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 September 30, 1999

                                       or

[ ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934
                For the Transition Period from ____ to ____

                         Commission file number 0-13634

                              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 Number)

            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


     As of September 30, 1999, there were 22,421,662 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

                  Unaudited Balance Sheets
                  September 30, 1999 and December 31, 1998              3-4

                  Unaudited Statements of Operations
                  Three Months and Nine Months Ended
                  September 30, 1999 and 1998                            5

                  Unaudited Statements of Cash Flows
                  Nine Months Ended September 30, 1999 and 1998         6-7

                  Notes to Unaudited Financial Statements                8


Item 2   Management's Discussion and Analysis of
         Financial Condition and Results of Operations                 9-12

Item 3   Quantitative and Qualitative Disclosures About Market Risk     12


PART II  Other Information

Item 5   Other Information                                              13

Item 6   Exhibits and Reports on Form 8-K                               13


<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1.  UNAUDITED FINANCIAL STATEMENTS
         ------------------------------


                              MACROCHEM CORPORATION
                            UNAUDITED BALANCE SHEETS

                                     ASSETS
                                     ------

                                                 September 30,      December 31,
                                                     1999               1998
                                                 -------------      ------------
CURRENT ASSETS:

    Cash and cash equivalents                    $16,332,380         $20,504,097
    Accounts receivable                               99,195              48,393
    Prepaid expenses and other
      current assets                                 181,609             204,181
    Note receivable and related
      accrued interest from affiliate                 20,557                 ---
                                                  ----------         -----------

    TOTAL CURRENT ASSETS                          16,633,741          20,756,671
                                                  ----------          ----------


PROPERTY AND EQUIPMENT, net of accumulated
      depreciation:  1999-$879,026;
      1998-$731,080                                  405,033             397,483
                                                  ----------          ----------


OTHER ASSETS:

    Patents, net of accumulated amortization:
      1999-$92,583; 1998-$79,600                     439,396             351,110
    Deposits                                          29,193               4,460
                                                  ----------          ----------

TOTAL OTHER ASSETS                                   468,589             355,570
                                                  ----------          ----------

TOTAL ASSETS                                     $17,507,363         $21,509,724
                                                  ==========          ==========


                                                                     (Continued)

<PAGE>
                              MACROCHEM CORPORATION
                            UNAUDITED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

                                                   September 30,    December 31,
                                                       1999            1998
CURRENT LIABILITIES:                               -------------    ------------

    Accounts payable                              $    193,828     $    116,246
    Accrued clinical trial costs                       120,758          498,716
    Other accrued expenses                             167,423          156,210
    Deferred compensation and related
      accrued interest                                  95,503           93,563
                                                    ----------       ----------

    TOTAL CURRENT LIABILITIES                          577,512          864,735
                                                    ----------       ----------

DEFERRED REVENUE                                       500,000          500,000
                                                    ----------       ----------

TOTAL LIABILITIES                                    1,077,512        1,364,735
                                                    ----------       ----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

    Preferred stock                                        ---              ---
    Common stock, $.01 par value; authorized
      60,000,000  shares;  issued 22,553,964
      shares,  outstanding  22,421,662
      shares at September 30, 1999 and
      issued 22,281,245 shares,  outstanding
      22,140,328 shares at December 31, 1998           225,540          222,812
    Additional paid-in capital                      49,225,829       47,295,449
    Unearned compensation                          (   462,587)     (   170,676)
    Accumulated deficit                            (31,902,304)     (26,508,119)
                                                    ----------       ----------
    Total                                           17,086,478       20,839,466
    Less cost of treasury stock (132,302 shares
      at September 30, 1999 and 140,917 shares
      at December 31, 1998)                        (   656,627)     (   694,477)
                                                    ----------       ----------
TOTAL STOCKHOLDERS' EQUITY                          16,429,851       20,144,989
                                                    ----------       ----------

TOTAL LIABILITIES AND
    STOCKHOLDERS' EQUITY                          $ 17,507,363     $ 21,509,724
                                                    ==========       ==========

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

                                                                     (Concluded)
<PAGE>
<TABLE>
<CAPTION>

                              MACROCHEM CORPORATION
                       UNAUDITED STATEMENTS OF OPERATIONS

                                      For the three months             For the nine months
                                       ended September 30,              ended September 30,
                                ------------------------------    ------------------------------
                                      1999             1998             1999             1998
                                      ----             ----             ----             ----
REVENUES:
<S>                             <C>              <C>              <C>              <C>

     Research contract          $    143,417     $    187,496     $    377,388     $    187,496
                                  ----------       ----------       ----------       ----------

     TOTAL REVENUES                  143,417          187,496          377,388          187,496
                                  ----------       ----------       ----------       ----------

OPERATING EXPENSES:

     Research and development      1,230,041          909,861        4,386,650        2,631,397
     Marketing, general and
       administrative                565,101          515,531        1,978,260        1,469,771
     Consulting fees with
       related parties                12,000           12,000           36,000           36,000
                                  ----------       ----------       ----------       ----------

     TOTAL OPERATING EXPENSES      1,807,142        1,437,392        6,400,910        4,137,168
                                  ----------       ----------       ----------       ----------

     LOSS FROM OPERATIONS        ( 1,663,725)     ( 1,249,896)     ( 6,023,522)     ( 3,949,672)
                                  ----------       ----------       ----------       ----------

OTHER INCOME (EXPENSE):

     Interest income                 204,039          307,983          631,553          913,728
     Interest expense            (       986)     (       890)     (     2,216)     (     3,921)
                                  ----------       ----------       ----------       ----------

     TOTAL OTHER INCOME              203,053          307,093          629,337          909,807
                                  ----------       ----------       ----------       ----------

NET LOSS                        $( 1,460,672)    $(   942,803)    $( 5,394,185)    $( 3,039,865)
                                  ==========       ==========       ==========       ==========

BASIC AND DILUTED
     NET LOSS PER SHARE         $(      0.07)    $(      0.04)    $(      0.24)    $(      0.14)
                                  ==========       ==========       ==========       ==========

SHARES USED TO COMPUTE
     BASIC AND DILUTED NET
     LOSS PER SHARE               22,382,707       22,248,985       22,305,765       22,206,531
                                  ==========       ==========       ==========       ==========
</TABLE>


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


<PAGE>
<TABLE>
<CAPTION>

                              MACROCHEM CORPORATION
                       UNAUDITED STATEMENTS OF CASH FLOWS

                                                                For the nine months ended September 30,
                                                                ---------------------------------------
                                                                       1999                1998
                                                                       ----                ----
<S>                                                                <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net Loss                                                      $( 5,394,185)       $( 3,039,865)
                                                                      ---------           ---------

     Adjustments to reconcile net loss to net cash
       used by operating activities:
          Depreciation and amortization                                 163,279             132,991
          Stock-based compensation                                      416,926              92,683
          401(k) contribution in company common stock                    58,252              22,306
          Amortization of discounts on marketable securities                ---         (   309,243)
     Increase (decrease) in cash from:
       Accounts receivable                                          (    50,802)        (   187,497)
       Prepaid expenses, other current assets and deposits          (     2,161)        (    58,377)
       Note receivable and related accrued interest from affiliate  (    20,557)                ---
       Accounts payable and accrued expenses                        (   289,163)            446,965
       Deferred compensation and related accrued interest                 1,940               2,776
       Deferred revenues                                                    ---             500,000
                                                                     ----------          ----------

          Total adjustments                                             277,714             642,604
                                                                     ----------          ----------
          Net cash used by operating activities                     ( 5,116,471)        ( 2,397,261)
                                                                     ----------          ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of marketable securities                                     ---         (37,125,148)
     Proceeds from maturities of marketable securities                      ---          21,507,000
     Expenditures for property and equipment                        (   157,846)        (   234,283)
     Additions to patents                                           (   101,269)        (    58,717)
                                                                     ----------          ----------
          Net cash used for investing activities                    (   259,115)        (15,911,148)
                                                                     ----------          ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Principal payments on capital lease                                    ---         (    13,595)
     Repurchase of common shares                                            ---         (   668,494)
     Proceeds from exercise of common stock options                     369,656             169,432
     Proceeds from exercise of common stock warrants                    834,213              38,528
                                                                     ----------          ----------
          Net cash provided from financing activities                 1,203,869         (   474,129)
                                                                     ----------          ----------

Net decrease in cash and cash equivalents                           ( 4,171,717)        (18,782,538)

Cash and cash equivalents, beginning of period                       20,504,097          24,952,121
                                                                     ----------          ----------
Cash and cash equivalents, end of period                           $ 16,332,380       $   6,169,583
                                                                     ==========          ==========
</TABLE>
                                                                     (Continued)


<PAGE>


                              MACROCHEM CORPORATION
                  UNAUDITED STATEMENTS OF CASH FLOWS-Continued

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

During the nine months ended September 30, 1999 and 1998, cash paid for
interest aggregated $275 and $1,145, 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, 1998.

     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 as of September 30, 1999 and September 30, 1998, and
     results of operations and cash flows for the three and nine months ended
     September 30, 1999, and 1998.

     The results disclosed in the Unaudited Statements of Operations for the
     three and nine months ended September 30, 1999 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)  The Company granted 573,750 common stock options under the 1994 Equity
     Incentive Plan during the nine months ended September 30, 1999. During this
     same period, 135,400 options under the 1994 Equity Incentive Plan were
     exercised and 44,000 options under the 1994 Equity Incentive Plan were
     forfeited. All options were granted with an exercise price at the fair
     market value of the underlying common stock determined on the date of
     grant.

(4)  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 nine months ended September 30, 1999 and 1998 were 2,693,597 and
     2,353,437, respectively. Anti-dilutive potential shares not included in per
     share calculations for the three months ended September 30, 1999 and 1998
     were approximately 2,272,736 and 2,058,111, respectively.

(5)  Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
     Comprehensive Income", which requires businesses to disclose comprehensive
     income and its components in their general-purpose financial statements.
     Comprehensive income (loss) is equal to net income (loss) for the three and
     nine months ended September 30, 1999 and 1998.

(6)  In 1998, the Financial Accounting Standards Board issued SFAS No. 133,
     "Accounting for Derivative Instruments and hedging Activities." SFAS No.
     133 establishes accounting and reporting standards for derivative
     instruments, including certain derivative instruments embedded in other
     contracts, and for hedging activities. The provisions of SFAS No. 133 will
     be effective for the Company beginning January 1, 2001. The Company has not
     completed an evaluation of the effect of adopting SFAS No. 133 on the
     Company's financiaposition and results of operations.

<PAGE>


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 significant 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 SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1998

     During the three months ended September 30, 1999, the Company had $143,417
of revenues as compared to $187,496 of revenues during the same period in 1998.
All of the revenue is represented by one research contract related to the
Company's proprietary SEPA technology.

     Research and development expenses in the 1999 period increased $320,180
(35%) over the comparable 1998 period. Clinical trial efforts and costs related
to products under development accounted for most of this increase over 1998.

     Marketing, general and administrative expenses in the 1999 period increased
$49,570 (10%) over the comparable 1998 period. This increase is due primarily to
stock compensation and costs incurred due to increased printing and related
distribution of shareholder information which was partially offset by lower
consulting fees.
<PAGE>

     Total other income decreased $104,040, resulting primarily from decreased
interest income earned on reduced cash and cash equivalents.

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1998

     During the nine months ended September 30, 1999, the Company had $377,388
of revenues as compared to $187,496 of revenues during the same period in 1998.
All of the revenue is represented by one research contract related to the
Company's proprietary SEPA technology.

     Research and development expenses in the 1999 period increased $1,755,253
(67%) over the comparable 1998 period. Clinical trial efforts and costs related
to products under development accounted for most of this increase over 1998.

     Marketing, general and administrative expenses increased $508,489 (35%)
over the comparable 1998 period. This increase in the 1999 period is due
primarily to stock compensation, costs incurred due to increased printing and
related distribution of shareholder information and increased consulting fees.

     Total other income decreased $280,470, resulting primarily from decreased
interest income earned on reduced cash and cash equivalents.

YEAR 2000 COMPLIANCE

     Many existing computer programs use only two digits, rather than four, to
represent a year. The Year 2000 ("Y2K") problem arises because date-sensitive
software or hardware written or developed in this fashion may not be able to
distinguish between 1900 and 2000, and programs written in this manner that
perform arithmetic operations, comparisons or sorting of date fields may yield
incorrect results when processing a Y2K date. The Y2K problem could potentially
cause system failures or miscalculations that could disrupt operations.

     The Company has appointed a Director of Year 2000 Compliance who, along
with an outside Y2K consultant, recently completed a review, which included
testing, of the Company's computer systems. This review of internal financial
and information technology systems was completed in the fourth quarter of 1998.
The Company has evaluated and prioritized the problems, which are not considered
significant. The Y2K consultant has certified that the Company's internal
computer systems are Year 2000 Compliant.

     The Company intends to continuously identify and prioritize critical
vendors and suppliers and communicate with them about their plans and progress
in addressing their Y2K problems. The Company has implemented a policy to
exclude the use of any vendors which are not Y2K compliant.

     Based on the efforts described above, the Company currently believes that
its systems are Y2K compliant. However, there can be no assurance that all Y2K
problems have been successfully identified, or that the necessary corrective
actions were taken. Failure to successfully identify and remediate such Y2K
problems in a timely manner could have a material adverse effect on the
Company's results of operations, financial position or cash flow.
<PAGE>

     The Company has created a formal contingency plan for mission critical
Y2K problems. Such plan includes having arrangements for alternate suppliers and
using manual  intervention  where  necessary.  If it becomes  necessary  for the
Company to take these  corrective  actions,  it is uncertain  whether this would
result in  significant  interruptions  of  business  operations  or would have a
material  adverse  effect on the  Company's  results  of  operations,  financial
position or cash flow.

     As of September 30, 1999, the Company had not incurred significant costs
related to the Y2K problem, and does not expect to do so in the future. Overall,
the Company anticipates that incremental costs to the Company related to the Y2K
problem will not exceed $70,000, but there can be no assurance that such costs
will not be greater that anticipated.

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, research contracts, and the limited
sales of products and test materials.

     During the first nine months of 1999, the Company received aggregate net
proceeds of $369,656 from the exercise of stock options and $834,213 from the
exercise of stock warrants, compared to $169,432 and $38,528 for the nine months
ended September 30, 1998. At September 30, 1999 working capital was
approximately $16.1 million, compared to $19.9 million at December 31, 1998. The
reduction in the Company's working capital was due primarily to the cash used by
operating activities. 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 primarily to fund its operating activities.

     Pursuant to a plan approved by the Company's Board of Directors, the
Company is authorized to repurchase 1,000,000 shares of its common stock to be
held as treasury shares for future use. At September 30, 1999, 132,302
repurchased shares remain available for future use and 845,150 shares remain
available for repurchase.

     Capital expenditures and patent development costs for the nine months ended
September 30, 1999 aggregated approximately $259,115. The Company expects the
rate of spending for capital expenditures and patent development costs for the
remainder of the year to be consistent with amounts expended to date.

     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 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.
<PAGE>

     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 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.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
         ----------------------------------------------------------

CASH AND CASH EQUIVALENTS

                  As of  September  30,  1999,  the Company is exposed to market
risks which relate  primarily to changes in U.S.  interest rates.  The Company's
cash  equivalents are subject to interest rate risk and will decline in value if
interest  rates  increase.   Due  to  the  short  duration  of  these  financial
instruments,  three months 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  result in an  increase  or decrease of  approximately
$20,000 and  $63,000,  respectively,  to  reported  interest  income  within the
Company's statements of operations for the three and nine months ended September
30, 1999.

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 RELATED 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, 1998 AND, IN PARTICULAR, THE
SECTION ENTITLED "RISK FACTORS".
<PAGE>


                           PART II - OTHER INFORMATION


ITEM 5.  OTHER INFORMATION
         -----------------

     On August 13,1999, the Board of Directors approved the Amended and Restated
Bylaws of the Company, which include an "advance notice" bylaw governing the
requirements of prior notice for stockholder nominations of directors and
stockholder proposals being submitted for Annual Meetings of Stockholders. Under
the Amended and Restated Bylaws, stockholders who wish to make a proposal at the
2000 Annual Meeting - other than one that will be included in the Company's
proxy materials - must notify the Company no earlier that March 24, 2000 and no
later than April 25, 2000. If a stockholder who wishes to present a proposal
fails to notify the Company by April 25, 2000, the stockholder would not be
entitled to present the proposal at the meeting. If, however, management were to
allow the matter to be presented, the proxies that management solicits for the
meeting will have discretionary authority to vote on the stockholder's proposal.
If a stockholder makes a timely notification, the proxies may still exercise
discretionary voting authority under circumstances consistent with the SEC's
proxy rules. This updates the disclosure in the Company's May 21, 1999 Proxy
Statement. The foregoing description of the Amended and Restated Bylaws is
qualified in its entirety by reference to the full text of the Company's Amended
and Restated Bylaws filed as Exhibit 5 to the Form 8-K filed August 26, 1999 and
incorporated herein by reference.

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

     (a) The following exhibits are filed herewith:

         10.1  Consulting Agreement dated August 10, 1999 between the Company
               and Stephen J. Riggi.

         27.   Financial Data Schedule

     (b) A report on Form 8-K was filed on August 26, 1999 to report 1) the
         declaration of a Rights dividend by the Company, the terms of which
         are set forth in a Rights Agreement dated as of August 13, 1999 between
         the Company and American Stock Transfer & Trust Company, as Rights
         Agent, a copy of which was filed as an exhibit thereto and 2) the
         adoption by the Board of Directors of the Amended and Restated Bylaws
         of the Company, a copy of which was filed as an exhibit thereto.

<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)



November 12, 1999                              /s/ Alvin J. Karloff
                                               --------------------
                                               Alvin J. Karloff
                                               President & C.E.O.


                                               /s/ Kenneth L. Rice
                                               -------------------
                                               Kenneth L. Rice
                                               Chief Financial Officer


                                               /s/ William P. Johnson
                                               ----------------------
                                               William P. Johnson
                                               Corporate Secretary & Treasurer