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, 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 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          
    ---           ---

     As of March 31, 1999, there were 22,183,434 shares of Common Stock, $.01
par value per share, of the Registrant outstanding.





<PAGE>


                              MACROCHEM CORPORATION

                                      INDEX
                                      -----


                                                                    Page Number
                                                                    -----------
PART I   Financial Information

Item 1   Unaudited Financial Statements

              Balance Sheets
              March 31, 1999 and December 31, 1998                      3-4

              Statements of Operations
              Three Months Ended March 31, 1999 and 1998                 5

              Statements of Cash Flows
              Three Months Ended March 31, 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                  9-11

Item 3   Quantitative and Qualitative Disclosures About Market Risk      12

PART II  Other Information

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
                                     ------

 
                                                   March 31,       December 31,
                                                     1999              1998    
                                                  ----------       ------------

CURRENT ASSETS: 

    Cash and cash equivalents                    $18,499,200       $20,504,097
    Accounts receivable                               43,740            48,393
    Prepaid expenses and other
         current assets                              193,562           204,181
                                                  ----------        ----------

TOTAL CURRENT ASSETS                              18,736,502        20,756,671
                                                  ----------        ----------

PROPERTY AND EQUIPMENT, 
    net of accumulated depreciation:
         1999-$778,821; 1998-$731,080                449,547           397,483
                                                  ----------        ----------

OTHER ASSETS:

    Patents, net of accumulated amortization:
         1999-$84,420; 1998-$79,600                  362,238           351,110
    Deposits                                           4,460             4,460
                                                  ----------        ----------

TOTAL OTHER ASSETS                                   366,698           355,570
                                                  ----------        ----------

TOTAL ASSETS                                     $19,552,747       $21,509,724
                                                  ==========        ==========








                                                                     (Continued)


<PAGE>


                              MACROCHEM CORPORATION
                            UNAUDITED BALANCE SHEETS

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

                                                   March 31,        December 31,
                                                     1999              1998  
                                                 ------------      -------------
CURRENT LIABILITIES:
    Accounts payable                             $    195,409      $    116,246
    Accrued clinical trial costs                          ---           498,716
    Other accrued expenses                            195,253           156,210
    Deferred compensation and related
         accrued interest                              94,186            93,563
                                                   ----------        ----------

         TOTAL CURRENT LIABILITIES                    484,848           864,735
                                                   ----------        ----------

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

TOTAL LIABILITIES                                     984,848         1,364,735
                                                   ----------        ----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
    Preferred Stock                                       ---               ---
    Common Stock, $.01 par value;
         authorized 60,000,000 shares;
         issued 22,316,245 shares,
         outstanding 22,183,434 shares at
         March 31, 1999 and issued 22,281,245
         shares, outstanding 22,140,328 at
         December 31, 1998                            223,162           222,812
    Additional paid-in capital                     48,135,716        47,295,449
    Unearned compensation                         (   568,031)      (   170,676)
    Accumulated deficit                           (28,564,670)      (26,508,119)
                                                   ----------        ----------
    Total                                          19,226,177        20,839,466
    Less cost of treasury stock (132,811 
         shares at March 31, 1999 and 
         140,917 shares at December 31, 1998)     (   658,278)      (   694,477)
                                                   ----------        ----------
TOTAL STOCKHOLDERS' EQUITY                         18,567,899        20,144,989
                                                   ----------        ----------

TOTAL LIABILITIES AND
    STOCKHOLDERS' EQUITY                         $ 19,552,747      $ 21,509,724
                                                   ==========        ==========

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

                                                                     (Concluded)


<PAGE>


                              MACROCHEM CORPORATION
                       UNAUDITED STATEMENTS OF OPERATIONS


                                            For the three months ended March 31,
                                            ------------------------------------
                                                    1999               1998
                                                    ----               ----

REVENUES:                                     

    Research contract                           $     58,746       $        ---
                                                  ----------         ----------

         TOTAL REVENUES                               58,746                ---
                                                  ----------         ----------

OPERATING EXPENSES:

    Research and development                       1,550,389            724,846
    Marketing, general and administrative            777,594            482,744
    Consulting fees with related parties              12,000             12,000
                                                  ----------         ----------

         TOTAL OPERATING EXPENSES                  2,339,983          1,219,590
                                                  ----------         ----------

         LOSS FROM OPERATIONS                    ( 2,281,237)       ( 1,219,590)
                                                  ----------         ----------

OTHER INCOME (EXPENSE):

    Interest income                                  225,307            310,299
    Interest expense                             (       623)       (     1,965)
                                                  ----------         ----------

         TOTAL OTHER INCOME                          224,684            308,334
                                                  ----------         ----------

NET LOSS                                        $( 2,056,551)      $(   911,256)
                                                  ==========         ==========

BASIC AND DILUTED NET LOSS
    PER SHARE                                   $(      0.09)      $(      0.04)
                                                  ==========         ==========

SHARES USED TO COMPUTE
    BASIC AND DILUTED NET LOSS
    PER SHARE                                     22,179,132         22,200,690
                                                  ==========         ==========






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


<PAGE>

<TABLE>
<CAPTION>

                              MACROCHEM CORPORATION
                       UNAUDITED STATEMENTS OF CASH FLOWS

                                                            For the three months ended March 31,
                                                            ------------------------------------
                                                                     1999            1998
                                                                     ----            ----
<S>                                                             <C>               <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                    $(2,056,551)      $(911,256)
                                                                  ---------         -------

    Adjustments to reconcile net loss to net cash 
         used by operating activities:
            Depreciation and amortization                            52,561          42,275
            Stock-based compensation                                323,792          46,153
            401(k) contribution in company common stock              18,794             ---
    Increase (decrease) in cash from:
         Accounts receivable                                          4,653             ---
         Prepaid expenses and other current assets                   10,619        ( 23,881)
         Accounts payable and accrued expenses                   (  380,510)        332,278
         Deferred compensation and related accrued interest             623           1,446
                                                                  ---------         -------

            Total adjustments                                        30,532         398,271
                                                                  ---------         -------

            Net cash used by operating activities                (2,026,019)       (512,985)
                                                                  ---------         -------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Expenditures for property and equipment                      (   99,805)       (169,106)
    Additions to patents                                         (   15,948)       ( 31,171)
                                                                  ---------         -------

            Net cash used for investing activities               (  115,753)       (200,277)
                                                                  ---------         -------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Principal payments on capital lease                                 ---        (  4,395)
    Proceeds from exercise of common stock options                  136,875          61,813
                                                                  ---------         -------
            Net cash provided from financing activities             136,875          57,418
                                                                  ---------         -------

</TABLE>


                                                                     (Continued)









<PAGE>


                              MACROCHEM CORPORATION
                 UNAUDITED STATEMENTS OF CASH FLOWS (Continued)



                                         For the three months ended March 31,
                                         ------------------------------------
                                            1999                      1998
                                            ----                      ----

NET INCREASE (DECREASE) IN
    CASH AND CASH EQUIVALENTS          $( 2,004,897)             $(   655,844)

CASH AND CASH EQUIVALENTS,
    BEGINNING OF PERIOD                  20,504,097                24,952,121
                                         ----------                ----------

CASH AND CASH EQUIVALENTS,
    END OF PERIOD                      $ 18,499,200              $ 24,296,277
                                         ==========                ==========


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid for interest aggregated $0 and $519 for the three months ended
March 31, 1999 and 1998, 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 March 31,1999 and March 31, 1998, and results of
     operations and cash flows for the three months ended March 31, 1999 and
     1998.

     The results disclosed in the Statement of Operations for the three months
     ended March 31, 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 173,250 Common Stock Options under the 1994 Equity
     Incentive Plan during the three months ended March 31, 1999. During this
     same period, 35,000 options under the 1994 Equity Incentive Plan were
     exercised. In addition, during this period, 16,334 options under the 1994
     Equity Incentive Plan were canceled. All options were issued with an
     exercise price at the fair market value of the underlying common stock
     determined on the date of grant.

(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
     March 31, 1999 and 1998 were approximately 2,534,000 and 2,439,000,
     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
     months ended March 31, 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, 2000. The Company has not
     completed an evaluation of the effect of adopting SFAS No. 133 on the
     Company's financial position 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 MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998

     During the three months ended March 31, 1999, the Company had $58,746 of
revenues as compared to no revenues during the same period in 1998. All of the
revenue for 1999 is represented by one research contract related to the
Company's proprietary SEPA technology.

     Research and development expenses in the 1999 period increased
approximately $825,500 (114%) over the comparable 1998 period. Clinical trial
efforts and costs related to the Company's new product, Benefen(TM), accounted
for most of this increase over 1998.

     Marketing, general and administrative expenses increased approximately
$294,850 (61%) over the comparable 1998 period. This increase is due primarily
to stock compensation and consulting fees associated with financial advisors and
an investment banker.

     Total other income decreased approximately $83,650, resulting primarily
from decreased interest income earned on reduced cash and cash equivalents.


<PAGE>


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 performed 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 Company expects to continue to coordinate any Y2K problems with
the vendors that supplied noncompliant systems. The Company expects that any
remediation efforts would continue through mid-1999. However, there can be no
assurance that the Company's survey will identify all Y2K problems in these
systems or that the necessary corrective actions will be completed in a timely
manner.

     The Company does not write its own application software, but depends on
third-party vendors. The Company intends to continuously identify and prioritize
critical vendors and suppliers and communicate with them about their plans and
progress in addressing the Y2K problem. The Company intends to implement 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 will be Y2K compliant in a timely manner. However, there can be no
assurance that all Y2K problems will be successfully identified, or that the
necessary corrective actions will be completed in a timely manner. 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.

     The Company has not created a formal contingency plan for Y2K problems and
currently does not intend to create one. However, the Company intends to take
appropriate actions to mitigate the effects of third parties' failures to
remediate their Y2K issues and for unexpected failures in its own systems. Such
actions may include 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 March 31, 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 $50,000, but there can be no assurance that such costs
will not be greater that anticipated.




<PAGE>


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 1999, the Company received aggregate net proceeds of approximately $136,875
from the exercise of stock options, compared to approximately $61,813 for the
three months ended March 31, 1998. At March 31, 1999 working capital was
approximately $18.3 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. During the three months ended March 31,
1999 the Company did not repurchase any shares. At March 31, 1999, 132,811
repurchased shares remain available for future use and 845,150 shares remain
available for repurchase.

     Capital expenditures and additional patent development costs for the three
months ended March 31, 1999 were approximately $115,753. The Company anticipates
capital expenditures of approximately $350,000 for the remainder of the current
year.

     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 early stage
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.

     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.

<PAGE>


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

CASH AND CASH EQUIVALENTS

     As of March 31, 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 $22,000 to reported interest
income within the Company's statement of operations for the three months ended
March 31, 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 RELATING TO GOVERNMENT REGULATION AND REGULATORY
APPROVALS; THE COMPANY'S DEPENDENCE ON THIRD PARTIES FOR THE FDA APPLICATION
PROCESS; THE COMPANY'S LACK OF EXPERIENCED MARKETING PERSONNEL AND DEPENDENCE ON
THIRD PARTIES FOR MARKETING AND DISTRIBUTION; THE COMPANY'S DEPENDENCE ON THIRD
PARTIES FOR MANUFACTURING; THE COMPANY'S RELIANCE ON KEY EMPLOYEES, THE LIMITED
PERSONNEL OF THE COMPANY AND ITS DEPENDENCE ON ACCESS TO SCIENTIFIC TALENT;
UNCERTAINTIES RELATING TO COMPETITION, PATENTS AND PROPRIETARY TECHNOLOGY;
UNCERTAINTIES RELATING TO RISKS OF PRODUCT LIABILITY CLAIMS, LACK OF PRODUCT
LIABILITY INSURANCE, AND EXPENSE AND DIFFICULTY OF OBTAINING ADEQUATE INSURANCE
COVERAGE; UNCERTAINTY OF PHARMACEUTICAL PRICING AND RELATED MATTERS; AND OTHER
FACTORS. ADDITIONAL INFORMATION ON THESE AND OTHER FACTORS WHICH COULD AFFECT
THE COMPANY'S ACTUAL RESULTS AND EXPERIENCE ARE INCLUDED IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 AND, IN PARTICULAR, THE
SECTION ENTITLED "RISK FACTORS".

<PAGE>


                                     PART II


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

         (a)  The following exhibits are filed herewith:

              27.  Financial Data Schedule

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



                                   SIGNATURES
                                   ----------


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


                                             MacroChem Corporation
                                             ---------------------
                                             (Registrant)



May 11, 1999                                  /s/ Alvin J. Karloff
                                             --------------------
                                             Alvin J. Karloff
                                             Chief Executive Officer

                                             /s/ William P. Johnson
                                             ----------------------
                                             William P. Johnson
                                             Treasurer, Secretary and Principal
                                             Financial Officer



<PAGE>