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 June 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 June 30, 1999, there were 22,324,020 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
                      June 30, 1999 and December 31, 1998               3-4

                      Unaudited Statements of Operations
                      Three Months and Six Months Ended
                      June 30, 1999 and 1998                             5

                      Unaudited Statements of Cash Flows
                      Six Months Ended June 30, 1999 and 1998            6

                      Notes to Unaudited Financial Statements            7


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

Item 3       Quantitative and Qualitative Disclosures About Market Risk  11


PART II      Other Information

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

Item 6       Exhibits and Reports on Form 8-K                            12-13


<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.  UNAUDITED FINANCIAL STATEMENTS
         ------------------------------

                              MACROCHEM CORPORATION
                            UNAUDITED BALANCE SHEETS

                                     ASSETS
                                     ------

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

  Cash and cash equivalents                       $17,428,998       $20,504,097
  Accounts receivable                                 171,177            48,393
  Prepaid expenses and other
    current assets                                    182,261           204,181
  Note receivable and related
    accrued interest from affiliate                    20,153               ---
                                                   ----------        ----------

  TOTAL CURRENT ASSETS                             17,802,589        20,756,671
                                                   ----------        ----------


PROPERTY AND EQUIPMENT, net of accumulated
  depreciation: 1999-$828,892; 1998-$731,080          431,494           397,483
                                                   ----------        ----------


OTHER ASSETS:

  Patents, net of accumulated amortization:
    1999-$88,173; 1998-$79,600                        402,207           351,110
  Deposits                                              4,460             4,460
                                                   ----------        ----------

TOTAL OTHER ASSETS                                    406,667           355,570
                                                   ----------        ----------

TOTAL ASSETS                                      $18,640,750       $21,509,724
                                                   ==========        ==========







                                                                     (Continued)


<PAGE>


                              MACROCHEM CORPORATION
                            UNAUDITED BALANCE SHEETS

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

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

  Accounts payable                               $     12,681       $   116,246
  Accrued clinical trial costs                        180,158           498,716
  Other accrued expenses                              239,873           156,210
  Deferred compensation and related
    accrued interest                                   94,794            93,563
                                                   ----------        ----------

  TOTAL CURRENT LIABILITIES                           527,506           864,735
                                                   ----------        ----------

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

TOTAL LIABILITIES                                   1,027,506         1,364,735
                                                   ----------        ----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

  Preferred stock                                         ---               ---
  Common stock, $.01 par value; authorized
    60,000,000  shares; issued 22,453,564
    shares, outstanding 22,324,020
    shares at June 30, 1999 and issued
    22,281,245  shares, outstanding
    22,140,328 shares at December 31, 1998            224,536           222,812
  Additional paid-in capital                       48,874,462        47,295,449
  Unearned compensation                           (   400,262)      (   170,676)
  Accumulated deficit                             (30,441,632)      (26,508,119)
                                                   ----------        ----------
  Total                                            18,257,104        20,839,466
  Less cost of treasury stock (129,544 shares
    at June 30, 1999 and 140,917 shares
    at December 31, 1998)                         (   643,860)      (   694,477)
                                                   ----------        ----------
TOTAL STOCKHOLDERS' EQUITY                         17,613,244        20,144,989
                                                   ----------        ----------

TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY                           $ 18,640,750      $ 21,509,724
                                                   ==========        ==========

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


<PAGE>
<TABLE>


                              MACROCHEM CORPORATION
                       UNAUDITED STATEMENTS OF OPERATIONS

<CAPTION>
                                                 For the three months               For the six months
                                                   ended June 30,                    ended June 30,
                                           -----------------------------    ------------------------------
                                              1999              1998             1999             1998
                                              ----              ----             ----             ----
<S>                                      <C>              <C>              <C>              <C>
REVENUES:

  Research contract                      $    175,225     $        ---     $    233,971     $        ---
                                           ----------       ----------       ----------       ----------

    TOTAL REVENUES                       $    175,225     $        ---     $    233,971     $        ---
                                           ----------       ----------       ----------       ----------

OPERATING EXPENSES:

  Research and development                  1,606,220          996,690        3,156,609        1,721,536
  Marketing, general and administrative       635,565          471,496        1,413,159          954,240
  Consulting fees with related parties         12,000           12,000           24,000           24,000
                                           ----------       ----------       ----------       ----------

    TOTAL OPERATING EXPENSES                2,253,785        1,480,186        4,593,768        2,699,776
                                           ----------       ----------       ----------       ----------

    LOSS FROM OPERATIONS                  ( 2,078,560)     ( 1,480,186)     ( 4,359,797)     ( 2,699,776)
                                           ----------       ----------       ----------       ----------

OTHER INCOME (EXPENSE):

  Interest income                              202,207         295,446          427,514          605,745
  Interest expense                        (        608)    (     1,066)     (     1,231)     (     3,031)
                                           -----------      ----------       ----------       ----------

    TOTAL OTHER INCOME                        201,599          294,380          426,283          602,714
                                           ----------       ----------       ----------       ----------

NET LOSS                                 $( 1,876,961)    $( 1,185,806)    $( 3,933,514)    $( 2,097,062)
                                           ==========       ==========       ==========

BASIC AND DILUTED
  NET LOSS PER SHARE                     $(      0.08)    $(      0.05)    $(      0.18)    $(      0.09)
                                           ==========       ==========       ==========       ==========

SHARES USED TO COMPUTE
  BASIC AND DILUTED NET
  LOSS PER SHARE                           22,199,795       22,244,358       22,266,363       22,247,522
                                           ==========       ==========       ==========       ==========

</TABLE>











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


<PAGE>
<TABLE>


                             MACROCHEM CORPORATION
                       UNAUDITED STATEMENTS OF CASH FLOWS

<CAPTION>
                                                                   For the six months ended June 30,
                                                                   ---------------------------------
                                                                         1999             1998
                                                                         ----             ----

<S>                                                                 <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Loss                                                          $( 3,933,514)     $( 2,097,062)

  Adjustments to reconcile net loss
    to net cash used by operating activities:
      Depreciation and amortization                                      106,385            86,971
      Stock-based compensation                                           392,512            92,476
      401(k) contribution in company common stock                         38,169
  Increase (decrease) in cash from:
    Accounts receivable                                              (   122,784)              ---
    Prepaid expenses and other current asset                              21,920       (    40,498)
    Note receivable and related accrued interest from affiliate      (    20,153)
    Accounts payable and accrued expenses                            (   338,460)          225,166
    Deferred compensation and related accrued interes                      1,231             2,129
                                                                      ----------        ----------

      Total adjustments                                                   78,820           366,244
      Net cash used by operating activities                          ( 3,854,694)      ( 1,730,818)
                                                                      ----------        ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of marketable securities                                         ---       (21,197,757)
  Expenditures for property and equipment                            (   131,823)      (   224,251)
  Additions to patents                                               (    59,670)      (    43,373)
                                                                      ----------        ----------
    Net cash used for investing
      activities                                                     (   191,493)      (21,465,381)
                                                                      ----------        ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on capital lease                                        ---       (     8,925)
  Proceeds from exercise of common stock options                         136,875           169,432
  Proceeds from exercise of common stock warrants                        834,213            38,528
                                                                      ----------        ----------
    Net cash provided from financing activities                          971,088           199,035

Net decrease in cash and cash equivalents                            ( 3,075,099)      (22,997,164)

Cash and cash equivalents, beginning of period                        20,504,097        24,952,121
                                                                      ----------        ----------

Cash and cash equivalents, end of period                            $ 17,428,998       $ 1,954,957
                                                                      ==========        ==========

</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

During the six months ended June 30, 1999 and 1998, cash paid for interest
aggregated $0 and $902, respectively.

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

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


<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 June 30, 1999 and June 30, 1998, and results of
     operations and cash flows for the three and six months ended June 30, 1999,
     and 1998.

     The results disclosed in the Unaudited Statements of Operations for the
     three and six months ended June 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 the current
     presentation.

(3)  The Company granted 243,750 common stock options under the 1994 Equity
     Incentive Plan during the six months ended June 30, 1999. During this same
     period, 35,000 options under the 1994 Equity Incentive Plan were exercised.
     In addition, during this period, 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 six months ended June 30, 1999 and 1998 were approximately 2,534,000
     and 2,357,000, respectively. Anti-dilutive potential shares not included in
     per share calculations for the three months ended June 30, 1999 and 1998
     were approximately 2,510,000 and 2,656,000, 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 and
     six months ended June 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 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 JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998

     During the three months ended June 30, 1999, the Company had $175,225 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 $609,500 (61%) over the comparable 1998 period. Clinical trial
efforts and costs related to the Company's new product under development,
Benefen(TM), accounted for most of this increase over 1998.

     Marketing, general and administrative expenses increased approximately
$164,000 (35%) over the comparable 1998 period. This increase is due primarily
to stock compensation and consulting fees associated with financial advisors,
and fees associated with legal counsel.

     Total other income decreased approximately $92,800, resulting primarily
from decreased interest income earned on reduced cash and cash equivalents.


<PAGE>
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998

     During the six months ended June 30, 1999, the Company had $233,971 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 $1,435,100 (83%) over the comparable 1998 period. Clinical trial
efforts and costs related to the Company's new product under development,
Benefen(TM), accounted for most of this increase over 1998.

     Marketing, general and administrative expenses increased approximately
$458,900 (48%) over the comparable 1998 period. This increase is due primarily
to stock compensation and consulting fees associated with financial advisors,
and fees associated with legal counsel.

     Total other income decreased approximately $176,400, 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.

     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.
<PAGE>
     As of June 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 $60,000, 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 six months of 1999, the Company received aggregate net
proceeds of $136,875 from the exercise of stock options and $834,213 from the
exercise of stock warrants, compared to approximately $169,432 and $38,528 for
the six months ended June 30, 1998. At June 30, 1999 working capital was
approximately $17.3 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 six months ended June 30,
1999, the Company did not repurchase any shares. At June 30, 1999, 129,544
repurchased shares remain available for future use and 845,150 shares remain
available for repurchase.

     Capital expenditures and patent development costs for the six months ended
June 30, 1999 aggregated approximately $191,500. The Company expects capital
expenditures and patent development costs for the remainder of the year to be
consistent with expenditures made 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 June 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 $43,000,
respectively, to reported interest income within the Company's statements of
operations for the three and six months ended June 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 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     On June 24, 1999, the Company held its Annual Meeting of Stockholders to
vote on the following proposals:

     1.  To elect six members of the Board of Directors.  Nominees for Director
         were:  a) Carlos M. Samour;  b) Alvin J. Karloff;  c) Willard M.
         Bright; d) Peter G. Martin;  e) Stephen J. Riggi;  f) Michael A. Davis
         ("Proposal No. 1").

     2.  To ratify the appointment of Deloitte & Touche LLP, as independent
         auditors for the Company for the fiscal year ending December 31, 1999.

     Each of the proposals was adopted with a total vote as follows:

                                           Shares
                       Shares          Voting Against        Shares     Broker
Proposal             Voting For    or Authority Withheld   Abstaining  Non-Votes
--------             ----------    ---------------------   ----------  ---------

No. 1

Carlos M. Samour     19,648,987           694,516

Alvin J. Karloff     19,637,887           705,616

Willard M. Bright    19,648,646           694,857

Peter G. Martin      19,654,337           689,166

Stephen J. Riggi     19,653,531           689,972

Michael A. Davis     19,653,190           690,313

No. 2                20,141,473           141,138            53,892


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  The following exhibits are filed herewith:

          10.14  Amended form of Employment Agreement between the Company and
                 Dr. Carlos M. Samour

          10.15  Amended form of Employment Agreement between the Company and
                 Alvin J. Karloff.

          10.16  Form of Employment Agreement between the Company and
                 Dr. Paul J. Schechter.

          27.    Financial Data Schedule

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


<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)



August 13, 1999                                       /s/ Alvin J. Karloff
                                                      --------------------------
                                                      Alvin J. Karloff
                                                      President & C.E.O.


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



<PAGE>