accumulated patent costs and deferred patent application costs related to
patents that are considered to have limited future value are charged to
operations.

RESULTS OF OPERATIONS
---------------------

There were no revenues for the three-month period ended March 31, 2003, compared
to research contract revenues of $43,000 for the three-month period ended March
31, 2002. The decrease is the result of the Company having obtained a small
business grant in September of 2001, funded by the Department of Health and
Human Services, which was completed in January 2002.

                                       11
<PAGE>

Research and development expenses decreased $695,000, or 56%, to $540,000 in the
three-month period ended March 31, 2003 from $1,235,000 in the three-month
period ended March 31, 2002. The decrease is primarily attributable to expenses
of approximately $300,000 in the 2002 period for Topiglan Phase III clinical
trial studies, and the reduction of research staff levels in November of 2002,
reducing expenses in the 2003 period by approximately $290,000. The level of
research and development expenses is highly dependent on the timing and extent
of new and ongoing research performed in our in-house laboratories as well as
outside contract laboratories. The spending is expected to increase slightly
over the remainder of the year as we launch new clinical trials.

Marketing, general and administrative expenses decreased $420,000, or 39%, to
$644,000 in the three months ended March 31, 2003 from $1,064,000 in the
three-month period ended March 31, 2002. The decrease is primarily attributable
to the reduction in staff implemented in November of 2002, resulting in a
savings of approximately $370,000 in the 2003 period. In addition, the Company
has reduced spending on consultants, investor relations and travel expenses. The
spending is expected to increase slightly over the remainder of the year due to
increased business development activities.

Other income decreased $46,000, or 69%, to $21,000 in the three-month period
ended March 31, 2003 from $67,000 in the three-month period ended March 31,
2002. The decrease is due to an average lower invested balance of cash, cash
equivalents and short-term investments resulting from funds used in Company
operations and a decrease in overall return rates.

For the reasons described above, net loss decreased $1,035,000, or 47%, to
$1,169,000 in the three-month period ended March 31, 2003 from $2,204,000 in the
three-month period ended March 31, 2002.

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, government grants and the
limited sales of products and test materials. During the first three months of
2003, the Company received net proceeds from the exercise of stock options of
approximately $99,600 compared to no proceeds from the exercise of stock options
for the three months ended March 31, 2002.

At March 31, 2003, working capital was approximately $7,721,000, compared to
$8,706,000 at December 31, 2002. The decrease in the Company's working capital
was due primarily to the use of funds for operations and resulted in a lower
balance of cash and equivalents and short-term investments. 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 additional funds through the private or public sale of its securities,
the Company's working capital will be utilized primarily to fund its operating
activities.

                                       12
<PAGE>

There were no capital expenditures or additional patent development costs for
the three months ended March 31, 2003. The Company anticipates additional
capital and patent expenditures of approximately $200,000 for the remainder of
the current year.

On November 11, 2002, the Company had received a notification from NASDAQ
indicating that, for the previous thirty consecutive trading days, the Company's
common stock had not satisfied the minimum bid price requirement of $1.00 per
share required for continued inclusion on the NASDAQ National Market. On April
29, 2003, the Company received a notification from NASDAQ indicating that the
closing bid price of the Company's common stock had been at $1.00 per share or
greater for at least ten consecutive trading days prior to May 12, 2003, and
that, as a result, the Company had regained compliance with the minimum bid
price requirement.

On March 31, 2003, the Company received a notification from NASDAQ indicating
that, as of December 31, 2002, the Company's stockholders' equity did not comply
with the minimum $10,000,000 stockholders' equity requirement for continued
inclusion on the NASDAQ National Market. The NASDAQ notification further
requested that the Company submit a specific plan to achieve and sustain
compliance with NASDAQ National Market Listing Requirements. The Company has
been in contact with NASDAQ concerning this matter. If the Company is unable to
regain compliance, the Company will consider other potential actions, including
applying to transfer its common stock to The NASDAQ SmallCap Market. A delisting
of the Company's common stock from the NASDAQ National Market could reduce the
liquidity of an investment in the Company's common stock and affect the
Company's ability to raise additional funds in the future.

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, proprietary
manufacturing methods and advanced technologies; the ability of the Company to
enter into 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 may be required before the Company is able to generate revenues
sufficient to support its 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, cash equivalents and short term
investments will be sufficient to meet its operating expenses and capital
expenditure requirements for the next twelve months. The Company's cash
requirements may vary materially from those now planned because of 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.

                                       13
<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------

In November 2002, the Emerging Issues Task Force ("EITF") issued EITF Issue No.
00-21, "Revenue Arrangements with Multiple Deliverables" ("EITF 00-21"), which
provides guidance on the timing and method of revenue recognition for sales
arrangements that include the delivery of more than one product or service. EITF
00-21 is effective prospectively for arrangements entered into in fiscal periods
beginning after June 15, 2003. The Company will adopt the provisions of EITF
00-21 for new contracts entered into beginning in the third quarter of 2003.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

As of March 31, 2003, the Company is exposed to market risks which relate
primarily to changes in U.S. interest rates. The Company's cash equivalents and
short-term investments are subject to interest rate risk and will decline in
value if interest rates increase. Due to the short duration of these financial
instruments, generally one year or less, changes to interest rates would not
have a material effect upon the Company's financial position. A hypothetical 10%
change in interest rates would not have a material effect on our Statement of
Operations or Cash Flows for the three months ended March 31, 2003.

ITEM 4.    CONTROL AND PROCEDURES

(a)      Evaluation of disclosure controls and procedures. Our chief executive
         officer and our chief financial officer, after evaluating the
         effectiveness of our "disclosure controls and procedures" (as defined
         in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c))
         as of a date (the "Evaluation Date") within 90 days before the filing
         date of this quarterly report, have concluded that as of the Evaluation
         Date, our disclosure controls and procedures were adequate and designed
         to ensure that material information relating to the Company would be
         made known to them by others within the Company.

(b)      Changes in internal controls. There were no significant changes in our
         internal controls or to our knowledge, in other factors that could
         significantly affect our internal controls and procedures subsequent to
         the Evaluation Date.

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;


                                       14
<PAGE>

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, 2002 AND, IN PARTICULAR, THE
SECTION ENTITLED "RISK FACTORS".


                                       15
<PAGE>

PART II - OTHER INFORMATION


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

           (a)   The following exhibit is filed herewith:

                 99.1     Certification Pursuant to Section 1350, Chapter 63 of
                          Title 18, United States Code, as Adopted Pursuant to
                          Section 906 of the Sarbanes-Oxley Act of 2002.

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


                                       16
<PAGE>

                                   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 14, 2003               /s/ Robert J. DeLuccia
                           ---------------------------------------------
                           Robert J. DeLuccia
                           Interim President and Chief Executive Officer
                           (Principal Executive Officer)

                           /s/ Bernard R. Patriacca
                           ---------------------------------------------
                           Bernard R. Patriacca
                           Vice President, Chief Financial Officer and Treasurer
                           (Principal Financial Officer)


                                       17
<PAGE>

                            CERTIFICATION PURSUANT TO
                 SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


CERTIFICATIONS
--------------

I, Robert J. DeLuccia, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of MacroChem
         Corporation;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

a)       Designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

b)       Evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

c)       Presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

a)       All significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

b)       Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

                                       18
<PAGE>

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

Date:    May 14, 2003
         ------------



                                   /s/ Robert J. DeLuccia
                                   ---------------------------------------------
                                                Robert J. DeLuccia
                                   Interim President and Chief Executive Officer



                                       19
<PAGE>

                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


CERTIFICATIONS
--------------

I, Bernard R. Patriacca, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of MacroChem
         Corporation;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

a)       Designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

b)       Evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

c)       Presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

a)       All significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

b)       Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

                                       20
<PAGE>

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

Date:    May 14, 2003
         ------------



                                         /s/ Bernard R. Patriacca
                                         ---------------------------------------
                                                 Bernard R. Patriacca
                                         Vice President, Chief Financial Officer
                                                    and Treasurer


                                       21
<PAGE>


                                  EXHIBIT INDEX


The following designated exhibit is filed herewith:

99.1     Certification Pursuant to Section 1350, Chapter 63 of Title 18, United
         States Code, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
         Act of 2002.









                                       22
<PAGE>