---

UNITED
  STATES
  SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM
  10-KFOR
ANNUAL AND TRANSITIONAL REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF
THE SECURITIES
EXCHANGE ACT OF 1934

ýANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF 1934

For the Fiscal
Year Ended December 31, 2004

o TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934

Commission File
Number 0-19635GENTA
  INCORPORATED(Exact name of Registrant as specified in its
certificate of  incorporation)

|Delaware                                                       |  | 33-0326866                                
|-------------------------------------------------------------- |  | ------------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (IRS
      Employer Identification Number)
|                                                               |  |                                           
|Two
      Connell Drive
      Berkeley Heights, New Jersey     |  | 07922                                     
|(Address
      of principal executive offices)                 |  | (Zip
      Code)                          

(908)
  286-9800(Registrants telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act: NONE

Securities
  registered pursuant to Section 12(g) of the Act:
  Common Stock, $.001 par value(Title of Class)

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 ý No o

Indicate by
check mark if disclosure of delinquent  filers pursuant  to Item 405 of Regulation S-K is
not contained  herein,  and will not be  contained,  to the best of registrants
knowledge,  in definitive proxy  or information statements  incorporated by reference in
Part III of this  Form 10-K or any amendment to this Form 10-K.
  o

Indicate by
check mark  whether the  registrant  is an  accelerated  filer (as defined in Exchange
Act Rule 12b-2). Yes ý
  No o

The
approximate  aggregate  market  value  of  the  voting  and  non-voting  common equity
held by  non-affiliates  of the registrant was  $159,885,000  as of  June  30,  2004
(the  last  business  day  of  the  registrants  most  recently  completed  second
fiscal  quarter).  For  purposes of determining this number,  16,416,341  shares of
common stock  held by  affiliates  as of June 30, 2004 are  excluded.  For purposes of
making  this  calculation,  the  registrant  has defined  affiliates  as  including all
directors,  executive  officers and  beneficial  owners of  more than ten percent of the
common stock of the Company.

As of March 9,
2005,  the  registrant  had  95,358,215  shares  of  Common Stock outstanding.

Documents
  Incorporated by Reference

Certain
provisions of the registrants  definitive proxy statement  to be filed not later
than April 30,  2005  pursuant to  Regulation  14A  are  incorporated  by  reference  in
Items 10  through 13 of Part III of  this Annual Report on Form 10-K.

1

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---

Genta
  Incorporated
  Table of Contents

|Part
      I   |                |    |                                                                                                               
|-------------- | -------------- | -- | --------------------------------------------------------------------------------------------------------------
|               | Item
      1.  |    | Business                                                                                                      
|               | Item
      2.  |    | Properties                                                                                                    
|               | Item
      3.  |    | Legal
      Proceedings                                                                                       
|               | Item
      4.  |    | Submission
      of Matters to a Vote of Security Holders                                                     
|Part
      II 
|               | Item
      5.  |    | Market
      For Registrants Common Equity and Related Stockholder Matters                                   
|               | Item
      6.  |    | Selected
      Consolidated Financial Data                                                                    
|               | Item
      7.  |    | Managements
      Discussion and Analysis of Financial Condition and Results of Operations                   
|               | Item
      7A. |    | Quantitative
      and Qualitative Disclosure about Market Risk                                               
|               | Item
      8.  |    | Financial
      Statements and Supplemental Data                                                              
|Part
      III
|               | Item
      9.  |    | Changes
      in and Disagreements with Accountants on Accounting and Financial Disclosure                    
|               | Item
      9A. |    | Controls
      and Procedures                                                                                 
|               | Item
      9B. |    | Other
      Information                                                                                       
|               | Item
      10. |    | Directors
      and Executive Officers of the Registrant (1)                                                  
|               | Item
      11. |    | Executive
      Compensation (1)                                                                              
|               | Item
      12. |    | Security
      Ownership of Certain Beneficial Owners and Management and Related Stockholder
      Matters (1)
|               | Item
      13. |    | Certain
      Relationships and Related Transactions (1)                                                      
|               | Item
      14. |    | Principal
      Accounting Fees and Services (1)                                                              
|Part
      IV 
|               | Item
      15. |    | Exhibits
      and Financial Statement Schedules                                                              
|Signatures     |                | 65 |                                                                                                               
|Certifications |                | 72 |                                                                                                               

|(1) |  | The
information  required in these items is  incorporated by reference  from the Companys
definitive  proxy  statement to be filed  not later than April 30,  2005  pursuant to
Regulation  14A  of the General Rules and  Regulations  under the  Securities  Exchange
Act of 1934, as amended.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2

---



Table of Contents

|Part
      I       |                |                                                                |                                                                                                               
|------------------ | -------------- | -------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------
|                   | Item
      1.  |                                                                | Business                                                                                                      
|                   | Item
      2.  |                                                                | Properties                                                                                                    
|                   | Item
      3.  |                                                                | Legal
      Proceedings                                                                                       
|                   | Item
      4.  |                                                                | Submission
      of Matters to a Vote of Security Holders                                                     
|Part
      II     
|                   | Item
      5.  |                                                                | Market
      For Registrants Common Equity and Related Stockholder Matters                                   
|                   | Item
      6.  |                                                                | Selected
      Consolidated Financial Data                                                                    
|                   | Item
      7.  |                                                                | Managements
      Discussion and Analysis of Financial Condition and Results of Operations                   
|                   | Item
      7A. |                                                                | Quantitative
      and Qualitative Disclosure about Market Risk                                               
|                   | Item
      8.  |                                                                | Financial
      Statements and Supplemental Data                                                              
|Part
      III    
|                   | Item
      9.  |                                                                | Changes
      in and Disagreements with Accountants on Accounting and Financial Disclosure                    
|                   | Item
      9A. |                                                                | Controls
      and Procedures                                                                                 
|                   | Item
      9B. |                                                                | Other
      Information                                                                                       
|                   | Item
      10. |                                                                | Directors
      and Executive Officers of the Registrant (1)                                                  
|                   | Item
      11. |                                                                | Executive
      Compensation (1)                                                                              
|                   | Item
      12. |                                                                | Security
      Ownership of Certain Beneficial Owners and Management and Related Stockholder
      Matters (1)
|                   | Item
      13. |                                                                | Certain
      Relationships and Related Transactions (1)                                                      
|                   | Item
      14. |                                                                | Principal
      Accounting Fees and Services (1)                                                              
|Part
      IV     
|                   | Item
      15. |                                                                | Exhibits
      and Financial Statement Schedules                                                              
|Signatures         |                |                                                                |                                                                                                               
|                   |                |                                                                |                                                                                                               
|Exhibit
      21   |                | Subsidiaries
      of The Registrant                           |                                                                                                               
|                   |                |                                                                |                                                                                                               
|Exhibit
      23.1 |                | Consent
      of Independent Registered Public Accounting Firm |                                                                                                               
|                   |                |                                                                |                                                                                                               
|Exhibit
      31.1 |                | Certification
      Pursuant to Section 302 (CEO)              |                                                                                                               
|                   |                |                                                                |                                                                                                               
|Exhibit
      31.2 |                | Certification
      Pursuant to Section 302 (CFO)              |                                                                                                               
|                   |                |                                                                |                                                                                                               
|Exhibit
      32.1 |                | Certification
      Pursuant to Section 906 (CEO)              |                                                                                                               
|                   |                |                                                                |                                                                                                               
|Exhibit
      32.2 |                | Certification
      Pursuant to Section 906 (CFO)              |                                                                                                               



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The
statements  contained  in this Annual  Report on Form 10-K that  are not historical are
forward-looking  statements within the meaning of  Section 27A of the Securities  Act of
1933, as amended,  and Section 21E  of  the  Securities  Exchange  Act  of  1934,  as
amended,  including  statements  regarding  the  expectations,  beliefs,  intentions  or
strategies  regarding  the  future.  The  Company  intends  that  all  forward-looking
statements be subject to the safe harbor  provisions of  the  Private  Securities
Litigation  Reform  Act  of  1995.  These  forward-looking  statements  reflect the
Companys  views as of the date  they are made with respect to future events and
financial  performance,  but are  subject  to many risks and  uncertainties,  which
could  cause  actual results to differ  materially  from any future results  expressed
or  implied  by  such  forward-looking  statements.  Forward-looking  statements include,
without limitation, statements about:

- the  Companys  ability  to
obtain  necessary  regulatory  approval,  especially  U.S.  Food  and  Drug
Administration  (FDA) approval or failure to approve Genasense®;
- the safety and  efficacy of the
Companys products;
- the commencement and completion
    of clinical trials;
- the Companys ability
    to develop, manufacture and sell its products;
- the adequacy of the Companys
    capital resources and the Companys ability to obtain sufficient financing
    to maintain
- the Companys planned
    operations;
- the adequacy of the Companys
patents and proprietary rights;
- the impact of litigation
    that has been brought against the Company and its officers and directors;
- the  other  risks  described
under  Certain  Risks  and  Uncertainties Related to the Companys Business.

The
Company  does  not  undertake  to  update  any  forward-looking  statements.

We
make available free of charge on our internet website (http://www.genta.com)
our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K and amendments to these reports filed or furnished pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably
practicable after we electronically file such material with, or furnish it to, the
Securities and Exchange Commission. The content on the Companys website is
available for informational purposes only. It should not be relied upon for
investment purposes, nor is it incorporated by reference into this Form 10-K.

3

---



PART
  I

|Item 1. |  | Business
|------- |  | --------

A. Overview

Genta
Incorporated  (Genta or the Company) was incorporated in
Delaware  on  February  4, 1988.  Genta is a  biopharmaceutical  company  dedicated to
the identification,  development and  commercialization  of  novel  drugs for cancer and
related  diseases.  Our  research  portfolio  consists of two major areas of focus:

- DNA/RNA Medicines, which
    include drugs that are based on chemical modifications of oligonucleotides;
    and
- Small Molecules

The
DNA/RNA  Medicines  program  includes  drugs that are based on  technologies  known  as
antisense,  decoys  and RNA  interference.  The  Companys  lead drug from this
program is an  investigational  antisense  compound known as Genasense® (oblimersen
sodium injection).  Genasense® is  designed  to block  the  production  of a  protein
known as  Bcl-2.  Current  science  suggests  that Bcl-2 is a  fundamental  (although
not  sole)  cause of the  inherent  resistance  of  cancer  cells to  current  anticancer
treatments,  such as chemotherapy,  radiation,  or monoclonal  antibodies.  While
Genasense® has displayed some  anticancer  activity  when used by itself,  the
Company is developing  the drug primarily as a  means  of  amplifying  the  cytotoxic
effects  of  other  anticancer  treatments.

Genasense®
  has been studied in combination with a wide variety of anticancer drugs in a
  number of different cancer indications. Three randomized Phase 3 trials of Genasense®
  have been completed in malignant melanoma, chronic lymphocytic leukemia (CLL),
  and multiple myeloma. Under its own sponsorship or in collaboration with the U.S. National Cancer Institute
  (NCI), Genta is currently conducting a number of additional trials.

In May
  2004, the Companys New Drug Application (NDA) for Genasense®
  plus chemotherapy in malignant melanoma failed to gain a majority vote for marketing
  approval by the Oncology Drug Advisory Committee (ODAC) of the U.S. Food and
  Drug Administration (FDA). Genta subsequently withdrew the NDA from further
  consideration. The Company has continued long-term follow-up of patients who
  were enrolled into the melanoma trial. Genta is conducting additional analyses
  of those data and expects to provide an update of these results in 2005. The Company is also exploring
  the feasibility of filing similar regulatory applications in the European Union.

In
  December 2004, the Company released initial results from its other Phase 3 trials.
  The trial in multiple myeloma failed to meet endpoints that would be sufficient
  for regulatory approval. The trial in CLL met its primary endpoint of significantly
  increasing the proportion of patients who achieved a complete or nodular partial
  remission, as determined by blinded expert review of clinical data and bone
  marrow biopsies. A significant increase in disease-free survival was also observed.
  No difference was observed in overall response rate, time-to-disease progression,
  or overall survival. Adverse events (irrespective of relation to study drugs)
  during treatment or within 30 days from last dose of treatment that resulted
  in death occurred in 9 patients treated with Genasense®
  plus chemotherapy compared with 5 patients treated with chemotherapy alone.
  The percentage of patients who experienced serious adverse events was increased
  in the Genasense®
  arm; however, the percentages of patients who discontinued treatment due to
  adverse events were equal in the treatment arms. The incidence of certain serious
  adverse reactions, including but not limited to nausea, fever and catheter-related
  complications, was increased in patients treated with Genasense®.

Genta
  is currently conducting additional analyses of data from this trial and is exploring
  the feasibility of filing a NDA for this indication based on existing data.
  Such an application would be filed using the Fast Track designation
  previously granted by the FDA, which allows approval of a drug based on a surrogate
  endpoint that is reasonably likely to be predictive of clinical benefit. Approval
  under this mechanism is contingent upon a company conducting one or more additional
  trials that would conclusively document that benefit. The Company is also exploring
  the feasibility of filing similar regulatory applications in the European Union.

4

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In
April  2002,  we  entered  into a  series  of  agreements  with  Aventis,  a member of
the sanofi-aventis  Group  (Aventis),  regarding  the  development  and
commercialization  of Genasense®.  On November 8,  2004,  the Company  received  from
Aventis a notice of  termination  of  these agreements.  Pursuant to those agreements,
Aventis is required to  fund substantial  portions of the development  costs of Genasense® until
May 8,  2005.  Genta has  initiated  discussions  with  other  potential  marketing and
development partners for Genasense®.

The
  Company has two additional programs in the DNA/RNA Medicines program. The first
  is an antisense drug (LR3001) directed against an oncogene called c-myb. LR3001
  has been tested in a clinical Phase 1 trial, and the Company is currently seeking
  to restart that study, which is currently being sponsored by an independent
  investigator. The second is a drug called the CRE-BP Decoy, which remains in
  the laboratory testing stage.

The
Small  Molecules  Program  currently  includes  drugs  that are  based  on
gallium-containing  compounds.  The  lead  drug  from  this  Program is Ganite® (gallium
nitrate  injection),  which was approved by  FDA in October 2003 for the  treatment of
cancer-related  hypercalcemia  that is resistant  to  hydration.  In Phase 2 studies,
Ganite® has been  reported to demonstrate  direct  anticancer  activity,
particularly  in  patients  with  malignant  lymphoma and bladder  cancer.  Following
the  adverse  outcome  of the ODAC  meeting in May 2004 for  Genasense®,  the
Company  markedly  reduced  spending  on  the  development,  sale  and  marketing of
Ganite® resulting in significantly  lower sales of Ganite®.  A number of side
effects have been  reported  related to treatment  with  Ganite®.  These side effects
are described in the Product Insert for the  drug.  Genta has also been engaged in
developing  new  formulations  of  gallium-containing  compounds  that  may be  orally
absorbed;  to date,  however,  these efforts have not yielded a compound that the Company
has  advanced into late-stage preclinical testing.

The
Company seeks to acquire additional drugs in these two  Programs that will enhance the
value of its pipeline to shareholders.

B. Summary of
Business and Research and Development Programs

Our
goal is to establish Genta as a biopharmaceutical leader and  preferred partner in the
oncology market and as direct marketers of our  products in the United States.  Our key
strategies in this regard are:

| | Build
on our core competitive strength of oncology development expertise to establish a
leadership position in providing biopharmaceutical products for the treatment of cancer.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Expand
our pipeline of products in two therapeutic categories, DNA/RNA Medicines and Small
Molecules, through internal development, licensing and acquisitions.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Establish
our lead antisense compound, Genasense®, as the preferred chemosensitizing drug for
use in combination with other cancer therapies in a variety of human cancer types.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Establish
a sales and marketing presence in the U.S. oncology market.
| | ---------------------------------------------------------------------

Research
and Development Programs

DNA/RNA
Medicines

A
number of technologies  have been developed  using  modifications  of DNA or RNA.  These
agents  have  been used as  scientific  tools for  laboratory  use to  identify  gene
function,  as  diagnostic  probes to  evaluate  diseases,  and  more  recently
 as potential  drugs to treat  human diseases.  Collectively,  these technologies
include methods known  as antisense,  RNA  interference,  decoys and gene  therapy.
Founded in  1988, Genta was one of the first companies  established to exploit these  new
technologies  for use as  potential  drugs  and we  remain  broadly  committed  to
research  and  development  of  these  compounds  with  a  specific focus on cancer
medicine  (oncology).  Our most advanced drugs  in  our  DNA/RNA  Medicines  Program
involve  the  use  of  antisense  technology.

5

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Antisense
Technology

Most
of a cells  functions,  including  whether  the cell lives or  dies,  are carried
out by  proteins.  The genetic  code for a protein is  contained in DNA,  which is made
up of bases known as  nucleotides  that  are arranged in a specific  sequence.  The
specificity  of the sequence  accounts for the production of a specific  protein.  In
order for DNA to  produce a protein,  an intermediate step is required.  In this step,
DNA  is  transcribed  into  messenger RNA, or mRNA. The sequence of mRNA that  encodes a
protein is oriented in only one  direction,  which is known as  the sense orientation.

Antisense
drugs are short  sequences  of  chemically  modified DNA  bases  that are  called
oligonucleotides,  or  oligos.  The  oligos are  engineered in a sequence that is exactly
opposite (hence anti) to the  sense coding  orientation of mRNA.
Because  antisense drugs bind only  short regions of the mRNA (rather than the whole
message  itself),  they  contain  far fewer  nucleotides  than the whole  gene.
Moreover,  since  they are engineered to bind only to the matching  sequence on a
specific  mRNA, antisense drugs have both high selectivity and specificity,  which  can
be used to attack production of a single,  disease-causing  protein.  Gentas lead
antisense compound,  Genasense®, is an antisense oligo that  is designed to block the
production of Bcl-2.

We
have devoted  significant  resources  towards the development of  antisense oligos that
contain a phosphorothioate  backbone, which is the  nucleotide chain comprised of ribose
and phosphate groups.  However,  we  also  have  patents  and  technologies  covering
later  generation  technologies  that  involve  mixed  backbone  structures,  as  well
as  sterically  fixed  chemical  bonds,  that  may  further  enhance  the  molecules
ability to bind to the intended  target.  Moreover,  we have  developed  certain
formulations  that  can be used to more  efficiently  increase  the  uptake  of  oligos
into  cells.  Some of these  advanced  technologies  may be incorporated  into future
products from our DNA/RNA  Medicines Program.

Genasense®
as a Regulator of Apoptosis (Programmed Cell Death)

The
programmed  death  of  cells,  also  known  as  apoptosis,  is  necessary  to
accommodate  the  billions of new cells that are produced  daily and also to eliminate
aged or damaged  cells.  However,  abnormal  regulation of the apoptotic process can
result in disease.

Cancer
is commonly  associated  with the over- or  under-production  of  many  types  of
proteins.  These  proteins  may  be  directly  cancer-causing  (i.e.,  oncogenic)
or  they  may  contribute  to  the  malignant  nature of cancer (for  instance,  by
increasing the longevity  of cancer  cells or making  them more  likely to spread
throughout  the  body).  The  ability  to  selectively  halt the  production  of  certain
proteins may make the  treatment  of certain  diseases  more  effective.  Apoptosis  is
regulated  by a large  number of  proteins,  particularly  members  of the Bcl-2  protein
family.  In an  effort to make  existing  cancer therapy more effective,  Genta is
developing Genasense® to target  and block the  production  of Bcl-2,  a protein
that is  central to the  process of apoptosis.

| | Bcl-2
as an Inhibitor of Programmed Cell Death
| | ----------------------------------------------

Normally,
when a cancer cell is exposed to treatment,  such as with  chemotherapy,  radiation or
immunotherapy,  a death signal is sent to  an  organelle  within  the  cell
called  the  mitochondrion.  The  mitochondrion  then  releases  a  factor  known  as
cytochrome  C  that  activates  a series of enzymes  called  caspases.  These  enzymes
cause  widespread  fragmentation of cellular proteins and DNA, which ultimately  causes
cell death.

Bcl-2
is  normally  found in the  mitochondrial  membrane  where it  regulates  the  release
of  cytochrome  C.  High  levels  of Bcl-2  are  associated with most types of human
cancer,  including major hematologic  cancers such as lymphomas,  myeloma, and leukemia,
and solid tumors such  as melanoma  and cancers of the lung,  colon,  breast and
prostate.  In  these  diseases,  Bcl-2  inhibits the release of cytochrome C that would
ordinarily be triggered by cancer therapy.  Thus,  Bcl-2 appears to be a  major
contributor  to both  inherent and acquired  resistance to cancer  treatments.
Overcoming  resistance  to  chemotherapy  poses  a  major  challenge for cancer treatment.

In
cancer  cells,  Bcl-2  inhibits the process of  programmed  cell  death,  thereby
allowing  cells to survive  for much longer than normal  cells.  Genasense® has been
developed  as a  chemosensitizing  drug to  block  production  of  Bcl-2,  thereby
dramatically  increasing  the  sensitivity of cancer cells to standard cancer treatment.

6

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Genasense®

Genasense® has
been  designed  to block  the  production  of Bcl-2.  Current  science  suggests  that
Bcl-2  is a  fundamental  cause of the  inherent  resistance of cancer cells to current
cancer treatments,  such  as  chemotherapy,  radiation or monoclonal  antibodies.
Blocking Bcl-2,  therefore,  may enable  cancer  treatments to be more  effective.  While
Genasense® has displayed some  anticancer  activity when used by itself,  we believe
the drug can be optimally  used as a means of amplifying  the  effectiveness  of other
cancer  therapies,  most of which  function  by  triggering  apoptosis,  which as noted
is  relatively  blocked in cancer  cells to over-production of Bcl-2.

Overview of
Preclinical and Clinical studies of Genasense®

Preclinical
Studies

A
number of pre-clinical  studies in cell lines and in animals have  shown  enhancement  of
tumor cell killing when Bcl-2  antisense was used  in  combination  with  standard
cancer  therapies,  including  anti-metabolites,  alkylating agents,  corticosteroids,
other cytotoxic  chemotherapy,  radiation and monoclonal antibodies. Several studies have
demonstrated  enhanced  antitumor  activity and durable tumor regression  in animals
engrafted  with human  cancers  that were treated with Bcl-2  antisense  followed by
antitumor  agents that  induce  programmed  cell  death.  These studies  include human
lymphoma,  melanoma,  breast cancer  and prostate cancers,  which were treated with
Genasense® in combination  with  cyclophosphamide,  dacarbazine,  docetaxel  and
paclitaxel,  respectively.

Clinical
Studies

Genasense® has
been in  clinical  trials  since  1995 in both the  United States and Europe.  We
currently have efficacy and safety data on  over 1,400  patients  in Phase 1,  Phase 2 or
Phase 3  clinical  trials.  These  studies have been  conducted  in patients  with a wide
variety of  tumor types,  including  advanced malignant  melanoma,  several types of
leukemia,  non-Hodgkins  lymphoma  (NHL) and  cancers of the  prostate,  colon,
lung,  breast and other tumor types.  Since 2001,  Genta and the  National Cancer
Institute (NCI) have jointly approved the initiation of  approximately  twenty clinical
trials.  In addition to making Genasense® available  to more  physicians  and
patients,  these trials allow us to  evaluate  Genasense® in certain  diseases (and
in combination with other  chemotherapy  drugs)  that  would  otherwise  be  outside  our
initial  priorities  for clinical  development.  The overall  results of clinical  trials
performed to date suggest that Genasense® can be administered to  cancer  patients
with acceptable  side-effects,  and that such treatment  may reduce the level of Bcl-2
protein in cancer cells.

7

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The
following chart sets forth the progress of our clinical trials  with respect to various
potential indications for Genasense®:

|Indication                                 | Status                                                                                                                                                    
|------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|Malignant Melanoma                         | Phase 3 completed; NDA filed; On May 3, 2004, the
 FDA Oncology Drugs Advisory Committee voted not to
recommend; NDA withdrawn; analysis of data continues
|Chronic Lymphocytic Leukemia               | Phase 3 completed; results of trial met primary
      endpoint; analysis of data continues                                                                
|Multiple Myeloma                           | Phase 3 completed; trial did not meet primary
                  endpoint                                                                                  
|Acute Myelocytic Leukemia                  | Phase 3 (randomized)                                                                                                                                      
|Non-Small-Cell Lung Cancer                 | Phase 2 (randomized), fully enrolled                                                                                                                      
|Prostate Cancer                            | Phase 2 (randomized)                                                                                                                                      
|Small-Cell Lung Cancer                     | Phase 2 (randomized), fully enrolled                                                                                                                      
|Breast Cancer                              | Phase 1-2                                                                                                                                                 
|Colorectal Cancer                          | Phase 1-2                                                                                                                                                 
|non-Hodgkins
lymphoma                     | Phase 1-2 and
   Phase 2                                                                                                                                  
|Kidney Cancer                              | Phase 2                                                                                                                                                   
|Pancreatic Cancer (and other solid tumors) | Phase 1-2                                                                                                                                                 
|Waldenstroms
macroglobulinemia            | Phase 1-2                                                                                                                                                 
|Hepatocellular Carcinoma                   | Phase 1-2                                                                                                                                                 
|Childhood Solid Tumors                     | Phase 1                                                                                                                                                   

Highlights
of  the  randomized  trials  sponsored  directly  by the  Company follow:

Phase
3 Trial of Genasense® Plus Chemotherapy in Patients with Malignant Melanoma

In
late  2003,  we  filed  an NDA  for  Genasense® to be  used in  combination  with
dacarbazine  for  the  treatment  of  patients  with  melanoma who had not previously
received chemotherapy.  The FDA accepted  our NDA filing on February 5, 2004 and granted
Priority Review status  to the  application,  which  targeted an agency
action on or before June  8, 2004.  On February  10,  2004,  we were invited by the FDA
to meet on  May 3,  2004  with  ODAC.  On May 3, 2004 we  presented  results  of our
Phase 3 trial of  Genasense® in  combination  with  dacarbazine  versus  dacarbazine
alone to the ODAC.  A  majority  of the  committee  members  voted that the increased
number of clinical  responses were  indicative  of the clinical  activity of  Genasense® in
melanoma.  However,  in the  absence of  increased  survival,  a majority  of the
committee  members  voted that the evidence presented did not provide  substantial
evidence  of  effectiveness,  as measured by  response  rate and  progression-free
survival,  to  outweigh  the  increased  toxicity  of  administering  Genasense® for
the treatment of patients with  metastatic  melanoma who  have not  received  prior
chemotherapy.  On May 13,  2004  the  Company  announced that it had withdrawn its NDA.
Genta  continues to track data  from  patients  enrolled in this trial and to analyze its
results.  The  Company  expects  to  present  updated  information  from this  trial in
2005. The Company is currently  reviewing the possibility for filing the  updated data
for marketing  approval in Europe.  The Company has not yet  determined  what, if any,
additional  clinical trials may be undertaken  with Genasense® in patients with
melanoma.

8

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Phase
3 Trial of Genasense®Plus Chemotherapy in Patients with Chronic Lymphocytic
Leukemia

In
November 2004, the Company  reported  results from a randomized Phase  3 clinical  trial
of  Genasense® in patients with relapsed or refractory  chronic  lymphocytic
leukemia  (CLL).  Patients  were eligible for this  trial if they had failed  standard
treatment  for CLL that had included  fludarabine.  Two hundred forty one patients were
randomized to receive  standard  chemotherapy  with  fludarabine and  cyclophosphamide
with or  without  Genasense®.  The primary objective of the study was to evaluate
whether the addition of  Genasense® would  increase the  proportion  of  patients who
attained  major  objective  responses  (defined as complete  remission or a nodular
partial  remission),  as determined by review of  clinical  data and bone marrow
biopsies  using experts who were blinded  as to  treatment  assignment.  Analysis of
study  results has shown that  the  addition  of  Genasense® to  chemotherapy  was
associated  with a  statistically  significant increase in the major objective response
rate  compared  with the rate  observed  in  patients  who were  treated  with
chemotherapy  alone.  A significant  increase in  disease-free  survival  was also
observed.  No  difference  was  observed  in overall  response  rate,  time-to-disease
progression,  or overall survival. The incidence  of certain  serious  adverse
reactions,  including  but not  limited to  nausea,  fever and  catheter-related
complications,  was  increased  in  patients  treated  with  Genasense®.  Adverse
events  (irrespective  of  relation to study  drugs)  during  treatment or within 30 days
from last  dose of treatment that resulted in death occurred in 9 patients  treated  with
Genasense® plus chemotherapy  compared with 5 patients treated with  chemotherapy
alone. The percentage of patients who experienced  serious  adverse  events  was
increased  in the  Genasense® arm;  however,  the  percentages  of  patients  who
discontinued  treatment  due to  adverse  events were equal in the treatment arms.

Genta
plans to discuss the  feasibility  of  submitting  an NDA for  Accelerated  Approval based
on this data with the FDA.  The CLL trial  has both Fast Track and Orphan
Drug designations from the FDA. The Company is also exploring the feasibility of filing similar
regulatory applications in the European Union.

In
mid-2004,  the  Company  became  aware of an episode of employee  misconduct  that
involved an  unauthorized  attempt by the  employee to  analyze data from the Companys
Phase 3 trial of Genasense® in patients  with CLL. The episode,  which was undertaken
prior to assessment of the  external expert clinical review of response,  was fully
investigated by  the Company  and the Company  reported  the  incident to the FDA.  While
there can be no assurance,  the Company does not currently  believe this  episode will
have a material  impact on the  analysis or  interpretation  of the  study  results,  nor
that it  will  affect  whether  or not the  Company will receive marketing approval for
Genasense® in CLL.

Phase
3 Trial of Genasense®Plus Chemotherapy in Patients with Multiple Myeloma

In
November  2004,  Genta  reported  that the  Company's  randomized  Phase 3 clinical
trial of Genasense® in patients with multiple  myeloma  did not meet its  primary
endpoint.  The  trial  had been  designed  to  evaluate  whether the  addition of
Genasense®  to standard  therapy with  high-dose  dexamethasone  could  increase  the
time to  development  of  progressive  disease in patients who previously  had received
extensive  therapy.  Based on the results of the Phase 3 trial,  the Company has no
plans to submit  an NDA in this  indication  at the  current  time.  The  Company has not
yet determined what additional  clinical trials, if any,  may be undertaken in patients
with multiple myeloma.

Other
Trials

Other
randomized  trials are being  conducted by either the Company  or by oncology
cooperative groups.  These trials materially differ from  previous  studies  noted  above
in that  they  were  not  prospectively  reviewed  by FDA  for  registration  suitability
prior  to  initiation.  Details of these trials are as follows:

A
large U.S.  cooperative  oncology  group,  the Cancer and Leukemia  Group B  (CALGB)  is
running  a Phase 3 trial in  patients  with  acute  myelocytic  leukemia  (AML)  over the
age of 60 who have not  previously  received  chemotherapy.  All  patients  in this trial
receive  standard  chemotherapy  with  daunorubicin  and  cytarabine  and they are
randomly  assigned to receive  additional  treatment  with  Genasense® or no other
treatment.  This  trial  is  currently  projected  to  enroll  up  to  approximately  500
patients.  As  yet,  the  CALGB  has  not  released  expectations  for enrollment
completion.  While the primary endpoint is  overall  survival,  a variety of secondary
endpoints  (such as complete  remission  rate and remission  duration) will be
sequentially  examined  during the conduct of this trial.

9

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During
June 2004,  Genta completed  enrollment in a randomized Phase  2 trial of Genasense® plus
docetaxel in patients with  non-small  cell  lung cancer.  Patients who met a variety of
eligibility criteria and who  had failed  front-line  platinum-containing  chemotherapy
were eligible.  Patients were randomly  assigned to receive a standard dose of docetaxel
with or without  Genasense®.  A total of 298 patients were enrolled into  this study.
The primary  endpoint of the study was to increase  overall  survival in patients treated
with Genasense® plus chemotherapy  compared  with patients treated with chemotherapy
alone. Key secondary  endpoints  include comparisons of progression-free survival and
objective response.

Two
oncology  cooperative  groups,  including  the  European  Organization  for  Research
and  Treatment  of Cancer  (EORTC)  and the  CALGB, are conducting exploratory randomized
trials, as follows:

During
the fourth  quarter of 2004, the CALGB  completed  enrollment  in a randomized  trial of
Genasense® in patients  with small cell lung  cancer.  The trial  evaluates  patients
with extensive  disease who have  not previously received  chemotherapy.  The trial
includes approximately  55 patients and randomly  assigns  patients to receive  Genasense® plus
chemotherapy  with carboplatin and etoposide or chemotherapy  alone. The  endpoint of the
trial is to  determine  the  proportion  of patients who  have  survived at least  twelve
months from the date of  randomization.  Data from this trial are expected to be
available in 2006.

The
EORTC  is  conducting  a  randomized  study  of  Genasense® in  patients  with
hormone-refractory  prostate  cancer  who  have  not  previously  received  chemotherapy.
In this study, all patients receive  standard  therapy with  docetaxel  and are randomly
assigned to receive  Genasense® or no other  treatment.  The current sample size is
projected  at 102 patients;  the primary  objective is to compare response rates of
prostate specific antigen (PSA).

In
addition to these randomized  trials,  the Company,  either under  its own sponsorship or
in collaboration  with the NCI is also conducting  a number of  non-randomized  clinical
trials in patients  with  various  types of cancer.

For
additional  background  information  on the drug  application  process and clinical
trials, see Government Regulation.

Ganite®

| | Ganite®
as a Treatment for Cancer-Related Hypercalcemia
| | -------------------------------------------------------

On
October 6, 2003,  we began  marketing  Ganite® for the treatment  of  cancer-related
hypercalcemia.  Ganite® is our first drug to receive  marketing approval.

Hypercalcemia
is a  life-threatening  condition caused by excessive  buildup of calcium in the
bloodstream,  which may occur in up to 20% of  cancer patients.  Gallium nitrate was
originally studied by the NCI as a  new type of cancer  chemotherapy.  More than 1,000
patients were treated  in Phase 1 and Phase 2 trials,  and the drug showed promising
antitumor  activity against NHL,  bladder cancer and other diseases.  In the course  of
these  studies,  gallium  nitrate was also shown to strongly  inhibit  bone resorption.
Gallium nitrate underwent  additional clinical testing  and was  approved by the FDA in
1991 as a treatment  for  cancer-related  hypercalcemia.  Lower doses of Ganite® were
also tested in patients with  less  severe bone loss,  including  bone  metastases,  a
cancer that has  spread to bone,  Pagets  disease,  an affliction of older patients
that  causes pain and disability, and osteoporosis.

Side
effects  of  Ganite® include  nausea,  diarrhea  and  kidney  damage.  (A complete
listing of Ganite®s  side effects is contained in  the products  Package
Insert that has been reviewed and approved by the  FDA.)  .

The
extension for an important  patent  covering the use of Ganite® for its approved
indication will expire in April 2005.  Genta has filed  patent applications seeking
additional patent protection for Ganite®.

In
May  2004,  the  Company  eliminated  its  sales  force  and  significantly  reduced  its
marketing  support  for  Ganite®.  After  evaluating various options,  we decided
during the third quarter of 2004  to continue  selective  marketing  support of the
product.  In December  2004,  a  wholesaler  contacted  the  Company  to  return a
significant  portion of its  inventory of Ganite®.  The Company  agreed to the return
of this product and recorded a provision for sales  returns,  as well as  provided for
potential  returns from other  wholesalers.  Our provision  for sales returns increased
by $1.2 million in 2004.

10

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| | Ganite®
as a Treatment for Non-Hodgkins Lymphoma and Other Cancer Types
| | ------------------------------------------------------------------------

Based
on  previously  published  data,  we believe that Ganite® may  also be a useful
treatment  for patients  with certain types of cancer,  particularly  non-Hodgkins
lymphoma  (NHL).  Approximately  54,000 new  cases of NHL are  diagnosed in the United
States each year. We have been  granted  an  investigational  new drug  exemption,  or
IND,  and we have  commenced  clinical trials of Ganite® for the treatment of
patients with  relapsed  NHL. In December  2004,  we announced the results of a Phase 2
clinical  trial in patients  with NHL.  The results  showed that Ganite® displayed
antitumor activity in patients with various types of advanced  NHL who had  failed to
respond  or had  relapsed  from  other  types of  treatment.  However,  the use of Ganite® for
these indications  entailed  the use of higher doses than were used in the  hypercalcemia
trials and  as a  result,  an  increased  number  of  serious  adverse  events  were
recorded in this trial.  In  particular,  several  patients  experienced  optic  neuritis
and optic  atrophy  associated  with visual loss,  along  with  other  side  effects.  As
a  result  of the cost  savings  actions  announced in May 2004,  spending on the
clinical  development of Ganite® as a  chemotherapy  agent was also reduced.  When
sufficient  resources  become available,  we may resume clinical  development of Ganite® in
NHL  and other  indications  by  initiating  new  clinical  trials.  Previous  clinical
trials of Ganite® showed that the drug has not been associated  with  significant
myelosuppression,  a decrease of bone marrow activity  often  associated  with  cancer
therapy,  which  can  cause  increased  susceptibility  to bleeding and  infection.  We
believe this feature may  allow Ganite® to be incorporated into combination
chemotherapy regimens  that  employ  other  drugs  that  cause  myelosuppression,
thereby  potentially increasing the utility of such therapy for patients.

Other
Pipeline Products and Technology Platforms

Oral
Gallium

For
several  years,  we have  been  attempting  to  develop  novel  formulations of
gallium-containing  compounds that can be taken orally.  Such  formulations  might be
useful  for  diseases  in which  long-term  low-dose therapy is deemed desirable,  such
as bone metastases,  Pagets  disease and osteoporosis.  Such patients are commonly
afflicted by bone  pain  and  susceptibility  to  fractures.  To  date,  a  suitable
oral  formulation  that would be available  for clinical  development  has not  yet been
identified.

Decoys

In
addition to  antisense  compounds  from the  DNA/RNA  Medicines  Program,  we  have
explored  the  development  of  compounds  known  as  decoys that are short
strands of DNA or RNA which bind proteins  known  as  transcription  factors.  Normally,
transcription  factors  bind  to  specific  portions of DNA known as response  elements
and  regulate the  functions  of genes in a positive or negative  fashion  (i.e.,  they
can  turn  genes on or  off).  When a cell is  flooded  with an
excess of  decoys,  these decoys compete with normal DNA response  elements to bind
transcription  factors and inactivate them. By selectively  inactivating  the
transcription  factor,  the function of the gene can be regulated in  a positive or
negative  manner.  This type of control could  potentially  be used to  regulate  genes
that are  critically  involved in the cause,  metastasis, or progression of cancer.

In
December 2000,  Genta licensed  patents and technology  relating  to  decoys  from  the
National  Institutes  of  Health  (NIH).  This  technology targets a
transcription  factor known as the cyclic adenosine  monophosphate response element
binding protein, or CRE-BP.  Pre-clinical  studies  conducted at the NIH have shown broad
anticancer  activity for  this  compound,  with  very low  toxicity  to normal  cells.
Due to the  financial  constraints  described above, the Company has sharply reduced
current  spending  on  the  Decoy  program  and is  currently  reviewing  whether or not
to retain this compound within its research portfolio.

11

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c-myb
Antisense

In
December  2004,  Genta  acquired  worldwide  rights from Temple  University  to
intellectual  property  and  technology  and  a  novel  antisense  compound  (LR3001)
that targets  c-myb,  a central gene that  regulates  the growth of cancer  cells.
LR3001  has been  tested in two  Phase 1 clinical  trials at the University of
Pennsylvania  in patients  with drug-resistant  myeloid leukemia. To date, clinical
investigations  have been  supported by grants from the NIH,  including the Rapid Access
to Investigational  Drugs (RAID) program.  Genta has submitted a request  for
designation  of  LR3001  as an  Orphan  Drug for the  treatment  of  chronic  myelocytic
leukemia  (CML)  to the  FDA,  and  notice  of this  designation  was  received in
February  2005.  The Company is  currently  working  with  the  lead  investigator  to
re-qualify  a  substantial  inventory of LR3001,  which  if  successful  should
be  sufficient  to  complete  the  Phase 1  program.  Following  completion  of Phase 1,
the  Company  will then  decide  whether or not to take  LR3001  into Phase 2  clinical
trials.  Based  on the  biology  of  c-myb,  potential  target  diseases for LR3001
include CML,  neuroblastoma and cancer of the breast  and colon, among other conditions.

Antisense
and RNAi Research and Discovery

We
have had several other  oligonucleotide-based  discovery programs  and collaborations
devoted to the identification of both antisense- and  RNAi-based  inhibitors of oncology
gene  targets.  However,  spending on  these  research  programs  was  sharply  reduced
due  to  financial  constraints  previously  mentioned.  The Company  has no current
agents  that it  considers  lead  compounds that would  justify  their  being
advanced into late-stage pre-clinical testing.

We
intend to continue to evaluate  novel  nucleic acid  chemistries,  through sponsored
research and collaborative agreements,  depending upon  the availability of resources.

Patents
and Proprietary Technology

It
is our  policy  to  protect  our  technology  by  filing  patent  applications  with
respect to  technologies  important  to our business  development.  To maintain our
competitive  position,  we also rely upon  trade  secrets,  unpatented  know-how,
continuing  technological  innovation,  licensing  opportunities and certain  regulatory
approvals  (such as orphan drug designations).

We
own  or  have  licensed  several  patents  and  applications  to  numerous  aspects  of
oligonucleotide  technology,  including  novel  compositions  of matter,  methods of
large-scale  synthesis,  methods of  controlling  gene  expression and methods of
treating  disease.  Gentas  patent  portfolio  includes  approximately  90 granted
patents  and 105  pending applications in the U.S. and foreign countries.  Genta
endeavors  to  seek  appropriate  U.S.  and  foreign  patent  protection  on  its
oligonucleotide technology.

Genta
has licensed  seven U.S.  patents  relating to Genasense® and  its  backbone
chemistry  that  expire  between  2008 and 2015 and three  pending  U.S.  patent
applications  that  relate  to  Genasense®.  Corresponding  patent  applications
have  been  filed in three  foreign  countries.  Genta also owns three U.S. patent
applications  relating to  methods of using  Genasense® that expire in 2020, with
approximately 45  corresponding foreign patent applications.

Included
among Gentas  property rights are certain rights licensed  from  the  NIH  covering
phosphorothioate  oligonucleotides.  We  also  acquired  from  the  University  of
Pennsylvania  exclusive  rights  to  antisense  oligonucleotides  directed against the
Bcl-2 mRNA, as well as  methods  of their use for the  treatment  of cancer.  In 1998,
two U.S.  patents were issued encompassing our licensed antisense  oligonucleotide
compounds  targeted  against  the  Bcl-2  mRNA  and  the  use  of  these  compounds
outside of  organisms.  These  claims  cover our  proprietary  antisense  oligonucleotide
molecules,  which  target  the  Bcl-2  mRNA  including  Genasense®.  Other  related
U.S. and  corresponding  foreign  patent applications are still pending.

The
patent covering the use of Ganite® for its approved  indication  will expire in April
2005. Genta has filed patent  applications  seeking  additional patent protection for
Ganite®.

12

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The
patent positions of biopharmaceutical  and biotechnology firms,  including  Genta,  can
be uncertain  and can involve  complex  legal and  factual  questions.  Consequently,
even  though  we  are  currently  prosecuting our patent  applications  with the United
States and foreign  patent  offices,  we do not know  whether any of our  applications
will  result in the  issuance of any  patents,  or if any issued  patents will  provide
significant proprietary  protection,  or even if successful that  these patents will not
be circumvented  or invalidated.  Even if issued,  patents  may  be  circumvented  or
challenged  and  invalidated  in the  courts.  Because  some  applications  in the
United  States are kept in  secrecy until an actual patent issues,  we cannot be certain
that others  have not filed patent  applications  directed at  inventions  covered by
our  pending  patent  applications,  or that we were  the  first to file  patent
applications for such  inventions.  Thus, we may become involved  in  interference
proceedings  declared by the U.S. Patent and Trademark  Office (or comparable  foreign
office or process) in connection with one  or more of our patents or patent  applications
to determine  priority of  invention,  which could result in substantial costs to us, as
well as an  adverse  decision as to priority  of  invention  of the patent or patent
application involved.

Competitors
or potential  competitors  may have filed  applications  for,  or have  received  patents
and may obtain  additional  patents and  proprietary rights relating to, compounds or
processes  competitive with  those of ours.  Accordingly,  there can be no assurances
that our patent  applications  will  result in issued  patents or that,  if  issued,  the
patents  will  afford  protection  against  competitors  with  similar  technology.  We
cannot  provide  assurance  that any  patents  issued to  Genta will not be infringed or
circumvented by others,  nor can there be  any assurance that we will obtain  necessary
patents or technologies or  the rights to use such technologies.

We
also rely upon  unpatented  trade secrets.  No assurances can be  given  as  to  whether
third  parties  will  independently  develop  substantially  equivalent  proprietary
information and  techniques,  or  gain access to our trade secrets,  or disclose such
technologies to the  public,  or that we can  meaningfully  maintain  and protect
unpatented  trade secrets.

We
require  our  employees,  consultants,  outside  scientific  collaborators,  sponsored
researchers  and other  advisors  to  execute  confidentiality  agreements with us. These
agreements  generally provide  that  all  confidential  information  developed  or  made
known  to  an  individual  during  the  course of the  individuals  relationship
with  Genta shall be kept  confidential  and shall not be  disclosed  to third  parties
except in  specific  circumstances.  In the case of  employees,  the agreement  generally
provides that all inventions  conceived by the  individual  shall be assigned  to, and
made the  exclusive  property of,  Genta.  There can be no assurance,  however,  that
these agreements will  provide  meaningful  protection  to  our  trade  secrets,  or
guarantee  adequate  remedies in the event of  unauthorized  use or  disclosure  of
confidential proprietary  information,  or in the event of an employees  refusal to
assign any  patents to Genta in spite of his/her  contractual  obligation.

Research
and Development

In
addition to our current focus in the areas  described  above, we  continually  evaluate
our  programs  in  light  of  the  latest  market  information and  conditions,  the
availability of third-party  funding,  technological  advances  and  other  factors.  As
a  result  of  such  evaluations,  we change our product  development plans from time to
time  and  anticipate  that we will  continue to do so. In August 2004,  Genta  closed of
its research  facility in Salt Lake City, which had originated  from  the  August  2003
acquisition  of  Salus  Therapeutics,  Inc.  We  recorded  research  and  development
expenses of $71.5  million,  $83.1  million,  and $87.2  million  during the years ended
December 31, 2004,  2003 and 2002, respectively.

Sales
and Marketing

In
May  2004,  the  Company  initiated  a series  of steps  that are  designed to conserve
cash in order to focus on  Genasense®.  The Company  reduced its workforce by 85
employees,  including the elimination of its  sales force.

Either
alone or in partnerships  with other companies,  we intend to  be a direct  marketer or
co-marketer of our  pharmaceutical  products by  rebuilding a sales and marketing
infrastructure in the United States to  launch and fully  realize the  commercial
potential  of our products if  approved  by the FDA.  For  international  product  sales,
we intend to  distribute our products through collaborations with third parties.

13

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Manufacturing
and Raw Materials

Our
ability  to  conduct  clinical  trials on a timely  basis,  to  obtain  regulatory
approvals  and to  commercialize  our products  will  depend in part upon our  ability to
manufacture  our  products,  either  directly  or  through  third  parties,  at a
competitive  cost  and  in  accordance  with  applicable  FDA  and  other  regulatory
requirements,  including current Good Manufacturing Practice regulations.

We
currently rely on third parties to manufacture our products.  In  December 2002, we
signed a five-year  manufacturing and supply agreement  with Avecia  Biotechnology,
Inc.,  or Avecia,  a leading  multinational  manufacturer  of  pharmaceutical  products,
to  supply  quantities  of  Genasense®.  This  agreement  is  also  renewable  beyond
the  initial  five-year  period.  We  are  not  obligated  to  purchase  further  drug
substance from Avecia prior to approval of  Genasense®.  We believe this  agreement
is  sufficient  for our  production  needs  with  respect  to  Genasense®.

We
have a  three-year  manufacturing  and  supply  agreement  with  Johnson  Matthey  Inc.
expiring in December  2006,  whereby  Genta will  purchase  a  minimum  of 80%  of  our
requirements  for  quantities  of  Ganite®.  There  are  no  minimum  purchase
requirements  under  the  agreement.

The
raw  materials  that we  require to  manufacture  our drugs are  available  only  from  a
few  suppliers.  Under  the  terms  of  our  manufacturing and supply agreement,  Avecia
is responsible for procuring  the raw materials needed to manufacture  Genasense®.
We believe that we  have  adequately  addressed  our needs for suppliers of raw materials
to  manufacture Genasense® and Ganite® and meet future customer demand.

Human
Resources

In
May 2004,  as a part of the  Companys  reduction in  workforce,  the Company
eliminated 85 employees,  or approximately 45%, including 27  positions  classified as
research and development  positions.  In August  2004, Genta completed the closure of its
research  facility in Salt Lake  City,  which had  originated  from the August 2003
acquisition of Salus  Therapeutics,  Inc. As a result, the Company eliminated an
additional 15  positions classified as research and development positions.

As
of December 31, 2004,  Genta had 73  employees,  15 of whom hold  doctoral  degrees.  As
of that date, there were 49 employees  engaged in  research,  development  and other
technical  activities,  2 employees in  sales  and  marketing  and  22  in
administration.  None  of  Gentas  employees  are  represented  by a  union.  Most
of the  management  and  professional  employees of Genta have had prior experience and
positions  with  pharmaceutical  and  biotechnology  companies.  Genta  believes it
maintains  satisfactory  relations  with  its  employees  and  has  not  experienced
interruptions of operations due to labor disagreements.

C.
Government Regulation

Regulation
by  governmental  authorities  in the United States and  foreign  countries is a
significant  factor in our ongoing  research and  product  development  activities and in
the manufacture and marketing of  our proposed  products.  All of our  therapeutic
products  will require  regulatory  approval  by  governmental  agencies  prior  to
commercialization.  In  particular,  human  therapeutic  products  are  subject to
rigorous  pre-clinical  and clinical  testing and  pre-market  approval  procedures  by
the  FDA and  similar  authorities  in  foreign  countries.  Various  federal,  and in
some  cases,  state  statutes  and  regulations  also  govern  or  affect  the
development,  testing,  manufacturing,  safety, labeling,  storage,  recordkeeping and
marketing  of such products.  The lengthy process of seeking these  approvals,  and  the
subsequent  compliance with  applicable  federal and, in some cases,  state statutes and
regulations,  require substantial  expenditures.  Any  failure by Genta, our
collaborators or our licensees to obtain,  or any  delay in obtaining,  regulatory
approvals  could  adversely  affect the  marketing  of our  products  and our  ability
to  receive  products  or  royalty revenue.

14

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The
activities  required before a new  pharmaceutical  agent may be  marketed  in  the
United  States  begin  with  pre-clinical  testing.  Pre-clinical  tests include
laboratory  evaluation of product chemistry  and animal  studies to assess the  potential
safety and efficacy of the  product  and its  formulations.  The  results of these
studies  must be  submitted to the FDA as part of an IND. An IND becomes  effective
within  30 days of filing  with the FDA unless the FDA  imposes a clinical  hold  on the
IND. In  addition,  the FDA may,  at any time,  impose a clinical  hold on ongoing
clinical  trials.  If the FDA imposes a clinical  hold,  clinical  trials  cannot
commence  or  recommence,  as the case may be,  without prior FDA  authorization and then
only under terms authorized by  the FDA.

Clinical
trials are generally categorized into four phases.

Phase
1 trials  are  initial  safety  trials on a new  medicine  in  which  investigators
attempt to establish the dose range tolerated by a  small  group  of  patients  using
single  or  multiple  doses,  and  to  determine the pattern of drug distribution and
metabolism.

Phase
2 trials are clinical trials to evaluate  efficacy and safety  in  patients  afflicted
with a  specific  disease.  Typically,  Phase 2  trials in oncology  comprise 14 to 50
patients.  Objectives may focus on  dose-response,  type of patient,  frequency of dosing
or any of a number  of other issues involved in safety and efficacy.

In
the case of products for life-threatening  diseases, the initial  human  testing is
generally  done in  patients  rather  than in healthy  volunteers.  Since these patients
are already  afflicted with the target  disease,  it  is  possible  that  such  studies
may  provide  results  traditionally obtained in Phase 2 trials.

Phase
3 trials are usually  multi-center,  comparative studies that  involve larger
populations.  These trials are generally  intended to be  pivotal in  importance  for the
approval  of a new drug.  In  oncology,  Phase 3 trials  typically  involve  100 to 1,000
patients  for whom the  medicine is eventually  intended.  Trials are also  conducted in
special  groups of patients or under  special  conditions  dictated by the nature  of
the  particular  medicine  and/or  disease.  Phase  3  trials  often  provide much of the
information  needed for package insert and labeling  of the  medicine.  A trial is fully
enrolled  when it has a  sufficient  number of patients to provide enough data for the
statistical  proof of  efficacy and safety  required by the FDA and others.  After a
sufficient  period of follow-up has elapsed to  satisfactorily  evaluate  safety and
efficacy,  the trials  results can then be analyzed.  Those  results are  then commonly
reported at a scientific  meeting,  in a medical  journal  and to the public.

Depending
upon the nature of the trial results,  a company may then  elect to discuss the results
with  regulatory  authorities  such as the  FDA. If the company  believes  the data may
warrant  consideration  for  marketing  approval  of the drug,  the results of the
pre-clinical  and  clinical  testing,  together with chemistry,  manufacturing  and
control  information,  are then submitted to the FDA for a pharmaceutical product  in the
form of an NDA.  In  responding  to an  NDA,  biologics  license  application  or
premarket  approval  application,  the  FDA  may  grant  marketing  approval,  request
additional  information  or  deny  the  application if it determines that the
application  does not satisfy its  regulatory  approval  criteria.  There  can  be no
assurance  that  the  approvals  that are being sought or may be sought by Genta in the
future  will be granted on a timely  basis,  if at all, or if granted will cover  all the
clinical  indications for which we are seeking  approval or will  not  contain
significant  limitations  in  the  form  of  warnings,  precautions  or
contraindications  with respect to  conditions  of use.  Phase 3b trials are conducted
after  submission of a NDA, but before the  product's  approval for market  launch.
Phase 3b trials may  supplement  or  complete  earlier  trials,  or they  may  seek
different  kinds  of  information,  such as  quality  of life or  marketing.  Phase  3b
is the  period  between  submission  for  approval  and  receipt  of  marketing
authorization.

After
a medicine is  marketed,  Phase 4 trials  provide  additional  details about the
product's safety and efficacy.

In
circumstances  where a company intends to develop and introduce  a novel  formulation of
an active drug  ingredient  already  approved by  the FDA,  clinical and pre-clinical
testing  requirements may not be as  extensive.  Limited  additional  data  about  the
safety  and/or  effectiveness  of  the  proposed  new  drug  formulation,  along  with
chemistry and  manufacturing  information and public  information  about  the  active
ingredient,  may  be  satisfactory  for  product  approval.  Consequently,  the  new
product  formulation  may  receive  marketing  approval  more rapidly  than a
traditional  full new drug  application,  although no  assurance  can be given that a
product will be granted such  treatment by the FDA.

15

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Under
European Union  regulatory  systems,  we may submit marketing  authorizations  either
under a centralized or  decentralized  procedure.  The centralized  procedure  provides
for the grant of a single marketing  authorization  that is valid for all European Union
member  states.  The  decentralized  procedure  provides  for mutual  recognition  of
national  approval  decisions.  Under  this  procedure,  the  holder of a national
marketing  authorization  may  submit an  application  to the  remaining  member  states.
Within  90  days  of  receiving  the  applications  and  assessment  report,  each member
state must decide  whether to recognize  approval.

We
and our  third-party  manufacturers  are also subject to various  foreign,  federal,
state and local  laws and  regulations  relating  to  health  and  safety,  laboratory
and  manufacturing  practices,  the  experimental use of animals and the use,
manufacture,  storage, handling  and  disposal  of  hazardous  or  potentially  hazardous
substances,  including  radioactive  compounds and infectious disease agents, used in
connection  with our research  and  development  work and  manufacturing  processes.  We
currently incur costs to comply with laws and regulations  and these costs may become
more significant.

D.
Competition

In
many cases,  our products  under  development  will be competing  with  existing
therapies  for market  share.  In addition,  a number of  companies  are pursuing the
development  of  antisense  technology  and  controlled-release  formulation  technology
and  the  development  of  pharmaceuticals  utilizing  such  technologies.  We  compete
with fully  integrated  pharmaceutical  companies  that  have  substantially  more
experience,  financial  and other  resources  and superior  expertise in  research and
development,  manufacturing,  testing, obtaining regulatory  approvals, marketing and
distribution.  Smaller companies may also prove  to be significant competitors,
particularly through their collaborative  arrangements  with  large  pharmaceutical
companies  or  academic  institutions.  Furthermore, academic institutions, governmental
agencies  and other public and private research  organizations  have conducted and  will
continue to conduct research,  seek patent protection and establish  arrangements  for
commercializing  products.  Such products may compete  directly with any products that
may be offered by us.

Our
competition  will  be  determined  in  part  by the  potential  indications  for  which
our  products  are  developed  and  ultimately  approved  by  regulatory  authorities.
For  certain  of  our  potential  products,  an  important  factor  in  competition  may
be the  timing of  market  introduction of our or our competitors products.
Accordingly,  the  relative  speed with which we can develop  products,  complete  the
clinical trials and approval processes and supply commercial  quantities  of the products
to the market are  expected to be important  competitive  factors.  We expect that
competition  among products  approved for sale  will  be  based,  among  other  things,
on  product  efficacy,  safety,  reliability,  availability,  price, patent position and
sales, marketing  and  distribution  capabilities.  The  development  by  others  of  new
treatment  methods  could  render  our  products  under  development  non-competitive or
obsolete.

Our
competitive  position also depends upon our ability to attract  and retain qualified
personnel,  obtain patent  protection or otherwise  develop proprietary  products or
processes and secure sufficient capital  resources  for  the  often-substantial  period
between  technological  conception and commercial sales.

E.
Certain Risks and Uncertainties Related to the Companys Business

You
should carefully consider the following risks and all of the other information set
forth in this prospectus before deciding to invest in shares of our common stock.
The risks described below are not the only ones facing our company. Additional risks
not presently known to us or that we currently deem immaterial may also impair our
business operations.

If
any of the following risks actually occurs, our business, financial condition or
results of operations would likely suffer. In such case, the trading price of our
common stock could decline due to any of these risks, and you may lose all or part of
your investment.

16

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| | We
may be unsuccessful in our efforts to obtain FDA approval for and commercialize Genasense® or
our other pharmaceutical products.
| | -----------------------------------------------------------------------------------------------------------------------------------

The
commercialization  of our  pharmaceutical  products involves a  number  of  significant
challenges.  In  particular,  our  ability  to  commercialize  products,  such as Ganite® and
Genasense®,  depends,  in  large part,  on the success of our clinical  development
programs,  our  efforts  to obtain  regulatory  approvals  and our  sales and  marketing
efforts  directed at  physicians,  patients and  third-party  payors.  A  number of
factors could affect these efforts, including:

- our ability to demonstrate
clinically that our products are  useful and safe in particular indications;
- delays or refusals by regulatory
authorities in granting  marketing approvals;
- our limited financial resources
and sales and marketing  experience relative to our competitors;
- actual and perceived differences
between our products and  those of our competitors;
- the availability and level of
reimbursement for our products  by third-party payors;
- incidents of adverse reactions to
our products;
- side effects or misuse of our
products and the unfavorable  publicity that could result; and
- the occurrence of manufacturing,
supply or distribution  disruptions.

We
cannot  assure you that  Genasense® will receive FDA  approval.  Our financial
condition  and results of  operations  have been and will  continue to be  significantly
affected  by FDA action  with  respect to  Genasense®.  In late  2003,  we  filed
our  first  NDA with the FDA for  Genasense® as a treatment  combined with
chemotherapy for patients with  malignant  melanoma.  On May 3,  2004 the FDA  Oncology
Drugs  Advisory  Committee  voted  not to  recommend  Genasense®.  On May  13,  2004
the  Company  announced  that it had  withdrawn its NDA.  Genta  continues to  track data
from  patients  enrolled  in this  trial and to  analyze  its  results.  The Company
expects to present updated  information  from this  trial in 2005. The Company is
currently  reviewing the  possibility  for  filing the updated data for marketing
approval in Europe.

On
November  8,  2004,  we  announced  the  results of our Phase 3  clinical  trial of
Genasense® in patients  with relapsed or refractory  CLL. The trial met its primary
endpoint of significantly  increasing the  proportion  of  patients  who  achieved  a
complete  or nodular  partial  remission,  as determined by blinded  expert review of
clinical data and  bone marrow biopsies.  A significant  increase in disease-free
survival  was also observed.  No difference was observed in overall response rate,
time-to-disease  progression,  or overall  survival.  The  incidence  of  certain serious
adverse reactions,  including but not limited to nausea,  fever and  catheter-related
complications,  was  increased  in patients  treated with  Genasense®.  Adverse
events  (irrespective  of relation to  study  drugs)  during  treatment  or  within  30
days  from last dose of  treatment  that  resulted in death  occurred in 9 patients
treated with  Genasense® plus  chemotherapy  compared  with 5 patients  treated  with
chemotherapy  alone. The percentage of patients who experienced  serious  adverse  events
was  increased  in the  Genasense® arm;  however,  the  percentages  of  patients
who  discontinued  treatment  due to  adverse  events  were  equal  in the  treatment
arms.  We  plan to  discuss  the  feasibility  of  submitting  a NDA  based on these
data in CLL with the  FDA.

In
November  2004,  Genta  reported  that the  Company's  randomized  Phase 3 clinical
trial of Genasense® in patients with multiple  myeloma  did not meet its  primary
endpoint.  The  trial  had been  designed  to  evaluate  whether the  addition of
Genasense®  to standard  therapy with  high-dose  dexamethasone  could  increase  the
time to  development  of  progressive  disease in patients who previously  had received
extensive  therapy.  Based on the results of the Phase 3 trial,  the Company has no
plans to submit  an NDA in this  indication  at the  current  time.  The  Company has not
yet determined what additional  clinical trials, if any,  may be undertaken in patients
with multiple myeloma.

17

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We
cannot  assure you that we will  submit a NDA for  Genasense® in  CLL or submit
regulatory  filings in melanoma or other  diseases to the  FDA or outside the U.S. Even
if submitted,  we cannot provide  assurance  that these submissions will result in
regulatory  approval of Genasense® in any territory.  Failure to obtain approval, or
a substantial delay in  approval of Genasense® for these or any other indications,
would have a  material  adverse  effect on our  results of  operations  and  financial
condition.

Ultimately,
our efforts may not prove to be as  effective as those  of our  competitors.  In the
United States and  elsewhere,  our products  will face  significant  competition.  The
principal  conditions on which  our  product  development  efforts  are  focused  and
some of the  other  disorders for which we are conducting  additional studies, are
currently  treated  with several  drugs,  many of which have been  available  for a
number of years or are available in  inexpensive  generic  forms.  Thus,  even if we
obtain regulatory  approvals,  we will need to demonstrate to  physicians,  patients  and
third-party  payors  that  the  cost  of our  products is  reasonable  and  appropriate
in light of their  safety and  efficacy,  the price of competing  products and the
relative health care  benefits  to the  patient.  If we are  unable  to  demonstrate
that the  costs of our products are reasonable  and  appropriate in light of these
factors, we will likely be unsuccessful in commercializing our products.

We
  intend to be a direct marketer of some products in the United States. Currently
  we do not have a sales force. Our sales force was eliminated in 2004 following
  our decision to withdraw the NDA for Genasense®
  for the treatment of malignant melanoma. Our need to build a sales force capable
  of marketing our products may adversely affect our sales and limit the commercial
  success of our products.

| | On
November 8, 2004, we received from Aventis a notice of termination of the agreements
between Genta and Aventis regarding the development and commercialization of Genasense®.
We will lose a significant source of funding as a result of this termination.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
April 2002, we entered into a series of  agreements  relating to  the development and
commercialization of Genasense®,  to which we refer  collectively  as the
Collaborative  Agreement,  with  Aventis  and  its  affiliates.  On November 8, 2004,  we
received  from Aventis a notice of  termination of the  Collaborative  Agreement.  The
key financial aspects  of the Collaborative Agreement were the following:

- Aventis committed to provide up
to $476.9 million in initial  payments, milestone payments and for the purchase from us
of  equity and convertible notes.
- If Genasense® received
marketing approval from the FDA, we  would have been entitled to royalties on Aventis exclusive
worldwide net sales of Genasense®.
- Aventis agreed to pay 75% of the
development costs related to  any U.S. NDA incurred by either us or Aventis subsequent to
the execution of our Collaborative Agreement, and  substantially all other development,
marketing, and sales  costs incurred worldwide.
- Aventis agreed to reimburse a
portion of our expenses in  building our sales force to market in the United States.

As
of December 31, 2004, we had received a total of $266.8  million  in  initial  and
near-term  funding  pursuant  to  the  Collaborative  Agreement,  which  included  a
$10.0  million  licensing  fee and  $40.0  million  in  development  funding,  $10.0
million in  convertible  debt  proceeds,  $71.9 million pursuant to an at-market  equity
investment in  our common  stock,  $127.6  million in expense  reimbursements  and $7.3
million in line of credit  proceeds.  As a result of the  termination of  the
Collaborative  Agreement,  Aventis  will  continue  to support  the  development  of
Genasense® for a six-month  period lasting until May 8,  2005.  After May 8,  2005,
we will be  responsible  for all  Genasense® costs.  In addition,  with the November
8, 2004 notice of termination by  Aventis,  Genta could no longer borrow  additional
funds under the line  of  credit  and the  remaining  balance  of the line of  credit
must be  repaid  no later  than  May 8,  2005.  During  the  termination  period,
reimbursements  due to Genta for  ongoing  development  activities  will  continue to be
applied against the line of credit  balance.  As a result  of the termination of the
Collaborative Agreement,  Aventis has forgiven  the $10.0 million of  convertible  debt
and accrued  interest  issued to  them in connection with the collaboration.

18

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We
are  considering  whether  to  seek  a  new  partner  for  the  development and
commercialization of Genasense®.  If we determine not to  collaborate  with a
partner,  or are unable to  identify a partner,  we  will be solely responsible for the
development and  commercialization of  Genasense®,  including the costs associated
therewith.  We may not have  sufficient  resources  to do so.  Even  if we are  able  to
identify  a  partner,  we may not be able to enter into an  agreement  on  acceptable
terms.

| | We
rely on our contractual collaborative arrangements with research institutions and
corporate partners for development and commercialization of our products. Our business
could suffer if we are not able to enter into suitable arrangements or if our
collaborative arrangements are not successful in developing and commercializing products.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We
have entered into  collaborative  relationships  relating to the  conduct of clinical
research and other research  activities in order to  augment  our  internal  research
capabilities  and to obtain  access to  specialized  knowledge and expertise.  Our
business  strategy depends in  part on our  continued  ability to develop  and  maintain
relationships  with leading  academic and research  institutions  and with  independent
researchers.  The competition for these relationships is intense, and we  can give no
assurances  that we will be able to  develop  and  maintain  these relationships on
acceptable terms.

We
also  seek  strategic  alliances  with  corporate  partners,  primarily  pharmaceutical
and  biotechnology  companies,  to  help  us  develop  and  commercialize  drugs.
Various  problems  can  arise  in  strategic  alliances.  A partner  responsible  for
conducting  clinical  trials  and  obtaining  regulatory  approval  may  fail  to
develop  a  marketable drug. A partner may decide to pursue an alternative  strategy  or
focus its  efforts  on  alliances  or other  arrangements  with third  parties.  A
partner that has been granted marketing rights for a certain  drug within a geographic
area may fail to market the drug  successfully.  Consequently,  strategic  alliances
that we may  enter  into may not be  scientifically  or  commercially  successful.  In
this  regard,  we have  received  from  Aventis a notice  of  termination  of the
Collaborative  Agreement.

We
cannot  control the resources that any  collaborator  may devote  to our  products.  Any
of our  present or future  collaborators  may not  perform their  obligations as
expected.  These  collaborators may breach  or terminate  their  agreements  with us, for
instance  upon changes in  control or management of the  collaborator,  or they may
otherwise  fail  to conduct their collaborative  activities  successfully and in a timely
manner.

In
addition,  our  collaborators  may elect not to develop products  arising out of our
collaborative  arrangements or to devote  sufficient  resources  to  the  development,
regulatory  approval,  manufacture,  marketing or sale of these  products.  If any of
these events occur,  we  may not be able to develop our products or commercialize our
products.

An
important  part of our  strategy  involves  conducting  multiple  product  development
programs.  We may pursue  opportunities  in fields  that  conflict  with  those  of  our
collaborators.  In  addition,  disagreements  with our  collaborators  could develop over
rights to our  intellectual  property.  The  resolution  of  such  conflicts  and
disagreements  may require us to relinquish  rights to our  intellectual  property  that
we  believe  we  are  entitled  to.  In  addition,  any  disagreement  or  conflict  with
our  collaborators  could  reduce  our  ability to obtain future collaboration
agreements and negatively impact  our  relationship  with  existing  collaborators.  Such
a  conflict  or  disagreement  could  also  lead to  delays  in  collaborative  research,
development,  regulatory  approval  or  commercialization  of  various  products or could
require or result in litigation or arbitration,  which  would be time  consuming  and
expensive  and could  have a  significant  negative  impact on our  business,  financial
condition  and results of  operations.

| | We
anticipate that we will incur additional losses and we may never be profitable.
| | ----------------------------------------------------------------------------------

We
have never been profitable.  From the period since our inception  to December 31, 2004,
we have  incurred a cumulative  net loss of $356.0  million.  We may  never  achieve
revenue  sufficient  for us to  attain  profitability.  Achieving  profitability  is
unlikely before  Genasense® receives  approval  from  the  FDA  for  commercial  sale
in one or more  indications.

19

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| | Our
business will suffer if we fail to obtain timely funding.
| | -------------------------------------------------------------

Our
operations  to  date  have  required  significant  cash  expenditures.  As a result of
Aventis termination of the Collaborative  Agreement,  after May 8, 2005, we will be
responsible for all Genasense® costs.  Our future  capital  requirements  will depend
on the results of  our  research  and  development  activities,  pre-clinical  studies
and  clinical trials,  competitive and technological advances, and regulatory  activities
of the FDA and  other  regulatory  authorities.  In order to  commercialize  our
products,  we will need to raise additional funds. On  December 15, 2004, we sold 15
million  shares of common stock at a price  of  $1.50  per  share  to two  institutional
investors,  raising  $21.6  million,  net of fees and expenses.  We will need to obtain
more funding  in  the  future  through  collaborations  or  other  arrangements  with
research  institutions  and  corporate  partners  or public and  private  offerings of
our  securities,  including  debt or equity  financing.  We  may not be able to obtain
adequate funds for our operations  from these  sources when needed or on acceptable
terms.  Future  collaborations  or  similar  arrangements  may require us to license
valuable  intellectual  property  to,  or to  share  substantial  economic  benefits
with,  our  collaborators.  If we raise  additional  capital by  issuing  additional
equity or  securities  convertible  into equity,  our  stockholders  may  experience
dilution and our share price may decline.  Any debt financing  may result in restrictions
on our spending.

If
we are unable to raise additional funds, we will need to do  one or more of the following:

- delay, scale back or eliminate
some or all of our research  and product development programs;
- license third parties to develop
and commercialize products  or technologies that we would otherwise seek to develop and
commercialize ourselves;
- attempt to sell our company;
- cease operations; or
- declare bankruptcy.

| | Our
business depends heavily on a small number of products.
| | -----------------------------------------------------------

We
currently sell one product,  Ganite®. We do not expect to expand  our marketed
product  portfolio  significantly in the short term unless  Genasense® receives
marketing  approval.  If Genasense® is not approved,  if approval is  significantly
delayed,  or if in the event of approval,  the product is commercially  unsuccessful,  we
do not expect significant  sales of other products to offset this loss of potential
revenue.

To
diversify  our  product  line  in the  long  term,  it  will be  important  for us to
identify  suitable  technologies  and  products for  acquisition or licensing and
development.  If we are unable to identify  suitable  technologies  and products,  or if
we are unable to acquire or  license products we identify,  we may be unable to diversify
our product  line and to generate long-term growth.

| | We
may be unable to obtain or enforce patents, other proprietary rights and licenses to
protect our business; we could become involved in litigation relating to our patents or
licenses that could cause us to incur additional costs and delay or prevent our
introduction of new drugs to market.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our
success will depend to a large extent on our ability to:

- obtain U.S. and foreign patent or
other proprietary  protection for our technologies, products and processes;
- preserve trade secrets; and
- operate without infringing the
patent and other proprietary  rights of third parties.

Legal
standards  relating  to the  validity  of  patents  covering  pharmaceutical and
biotechnological  inventions and the scope of claims  made  under  these  types of
patents  are  still  developing,  and they  involve complex legal and factual  questions.
As a result,  our ability  to  obtain  and  enforce  patents  that  protect  our  drugs
is  highly  uncertain.  If we are unable to obtain and enforce  patents and licenses  to
protect our drugs, our business,  results of operations and financial  condition could be
adversely affected.

20

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We
hold numerous U.S.,  foreign and international  patents covering  various aspects of our
technology,  which include novel  compositions of  matter,  use,  methods  of
large-scale  synthesis  and  methods  of  controlling  gene  expression.  In the  future,
however,  we may not be  successful in obtaining  additional  patents  despite  pending
or future  applications.  Moreover,  our  current  and  future  patents  may not be
sufficiently  broad to protect us against  competitors  who use  similar  technology.
Additionally,  our  patents,  the  patents of our  business  partners  and the patents
for which we have  obtained  licensing  rights  may be challenged,  narrowed, invalidated
or circumvented.  Furthermore,  rights  granted  under  our  patents  may not be broad
enough  to cover  commercially  valuable  drugs or processes and therefore may not
provide  us with any competitive advantage with respect thereto.

The
pharmaceutical  and biotechnology  industries have been greatly  affected by
time-consuming  and expensive  litigation  regarding patents  and other intellectual
property rights. We may be required to commence,  or  may be  made a  party  to,
litigation  relating  to the  scope  and  validity  of  our  intellectual  property
rights  or  the  intellectual  property  rights of  others.  Such  litigation  could
result in adverse  decisions  regarding the  patentability  of our inventions and
products,  the  enforceability,  validity  or scope of  protection  offered  by our
patents or our  infringement  of patents held by others.  Such decisions  could  make us
liable for  substantial  money  damages,  or could bar us  from the  manufacture,  sale
or use of certain  products.  Moreover,  an  adverse  decision  may also  compel  us to
seek a  license  from a third  party.  The costs of any  license  may be  expensive,  and
we may not be  able  to  enter  into  any  required  licensing  arrangement  on  terms
acceptable to us.

The
cost to us of any  litigation or proceeding  relating to patent  or license rights,  even
if resolved in our favor, could be substantial.  Some of our  competitors  may be able to
sustain  the costs of  complex  patent or licensing  litigation more  effectively than we
can because of  their substantially greater resources.  Uncertainties resulting from the
initiation and  continuation of any patent or related  litigation  could  have  a
material  adverse  effect  on our  ability  to  compete  in the  marketplace.

We
also may be required to participate in interference  proceedings  declared by the U.S.
Patent and Trademark  Office and in  International  Trade  Commission  proceedings  aimed
at preventing  the  importation of  drugs  that  would  compete  unfairly  with our
drugs.  These  types of  proceedings could cause us to incur considerable costs.

The
patent covering the use of Ganite® for its approved  indication  will expire in April
2005.  Genta has filed and continues to file patent  applications seeking intellectual
property protection for Ganite®.

| | Some
of our products are in an early stage of development, and we may never receive
regulatory approval for these products.
| | ---------------------------------------------------------------------------------------------------------------------------

Most
of our  resources  have  been  dedicated  to the  research  and  development  of
potential  antisense  pharmaceutical  products  such as  Genasense®,  based  upon
oligonucleotide  technology.  While  we  have  demonstrated  the activity of antisense
oligonucleotide  technology  in  model systems in vitro and in animals,  Genasense® is
our only antisense  product  to  have  been  tested  in  humans.  Several  of  our  other
technologies that serve as a possible basis for pharmaceutical  products  are only in
pre-clinical  testing.  Results  obtained  in  pre-clinical  studies or early clinical
investigations are not necessarily indicative  of results  that will be  obtained in
extended  human  clinical  trials.  Our products may prove to have  undesirable  and
unintended side effects  or other  characteristics  that may prevent our obtaining FDA or
foreign  regulatory  approval for any  indication.  In  addition,  it is possible  that
research and discoveries by others will render our  oligonucleotide  technology obsolete
or noncompetitive.

| | Clinical
trials are costly and time consuming and are subject to delays; our business would
suffer if the development process relating to our products were subject to meaningful
delays.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Clinical
trials are very costly and  time-consuming.  The length of  time  required to complete a
clinical  study  depends upon many factors,  including  but not  limited to the size of
the patient  population,  the  ability  of  patients  to get to the  site of the
clinical  study,  the  criteria for  determining  which patients are eligible to join the
study  and other  issues.  Delays in patient  enrollment  and other  unforeseen
developments  could delay  completion  of a clinical  study and increase  its costs,
which could also delay any eventual  commercial  sale of the  drug that is the subject of
the clinical trial.

21

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Our commencement and rate of completion of clinical trials also
may be delayed by many other factors, including the following:

- inability to obtain sufficient
quantities of materials for  use in clinical trials;
- inability to adequately monitor
patient progress after  treatment;
- unforeseen safety issues;
- the failure of the products to
perform well during clinical  trials and
- government or regulatory delays.

| | If
we fail to obtain the necessary regulatory approvals, we cannot market and sell our
products in the United States or in other countries.
| | -------------------------------------------------------------------------------------------------------------------------------------------

The
FDA and  comparable  regulatory  agencies  in foreign  countries  impose substantial
pre-market approval requirements on the introduction  of  pharmaceutical  products.
These  requirements  involve  lengthy and  detailed  pre-clinical  and  clinical  testing
and  other  costly  and  time-consuming procedures.  Satisfaction of these requirements
typically  takes  several years or more  depending  upon the type,  complexity  and
novelty of the  product.  We cannot apply for FDA approval to market any  of our
products  under  development  until  pre-clinical  and  clinical  trials  on the  product
are  successfully  completed.  Several  factors  could  prevent  successful  completion
or cause  significant  delays of  these  trials,  including an inability to enroll the
required  number of  patients or failure to demonstrate  adequately  that the product is
safe  and effective for use in humans.  If safety  concerns  develop,  the FDA  could
stop our trials before  completion.  We may not market or sell any  product for which we
have not obtained  regulatory  approval.  On May 3,  2004, the FDA Oncology Drugs
Advisory  Committee  voted not to recommend  Genasense® for  marketing  approval  for
the  treatment  of  malignant  melanoma.  As a result,  on May 13, 2004 we  announced
that we withdrew  our NDA. We cannot assure you that the FDA or other regulatory
agencies  will ever  approve the use of our products  that are under  development.  If
the patient  populations  for which our products are approved are not  sufficiently
broad,  or if approval  is  accompanied  by  unanticipated  labeling  restrictions,  the
commercial success of our products could be  limited and our business,  results of
operations and financial condition  could consequently be materially adversely affected.

| | If
the third party manufacturers upon which we rely fail to produce our products
in the volumes that we require on a timely basis, or to comply with stringent
regulations applicable to pharmaceutical drug manufacturers, we may face delays
in the commercialization of, or be unable to meet demand for, our products and
may lose potential revenues.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We
do not  manufacture  any of our  products or product  candidates  and we do not plan to
develop any capacity to do so. We have  contracted  with third-party  manufacturers  to
manufacture  Ganite® and Genasense®.  The  manufacture  of  pharmaceutical
products  requires  significant  expertise and capital investment,  including the
development of advanced  manufacturing  techniques  and  process  controls.
Manufacturers  of  pharmaceutical  products  often  encounter  difficulties  in
production,  especially  in scaling up initial  production.  These  problems  include
difficulties  with  production  costs and  yields,  quality  control and  assurance  and
shortages of qualified  personnel,  as well as compliance  with  strictly  enforced
federal,  state and foreign  regulations.  Our  third-party  manufacturers  may not
perform as agreed or may  terminate  their agreements with us.

In
addition to product  approval,  any facility in which Genasense® is  manufactured  or
tested  for  its  ability  to  meet  required  specifications  must be  approved  by the
FDA before it can  manufacture  Genasense®.  Failure of the  facility  to be
approved  could  delay the  approval of Genasense®.

We
do not currently  have alternate  manufacturing  plans in place.  The number of
third-party  manufacturers  with the  expertise,  required  regulatory  approvals and
facilities to manufacture  bulk drug substance  on a  commercial  scale  is  limited,
and it would  take a  significant  amount of time to arrange for alternative
manufacturers.  If we need to  change  to  other  commercial  manufacturers,  the  FDA
and  comparable  foreign  regulators  must approve these  manufacturers facilities
and  processes  prior  to our  use,  which  would  require  new  testing  and  compliance
inspections,  and the  new  manufacturers  would  have to be  educated in or
independently  develop the  processes  necessary for the  production of our products.

22

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Any
of these  factors  could cause us to delay or suspend  clinical  trials, regulatory
submissions,  required approvals or commercialization  of our products or product
candidates,  entail  higher costs and result  in  our  being  unable  to  effectively
commercialize  our  products.  Furthermore,  if our  third-party  manufacturers  fail  to
deliver  the  required  commercial  quantities  of bulk  drug  substance  or  finished
product on a timely basis and at commercially  reasonable prices, and we  were  unable
to  promptly  find one or more  replacement  manufacturers  capable  of  production  at
a  substantially  equivalent  cost,  in  substantially  equivalent  volume and on a
timely basis, we would likely  be unable to meet demand for our  products  and we would
lose  potential  revenues.

| | Even
if we obtain regulatory approval, we will be subject to ongoing regulation, and any
failure by us or our manufacturers to comply with such regulation could suspend or
eliminate our ability to sell our products.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Ganite®,
Genasense®,  if it obtains  regulatory  approval,  and any  other  product we may
develop  will be  subject  to ongoing  regulatory  oversight,  primarily by the FDA.
Failure to comply with  post-marketing  requirements,  such as maintenance by us or by
the  manufacturers of our  products  of current  Good  Manufacturing  Practices  as
required by the  FDA, or safety  surveillance of such products or lack of compliance with
other  regulations could result in suspension or limitation of approvals  or other
enforcement actions.  Current Good Manufacturing  Practices are  FDA  regulations  that
define the minimum  standards that must be met by  companies that  manufacture
pharmaceuticals  and apply to all drugs for  human  use  including  those to be used in
clinical  trials  as well as  those  produced for general sale after approval of an
application by the  FDA. These regulations define requirements for personnel,  buildings
and  facilities,  equipment,  control  of  raw  materials  and  packaging  components,
production  and  process  controls,  packaging  and  label  controls,  handling  and
distribution,  laboratory  controls  and  recordkeeping.  Furthermore,  the  terms  of
any  product  candidate  approval,  including the labeling content and advertising
restrictions,  may  be  so  restrictive  that  they  could  adversely  affect  the
marketability of our product  candidates.  Any such failure to comply or  the application
of such  restrictions  could limit our ability to market  our product  candidates  and
may have a material  adverse  effect on our  business,  results of operations and
financial condition.  Such failures  or  restrictions  may also prompt  regulatory
recalls of one or more of  our  products,  which could have  material  and  adverse
effects on our  business.

| | The
raw materials for our products are produced by a limited number of suppliers, and our
business could suffer if we cannot obtain needed quantities at acceptable price and
quality.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
raw  materials  that  we  require  to  manufacture  our  drugs,  particularly
oligonucleotides,  are available from only a few suppliers.  If these  suppliers cease to
provide us with the necessary raw materials  or  fail  to  provide  us  with  adequate
supply  of  materials  at  an  acceptable price and quality, we could be materially
adversely affected.

| | If
third-party payors do not provide coverage and reimbursement for use of our products, we
may not be able to successfully commercialize our products.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------

Our
ability to commercialize  drugs successfully will depend in part  on the  extent  to
which  various  third-party  payors  are  willing  to  reimburse  patients  for the costs
of our drugs and related  treatments.  These third-party payors include government
authorities,  private health  insurers  and  other  organizations,  such  as  health
maintenance  organizations.  Third-party  payors often  challenge the prices  charged
for medical  products and  services.  Accordingly,  if less costly drugs  are  available,
third-party  payors  may  not  authorize  or may  limit  reimbursement  for our drugs,
even if they are safer or more  effective  than the alternatives.  In addition,  the
federal government and private  insurers  have  changed  and  continue  to  consider
ways to change the  manner in which health care  products and services are provided and
paid  for in the United States. In particular,  these  third-party  payors are
increasingly  attempting  to contain  health care costs by limiting both  coverage and
the level of  reimbursement  for new therapeutic  products.  In the future,  it is
possible that the government  may institute  price  controls and further  limits on
Medicare and  Medicaid  spending.  These  controls  and limits  could affect the payments
we collect from sales of  our  products.  Internationally,  medical  reimbursement
systems  vary  significantly,  with  some  countries  requiring  application  for,  and
approval of, government or third-party reimbursement.  In addition, some  medical centers
in foreign  countries have fixed budgets,  regardless of  levels of  patient  care.  Even
if we succeed  in  bringing  therapeutic  products to market,  uncertainties  regarding
future health care policy,  legislation and regulation,  as well as private market
practices,  could  affect our  ability to sell our  products in  quantities,  or at
prices,  that will enable us to achieve profitability.

23

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| | The
outcome of and costs relating to pending shareholder class action and shareholder
derivative actions are uncertain.
| | -----------------------------------------------------------------------------------------------------------------------

In
2004,  numerous  complaints  were  filed  in the  United  States  District  Court for the
District of New Jersey against Genta and certain  of  our  principal  officers  on
behalf  of  purported  classes  of our  shareholders who purchased our securities  during
several class periods.  The complaints  have been  consolidated  into a single action and
allege  that we and  certain of our  principal  officers  violated  the  federal
securities laws by issuing  materially  false and misleading  statements  regarding
Genasense® for the treatment of melanoma that had the effect  of  artificially
inflating  the  market  price of our  securities.  The  shareholder  class  action
complaint  in  the  various  actions  seeks  monetary  damages in an  unspecified  amount
and recovery of plaintiffs costs and attorneys fees. In addition,  three
shareholder  derivative  actions have been filed against the  directors  and certain
officers of  Genta  in  New  Jersey  State  and  Federal  courts.  Based  on  facts
substantially  similar  to  those  asserted  in  the  shareholder  class  actions,  the
derivative  plaintiffs claim that defendants have breached  their fiduciary  duties to
the  shareholders and other violations of New  Jersey law. The Company  believes  these
litigations  are without merit  and will vigorously defend against these suits.

| | Our
business exposes us to potential product liability that may have a negative effect on
our financial performance and our business generally.
| | -----------------------------------------------------------------------------------------------------------------------------------------------

The
administration of drugs to humans,  whether in clinical trials  or  commercially,
exposes  us to  potential  product  and  professional  liability  risks,  which  are
inherent  in  the  testing,  production,  marketing  and sale of human  therapeutic
products.  Product  liability  claims can be expensive  to defend and may result in large
judgments or  settlements  against  us,  which  could  have a  negative  effect on our
financial  performance  and  materially  and  adversely  affect  our  business.  We
maintain product liability  insurance  (subject to various  deductibles),  but our
insurance coverage may not be sufficient to cover  claims.  Furthermore,  we cannot be
certain  that we will always be able  to maintain or increase our insurance  coverage at
an affordable  price.  Even  if a  product  liability  claim  is not  successful,  the
adverse  publicity  and time and expense of defending  such a claim may interfere  with
or adversely affect our business and financial performance.

| | We
may incur a variety of costs to engage in future acquisitions of companies, products or
technologies, and the anticipated benefits of those acquisitions may never be realized.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As
a part of our business  strategy,  we may make  acquisitions of,  or significant
investments  in,  complementary  companies,  products or  technologies,  although no
significant  acquisition  or investments  are  currently  pending.  Any future
acquisitions  would be  accompanied  by  risks such as:

- difficulties in assimilating the
operations and personnel of  acquired companies;
- diversion of our managements
attention from ongoing  business concerns;
- our potential inability to
maximize our financial and  strategic position through the successful incorporation of
acquired technology and rights into our products and  services;
- additional expense associated
with amortization of acquired  assets;
- maintenance of uniform standards,
controls, procedures and  policies; and
- impairment of existing
relationships with employees,  suppliers and customers as a result of the integration of
new management personnel.

We
cannot guarantee that we will be able to successfully  integrate  any business, products,
technologies or personnel that we might acquire  in the future, and our failure to do so
could harm our business.

24

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| | We
face substantial competition from other companies and research institutions that are
developing similar products, and we may not be able to compete successfully.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
many cases,  our products  under  development  will be competing  with  existing
therapies  for market  share.  In addition,  a number of  companies  are pursuing the
development  of  antisense  technology  and  controlled-release  formulation  technology
and  the  development  of  pharmaceuticals  utilizing  such  technologies.  We  compete
with fully  integrated  pharmaceutical  companies  that  have  more  substantial
experience,  financial  and other  resources  and superior  expertise in  research and
development,  manufacturing,  testing, obtaining regulatory  approvals,  marketing  and
distribution.  Smaller  companies  may  also  prove  to  be  significant  competitors,
particularly  through  their  collaborative  arrangements  with  large  pharmaceutical
companies  or  academic  institutions.  Furthermore,  academic  institutions,
governmental  agencies  and  other  public  and  private  research  organizations  have
conducted  and will  continue to conduct  research,  seek patent  protection and
establish  arrangements for  commercializing  products.  Such  products may compete
directly  with any products  that  may be offered by us.

Our
competition  will  be  determined  in  part  by the  potential  indications  for  which
our  products  are  developed  and  ultimately  approved  by  regulatory  authorities.
For  certain  of  our  potential  products,  an  important  factor  in  competition  may
be the  timing of  market  introduction of our or our competitors products.
Accordingly,  the  relative  speed with which we can develop  products,  complete  the
clinical trials and approval processes and supply commercial  quantities  of the products
to the market are  expected to be important  competitive  factors.  We expect that
competition  among products  approved for sale  will  be  based,  among  other  things,
on  product  efficacy,  safety,  reliability,  availability,  price, patent position and
sales, marketing  and  distribution  capabilities.  The  development  by  others  of  new
treatment  methods  could  render  our  products  under  development  non-competitive or
obsolete.

Our
competitive  position also depends upon our ability to attract  and retain qualified
personnel,  obtain patent  protection or otherwise  develop proprietary  products or
processes and secure sufficient capital  resources  for  the  often  substantial  period
between  technological  conception  and commercial  sales.  We cannot assure you that we
will be  successful in this regard.

| | We
are dependent on our key executives and scientists, and the loss of key personnel or the
failure to attract additional qualified personnel could harm our business.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our
business  is  highly  dependent  on  our  key  executives  and  scientific  staff.  The
loss of key  personnel or the failure to recruit  necessary  additional or  replacement
personnel  will likely impede the  achievement of our development objectives.  There is
intense competition  for  qualified  personnel  in  the  pharmaceutical  and
biotechnology  industries,  and  there  can be no  assurances  that  we will be able to
attract  and  retain  the  qualified  personnel  necessary  for  the  development of our
business.

Risks
Related to Our Common Stock

| | Provisions
in our restated certificate of incorporation and bylaws and Delaware law may
discourage a takeover and prevent our stockholders from receiving a premium for
their shares.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Provisions
in our restated  certificate of incorporation and bylaws  may  discourage  third parties
from seeking to obtain control of us and,  therefore,  could prevent our stockholders
from receiving a premium for  their  shares.  Our  restated  certificate  of
incorporation  gives our  board of directors the power to issue shares of preferred
stock without  approval of the holders of common  stock.  Any  preferred  stock that is
issued in the future could have voting rights,  including  voting rights  that could be
superior  to that of our common  stock.  The  affirmative  vote of 66-2/3%  of our
voting  stock is  required  to approve  certain  transactions  and to take certain
stockholder  actions,  including  the  amendment of certain  provisions of our
certificate  of  incorporation.  Our  bylaws  contain  provisions  that  regulate  how
stockholders  may  present proposals or nominate  directors for election at annual
meetings  of stockholders.

In
addition,  we are subject to Section 203 of the Delaware  General  Corporation  Law,
which contains  restrictions on stockholder  action to  acquire control of Genta.

25

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| | We
have not paid, and do not expect to pay in the future, dividends on our common stock.
| | ----------------------------------------------------------------------------------------

We
have never paid cash  dividends  on our common  stock and do not  anticipate  paying any
such  dividends  in the  foreseeable  future.  We  currently intend to retain our
earnings,  if any, for the development of  our business.

| | Our
stock price is volatile.
| | ----------------------------

The
market price of our common stock, like that of the common  stock of many other
biopharmaceutical companies, has been and likely  will continue to be highly volatile.
Factors that could have a  significant impact on the future price of our common stock
include but  are not limited to:

- the results of pre-clinical
studies and clinical trials by  us or our competitors;
- announcements of technological
innovations or new  therapeutic products by us or our competitors;
- government regulation;
- developments in patent or other
proprietary rights by us or  our respective competitors, including litigation;
- fluctuations in our operating
results; and
- market conditions for
biopharmaceutical stocks in general.

As
of  December  31,  2004,  we had 95.4  million  shares of common  stock outstanding and
options,  warrants and convertible preferred stock  outstanding  exercisable for or
convertible into 11.5 million additional  shares.  Future  sales  of  shares  of  common
stock  by  existing  stockholders,  holders  of  preferred  stock  who  might  convert
such  preferred  stock into common  stock and option and  warrant  holders who  may
exercise  their  options and warrants to purchase  common stock also  could adversely
affect the market price of the common stock.  Moreover,  the  perception  that sales of
substantial  amounts of our common stock  might occur could adversely affect prevailing
market prices.

|Item 2. |  | Properties
|------- |  | ----------

We
lease approximately 93 thousand square feet of office space in  Berkeley Heights, New
Jersey.  Our annual rental costs for this space  are approximately $2.4 million.  Our
lease on this space terminates in  2010.

|Item 3. |  | Legal Proceedings
|------- |  | -----------------

In
2004,  numerous  complaints  were  filed in the  United  States  District  Court for the
District of New Jersey against Genta and certain  of  our  principal  officers  on
behalf  of  purported  classes  of our  shareholders who purchased our securities  during
several class periods.  The complaints  have been  consolidated  into a single action and
allege  that we and  certain of our  principal  officers  violated  the  federal
securities laws by issuing  materially  false and misleading  statements  regarding
Genasense® for the treatment of melanoma that had the effect  of  artificially
inflating  the  market  price of our  securities.  The  shareholder  class  action
complaint  in  the  various  actions  seeks  monetary  damages in an  unspecified  amount
and recovery of plaintiffs costs and attorneys fees. In addition,  three
shareholder  derivative  actions have been filed against the  directors  and certain
officers of  Genta  in  New  Jersey  State  and  Federal  courts.  Based  on  facts
substantially  similar  to  those  asserted  in  the  shareholder  class  actions,  the
derivative  plaintiffs claim that defendants have breached  their fiduciary  duties to
the  shareholders and other violations of New  Jersey law. The Company  believes  these
litigations  are without merit  and will vigorously defend against these suits.

Management
does not  believe  that  this  litigation  will  have a  material adverse impact on the
Companys financial results or liquidity.

|Item 4. |  | Submission of Matters to a Vote of Security Holders
|------- |  | ---------------------------------------------------

No
matters  were  submitted  to a vote of  security  holders in the  quarter ended December
31, 2004.

26

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|Item 5. |  | Market For Registrants Common Equity and Related Stockholder Matters
|------- |  | ---------------------------------------------------------------------

(a)
Market Information

The
Companys  common stock is traded on the Nasdaq National Market  under the  symbol
GNTA. The  following  table  sets  forth,  for the  periods  indicated,  the
high and low sales  prices for the common stock  as reported by Nasdaq.

|                     |  |  | High |       | Low |  
|-------------------- |  |  | ---- | ----- | --- | -
|2004                 |  |  |      |       |     |  
|First
      Quarter  |  |  | $    | 14.25 |     | $
|Second
      Quarter |  |  |      | 16.65 |     |  
|Third
      Quarter  |  |  |      | 3.20  |     |  
|Fourth
      Quarter |  |  |      | 3.03  |     |  
|                     |  |  |      |       |     |  
|2003                 |  |  |      |       |     |  
|First
      Quarter  |  |  | $    | 8.80  |     | $
|Second
      Quarter |  |  |      | 14.69 |     |  
|Third
      Quarter  |  |  |      | 17.65 |     |  
|Fourth
      Quarter |  |  |      | 12.90 |     |  

(b)
Holders

There
were 605 holders of record of the Companys common stock as  of  March 9, 2005.

(c)
Dividends

The
Company has never paid cash  dividends  on its common  stock and  does  not  anticipate
paying  any  such  dividends  in the  foreseeable  future.  The Company currently
intends to retain its earnings,  if any,  for the development of its business.

(f)
Use of Proceeds

In
December 2004, the Company raised $21.6 million,  net of issuance  costs,  from  the
issuance  of  common  stock  pursuant  to  our  shelf  registration  statement.  The net
proceeds  from the sale of the common  stock will be used for general corporate purposes.

27

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|Item 6. |  | Selected Consolidated Financial Data
|------- |  | ------------------------------------

|                                                                    |  |  | Years
      Ended December 31, |        
|------------------------------------------------------------------- |  |  | ------------------------------ | -------
|(In thousands, except
      share data)                             |  |  | 2004                           |        
|                                                                    |  |  |                                |        
|                                                                    |  |  |                                |        
|Consolidated
      Statements of Operations Data:                   |  |  |                                |        
|Revenues:                                                           |  | 
|License
      fees and royalties                                    |  |  | $                              | 3,022  
|Development
      funding                                           |  |  |                                | 12,105 
|Product
      sales - net                                           |  |  |                                | (512   
|                                                                    |  |  |                                |        
|Total
      revenues                                                |  |  |                                | 14,615 
|                                                                    |  |  |                                |        
|Cost
      of goods sold                                            |  |  |                                | 170    
|Provision
      for excess inventory                                |  |  |                                | 1,350  
|                                                                    |  |  |                                |        
|Total
      cost of goods sold                                      |  |  |                                | 1,520  
|                                                                    |  |  |                                |        
|Gross
      margin                                                  |  |  |                                | 13,095 
|                                                                    |  | 
|Costs
      and expenses:                                           |  | 
|Research
      and development                                      |  |  |                                | 71,494 
|Selling,
      general and administrative                           |  |  |                                | 28,576 
|Promega
      settlement                                            |  |  |                                |       
|Loss
      on disposition of property and equipment                 |  |  |                                | 1,254  
|                                                                    |  |  |                                |        
|Total
      cost and expenses - gross                               |  |  |                                | 101,324
|Aventis
      reimbursement                                         |  |  |                                | (43,292
|                                                                    |  |  |                                |        
|Total
      cost and expenses - net                                 |  |  |                                | 58,032 
|                                                                    |  |  |                                |        
|Gain
      on extinguishment of debt                                |  |  |                                | 11,495 
|Other
      (expense)/income                                        |  |  |                                | (147   
|                                                                    |  |  |                                |        
|Loss
      before income taxes                                      |  |  |                                | (33,589
|                                                                    |  |  |                                |        
|Income
      tax benefit/(expense)                                  |  |  |                                | 904    
|                                                                    |  |  |                                |        
|Net loss                                                            |  |  |                                | (32,685
|Preferred
      stock dividends                                     |  |  |                                |       
|                                                                    |  |  |                                |        
|Net loss
      applicable to common shares                          |  |  | $                              | (32,685
|                                                                    |  |  |                                |        
|                                                                    |  |  |                                |        
|Net loss
      per basic and diluted share                          |  |  | $                              | (0.41  
|                                                                    |  |  |                                |        
|                                                                    |  |  |                                |        
|Shares
      used in computing net loss per basic and diluted share |  |  |                                | 79,798 
|                                                                    |  |  |                                |        
|                                                                    |  |  |                                |        
|                                                                    |  |  |                                |        
|                                                                    |  |  | As
      of December 31,       |        
|                                                                    |  |  | 2004                           |        
|                                                                    |  |  |                                |        
|Consolidated
      Balance Sheet Data:                              |  | 
|Cash,
      cash equivalents and marketable securities              |  |  | $                              | 42,247 
|Working
      capital                                               |  |  |                                | (4,269 
|Total
      assets                                                  |  |  |                                | 50,532 
|Total
      stockholders equity                                    |  |  |                                | 1,752  

28

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|Item 7. |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations
|------- |  | -------------------------------------------------------------------------------------

Overview

Since
its  inception  in  February  1988,  Genta has  devoted  its  principal  efforts toward
drug  discovery and research and  development.  Gentas  strategy  is  to  build  a
product  and  technology  portfolio  primarily  focused  on  its  cancer-related
products.  Genta  has  been  unprofitable to date and expects to incur  substantial
operating losses  due to  continued  requirements  for ongoing and  planned  research
and  development  activities,  pre-clinical  and  clinical  testing,  manufacturing
activities,  regulatory activities and establishment of a  sales and  marketing
organization.  From our  inception to December 31,  2004, we have incurred a cumulative
net loss of $356.0 million.  We have  experienced  significant quarterly fluctuations in
operating results and  we expect that these fluctuations in revenues,  expenses and
losses will  continue.

Our
financial  results in 2004 have been and will  continue  to be  significantly  affected
by FDA action  with  respect to  Genasense®.  In  late 2003 we filed a NDA for
Genasense® to be used in  combination  with  dacarbazine  for the  treatment of
patients  with  melanoma who have not  previously received chemotherapy.  In the absence
of increased survival,  the FDA  Oncology  Drugs  Advisory  Committee  voted  that the
evidence  presented  did not provide  substantial  evidence of  effectiveness,  as
measured by response  rate and  progression-free  survival,  to outweigh  the increased
toxicity of administering  Genasense® for the treatment of  patients  with
metastatic  melanoma  who  have  not  received  prior  chemotherapy.  On  May  13,  2004
the  Company  announced  that  it had  withdrawn  its NDA. On the same day,  the Company
initiated a series of  steps  that  were  designed  to  conserve  cash in  order  to
focus  on  Genasense®.  The  Company  reduced its  workforce  by 85  employees,  or
approximately  45%,  including  its field sales  employees.  The Company  also
significantly  reduced its marketing support of Ganite®,  its only  marketed product.
In August 2004, Genta closed its research facility in  Salt Lake City, Utah, with a
further reduction of 15 employees.

In
November  2004, the Company  reported  results from a randomized  Phase 3 clinical  trial
of  Genasense® in  patients  with  relapsed  or  refractory  chronic  lymphocytic
leukemia (CLL).  Two hundred forty one  patients  were  randomized  to  receive  standard
chemotherapy  with  fludarabine  and  cyclophosphamide  with  or  without  Genasense®.
The  primary  objective of the study was to evaluate  whether the addition of  Genasense® would
increase the proportion of patients who attained major  objective  responses (defined as
complete remission or a nodular partial  remission),  as  determined  by review of
clinical  data and bone marrow  biopsies  using  experts who were  blinded as to
treatment  assignment.  Analysis of study  results has shown that the addition of
Genasense® to  chemotherapy  was associated with a statistically  significant
increase  in the major objective  response rate compared with the rate observed in
patients  who  were  treated  with  chemotherapy  alone.  A  significant  increase in
disease-free  survival was also observed.  No difference was  observed  in overall
response  rate,  time-to-disease  progression,  or  overall  survival.  The incidence of
certain serious adverse  reactions,  including  but  not  limited  to  nausea,  fever
and  catheter-related  complications,  was  increased  in  patients  treated  with
Genasense®.  Adverse  events  (irrespective  of  relation  to  study  drugs)  during
treatment  or within 30 days from last dose of treatment  that  resulted  in  death
occurred  in  9  patients  treated  with  Genasense®  plus  chemotherapy  compared with 5
patients treated with chemotherapy  alone.  The percentage of patients who  experienced
serious  adverse events was  increased in the Genasense  arm;  however,  the  percentages
of patients  who  discontinued  treatment  due to  adverse  events  were equal in the
treatment arms.

In
November  2004,  Genta  reported that the  Company's  randomized  Phase 3 clinical  trial
of Genasense® in patients with multiple  myeloma  did not meet its  primary
endpoint.  The  trial  had been  designed  to  evaluate  whether the  addition of
Genasense®  to standard  therapy with  high-dose  dexamethasone  could  increase  the
time to  development  of  progressive  disease in patients who previously  had received
extensive  therapy.  As a result of the  outcome of the Phase 3 trial,  the Company  has
virtually eliminated activities on this indication.

29

---



A
significant  source of funds during the last  several  years has  been provided by the
Companys  collaboration  with Aventis,  regarding  the development and
commercialization of Genasense®.  The key financial  aspects of the Collaborative
Agreement were the following:

- Aventis committed to provide
    up to $476.9 million in initial payments, milestone payments and for the purchase
    from us of equity and convertible notes.
- If Genasense®
    received marketing approval from the FDA, we would have been entitled to royalties
    on Aventis exclusive worldwide net sales of Genasense®.
- Aventis agreed to pay
    75% of the development costs related to any U.S. NDA incurred by either us
    or Aventis subsequent to the execution of our Collaborative Agreement, and
    substantially all other development, marketing, and sales costs incurred worldwide.
- Aventis  agreed  to  reimburse  a
portion  of our  expenses  in  building our sales force to market in the United States.

On  November
8,  2004 the  Company  received  from  Aventis  notice  of  termination  of the
agreements  between Genta and Aventis.  Pursuant to  those  agreements,  Aventis will
continue to support the  development of  Genasense® for a six-month period lasting
until May 8, 2005.

Results of Operations

|                                                 |  |  | Summary Operating Results 
      For the years ended December 31, |        
|------------------------------------------------ |  |  | ----------------------------------------------------------------- | -------
|($
      thousands)                              |  |  | 2004                                                              |        
|                                                 |  |  |                                                                   |        
|Revenues:                                        |  |  |                                                                   |        
|License
      fees and royalties                 |  |  | $                                                                 | 3,022  
|Development
      funding                        |  |  |                                                                   | 12,105 
|Product
      sales - net                        |  |  |                                                                   | (512   
|                                                 |  |  |                                                                   |        
|Total
      revenues                             |  |  |                                                                   | 14,615 
|                                                 |  |  |                                                                   |        
|Cost
      of goods sold                         |  |  |                                                                   | 170    
|Provision
      for excess inventory             |  |  |                                                                   | 1,350  
|                                                 |  |  |                                                                   |        
|Total
      cost of goods sold                   |  |  |                                                                   | 1,520  
|                                                 |  |  |                                                                   |        
|Gross
      margin                               |  |  |                                                                   | 13,095 
|                                                 |  |  |                                                                  
|Costs
      and expenses:                        |  |  |                                                                  
|                                                 |  |  |                                                                  
|Research
      and development (including        |  |  |                                                                  
|non-cash
      compensation expense related to   |  |  |                                                                  
|certain
      stock options issued in 1999 and   |  |  |                                                                  
|2000
      of $158, $209 and $517 for the twelve |  |  |                                                                  
|months
      ended December 31, 2004, 2003 and   |  |  |                                                                  
|2002,
      respectively)                        |  |  |                                                                   | 71,494 
|Selling,
      general and administrative        |  |  |                                                                  
|(including
      non-cash compensation expense   |  |  |                                                                  
|related
      to certain stock options issued in |  |  |                                                                  
|1999
      and 2000 of $62, $227 and $499 for    |  |  |                                                                  
|the
      twelve months ended December 31, 2004, |  |  |                                                                  
|2003
      and 2002, respectively)               |  |  |                                                                   | 28,576 
|Loss
      on disposition of equipment           |  |  |                                                                   | 1,254  
|                                                 |  |  |                                                                   |        
|Total
      costs and expenses - gross           |  |  |                                                                   | 101,324
|Less:
      Aventis reimbursement                |  |  |                                                                   | (43,292
|                                                 |  |  |                                                                   |        
|Total
      costs and expenses - net             |  |  |                                                                   | 58,032 
|                                                 |  |  |                                                                   |        
|Gain
      on extinguishment of debt             |  |  |                                                                   | 11,495 
|Other
      (expense)/income                     |  |  |                                                                   | (147   
|                                                 |  |  |                                                                   |        
|Loss
      before income taxes                   |  |  |                                                                   | (33,589
|                                                 |  |  |                                                                   |        
|Income
      tax benefit/(expense)               |  |  |                                                                   | 904    
|                                                 |  |  |                                                                   |        
|Net loss                                         |  |  | $                                                                 | (32,685
|                                                 |  |  |                                                                   |        

30

---



Total Revenues

Total
revenues,  consisting of license fees, development funding and  product  sales were $14.6
million in 2004  compared to $6.7  million in  2003 and $3.6  million in 2002.  License
fees and  development  funding  revenues are generated by the initial  $10.0  million
licensing fee and  $40.0 million  development  funding  received from Aventis in 2002
under  the  Collaborative  Agreement (see Note 4 to our financial  statements),  along
with  non-exclusive  sub-license  agreements  involving  antisense  technology.  On
November 8, 2004  Aventis  gave notice to Genta that it  was terminating its
Collaborative  Agreement with the Company regarding  the development and
commercialization of Genasense®.  Under the terms of  the  Collaborative  Agreement,
Aventis  will  continue to fund  ongoing  development  activities  through May 8, 2005.
The Company had previously  determined  that,  due to the  nature of the  ongoing
development  work  related  to the  Collaborative  Agreement,  the  end of the
development  phase  and  the  fair-value  of  the  undelivered  elements  were  not
determinable.  Accordingly,  we  deferred  recognition  of  the  initial  licensing  fee
and up-front  development  funding  received from Aventis  and  recognized  these
payments  on  a  straight-line  basis  over  the  original estimated useful life of the
related  first-to-expire patent of  115  months.  As  a  result  of  the  notice  of
termination  of  the  Collaborative  Agreement,  the  Company has  determined  that the
period  over which the remaining  deferred  revenue should be recognized will be  through
May 8, 2005.  On  November  9, 2004 we began to  recognize  the  remaining  deferred
revenue  over  a  six-month  period,  resulting  in  increased revenue of $9.9 million
for 2004.

In
October  2003,  the  Company  launched  the  commercial  product  Ganite® for  the
treatment  of  cancer-related  hypercalcemia  that is  resistant to  hydration,
generating  $1.4  million in product  sales in  2003.  In  May  2004,  the  Company
eliminated  its  sales  force  and  significantly  reduced  its  marketing  support  for
Ganite®.  After  evaluating various options,  we decided during the third quarter of
2004  to continue  selective  marketing  support of the  product.  In December  2004,  a
wholesaler  contacted  the  Company  to  return a  significant  portion of its  inventory
of Ganite®.  The Company  agreed to the return  of this product and recorded a
provision for sales  returns,  as well as  provided for  potential  returns from other
wholesalers.  Our provision  for sales  returns  increased by $1.2 million in 2004,
resulting in net  sales of ($.5) million for 2004.

Total
revenues for 2003 of $6.7 million  increased $3.1 million from  the prior-year  period.
As we entered into the  Collaborative  Agreement  in April 2002,  2002 annual  results
included the  recognition of eight  months of license fee and  development  funding
revenue  received  from  Aventis,  while 2003 annual results  included the  recognition
of twelve  months of  revenue.  In October  2003,  the  Company  launched  Ganite®,
generating $1.4 million in product sales.

Cost of goods
sold

During
2004 we recorded  provisions for excess Ganite® inventory of  $1.4 million.

Research and
Development Expenses

Research
and development  expenses before  reimbursement were $71.5  million in 2004  compared to
$83.1  million in 2003 and $87.2 million in  2002.

Approximately
$66.8  million  or 93% of  research  and  development  expenses before  reimbursement
were incurred on the Genasense® project  for the twelve months ended December 31,
2004.  Research and development  expenses in 2004  include  $33.0  million  related to
the  expensing  of  vialed  Genasense® product and Genasense® bulk drug
substance,  much of  which  had  been  originally  produced  and  acquired  to be
commercial  inventory and other expenses related to the  manufacturing  and purchase  of
Genasense® bulk drug substance.  Research and development expenses in  2003 include a
$13.5 million write-off of acquired  in-process  research  and  development  resulting
from the August 2003  acquisition  of Salus  Therapeutics,  Inc. In August 2004,  Genta
completed the closure of its  research  facility  in Salt Lake  City,  which had
originated  from the  acquisition of Salus Therapeutics,  Inc. Excluding these items,
research  and  development  expenses  declined  $31.1  million in 2004,  primarily
resulting  from our decision in May 2004 to reduce staff and reduce most  non-Genasense® related
programs,  as well as from the  comparison to a  prior-year  period where expenses were
significantly  higher  resulting  from Genasense® Phase 3 clinical trials and NDA
preparation activities.

Research
and  development  expenses  incurred  on  the  Genasense® project in 2003 were
approximately  $63.5 million,  representing 91% of  research and  development  expenses
after  excluding  the  write-off of  acquired in-process research and development
expenses.

31

---



During
2002, we purchased  substantial  amounts of drug substance to  be used in  Genasense® Phase
3  clinical  trials,  leading  to  higher  research and development expenses.

Due
to the  significant  risks and  uncertainties  inherent  in the  clinical  development
and regulatory  approval  processes,  the nature,  timing  and costs of the  efforts
necessary  to  complete  projects  in  development are not reasonably  estimable.
Results from clinical trials  may not be favorable.  Data from clinical  trials are
subject to varying  interpretation  and may be deemed  insufficient by the regulatory
bodies  reviewing  applications  for  marketing  approvals.  As  such,  clinical
development  and  regulatory  programs  are subject to risks and changes  that may
significantly impact cost projections and timelines.

Selling,
general and administrative expenses

Selling,
general and administrative expenses were $28.6 million in  2004  compared to $29.8
million in 2003 and $20.6  million in 2002.  In  2004,  a higher  rate of  spending  in
the first  half of the  year,  in  anticipation of approval and launch of Genasense®,
was more than offset  by the impact of the May 2004 elimination of the sales force,
reduction  of  other  administrative  positions  and  substantial  reduction  of
marketing  support for Ganite®.  This net decrease was partially  offset  by the
recognition  of $1.0  million  of legal  expenses  related  to a  shareholder  class
action suit and three  shareholder  derivative  suits  (see Note 19 to our financial
statements).

During
2003, expenses substantially  increased from 2002 due to the  creation  of  a  sales
force,  Ganite® launch  activities,  a  larger  administrative  staff and higher
general  corporate  expenses  driven by  business growth.

Loss on
disposition of property and equipment

In
August 2004, we completed  the closure of our research  facility  in Salt Lake City, sold
all related  equipment and assigned our lease on  the  facility to another  company.
Additionally,  we disposed of excess  equipment at corporate  headquarters.  As a result
of these actions,  we  recorded  a  loss  on  disposition  of  property  and  equipment
of  approximately $1.3 million.

Aventis
Reimbursement

Under
the  Collaborative  Agreement with Aventis,  Aventis paid 75%  of U.S.  NDA-directed
development  costs  incurred  by either  Genta or  Aventis  and 100% of all other
development,  marketing  and sales costs  incurred  within the U.S. and elsewhere as
subject to the  Collaborative  Agreement.  A breakdown  of the various  third-party,
drug supply costs  and internal  costs of scientific  and technical  personnel  (Full-Time
Equivalents or FTEs)  that Aventis is required to  reimburse
under  our Collaborative Agreement with Aventis, follows ($ thousands):

|Reimbursement
      to Genta     |  |  |   | 2004   |  |   | 2003   |  |   | 2002   | 
|-------------------------------- |  |  | - | ------ |  | - | ------ |  | - | ------ | 
|Third-party
      costs          |  |  | $ | 19,284 |  | $ | 34,073 |  | $ | 18,168 | 
|Drug
      supply costs          |  |  |   | 20,061 |  |   | 16,326 |  |   | 6,879  | 
|FTEs                            |  |  |   | 5,833  |  |   | 7,228  |  |   | 3,404  | 
|                                 |  |  |   |        |  |   |        | 
|Amount
      due to Genta        |  |  | $ | 45,178 |  | $ | 57,627 |  | $ | 28,451 | 
|                                 |  |  |   |        |  |   |        |  |   |        | 
|Reimbursement
      to Aventis   |  |  |   | 1,886  |  |   | 1,736  |  |   |       | 
|                                 |  |  |   |        |  |   |        | 
|Net reimbursement
      to Genta |  |  | $ | 43,292 |  | $ | 55,891 |  | $ | 28,451 | 
|                                 |  |  |   |        |  |   |        | 

Net
expense  reimbursement  from Aventis of $43.3  million for 2004  decreased  from $55.9
million  for 2003  primarily  due to the  greater  activity  and  expenses  in  2003
resulting  from  the NDA  filing  for  Genasense®.  Purchases of drug material are
expensed as incurred and are  not reimbursable  pursuant to our  Collaborative  Agreement
with Aventis  until they are used in clinical trials.

32

---



In
September 2004, the Company  transferred $15.5 million of vialed  Genasense® drug
product and Genasense® bulk drug substance to Aventis;  this material had been
expensed in May 2004.  This amount is included in  Drug supply costs in the above  table.
The  companies  agreed to offset  amounts  owed under the line of credit  extended  by
Aventis  under the  Collaborative  Agreement (Line of Credit) by $14.8
million and accrued  interest  on the  Line of  Credit  by $.7  million  (see  Note 13 to
our  financial statements).

Once
Aventis  provided  notice of termination of the  Collaborative  Agreement,  all payments
otherwise  due from Aventis have been and will  continue to be applied  against any
balance on the Line of Credit  until  the Line of Credit is repaid.  In 2004,  $12.9
million of  reimbursement  due to Genta was applied to the balance of the Line of Credit.

Net
expense  reimbursement  from  Aventis of $55.9  million for the  year ended  December 31,
2003  increased from $28.5 million for the year  ended December 31, 2002 due to the
following factors:  the comparison of  twelve  months of  activity in 2003  compared  to
eight  months in 2002,  greater  activity  and  expenses  resulting  from  the  NDA
filing  for  Genasense® and reimbursement for 2002 and 2003 drug substance  purchases
used in Phase 3 clinical trials.

Reimbursement
  to Aventis consists of our 25% share of third party costs incurred by Aventis
  and internal costs of Aventis scientific and technical personnel.

Gain on
extinguishment of debt

On
November  8,  2004,  Aventis  gave  notice to Genta that it was  terminating  its
Collaborative  Agreement  with the Company.  Under the  terms of the  Collaborative
Agreement,  Aventis has  forgiven the $10.0  million  of  convertible  debt  issued  to
them in  connection  with the  collaboration,  along with $1.5 million in accrued
interest,  resulting  in a gain on extinguishment of debt of $11.5 million.

Other
(expense)/income

Net
other expense of $.1 million for 2004  unfavorably  compared to  net other  income of $.7
million for the prior  year,  primarily  due to  lower average investment  balances
throughout 2004 as compared to 2003.  Net other income of $.7 million for 2003  declined
$.7 million,  or 50%,  from  2002,  principally  due to lower  investment  balances  and
higher  borrowings from Aventis.

Income tax
benefit/(expense)

New
Jersey has enacted legislation  permitting certain corporations  located  in New Jersey
to sell  state tax loss  carryforwards  and state  research and  development  credits.
During 2004, New Jersey allowed the  Company to sell $11.6  million of its net operating
loss  carryforwards  and we received  $0.9  million  from the sale,  which we  recognized
as  income tax benefit.

If
still  available  under New Jersey law, the Company will attempt  to sell its tax loss
carryforwards  in 2005.  We cannot be assured that  the New Jersey  program  will
continue  next year,  nor can we estimate  what  percentage  of our saleable tax benefits
New Jersey will permit us  to sell,  how much money will be received in  connection  with
the sale,  or if the Company will be able to find a buyer for its tax benefits.

Net Loss

Genta
incurred  a net loss of $32.7  million,  or $0.41 per share,  for 2004, $50.1 million,
or $0.67 per share, for 2003 and a net loss of  $74.5 million,  or $1.05 per share,  for
2002. In 2004, the  improvement  in net loss and per share net loss to common
shareholders was primarily  due  to  accelerated  recognition  of  the  initial
licensing  fee  and  up-front  development  funding previously  received from Aventis and
the  gain  on  extinguishment  of debt  as  described  above.  In  2003,  the
improvement  in net loss and per share  net loss to common  shareholders  was primarily
due to lower clinical drug substance  purchases and higher  reimbursement by Aventis as
described above.

33

---



Recent
Accounting Pronouncements

In
December 2004, the Financial Accounting Standards Board (FASB) issued
Statement (SFAS) No. 123(R), Share-Based Payment that will require
compensation costs related to share-based payment transactions to be recognized in
the financial statements. With limited exceptions, the amount of compensation cost
will be measured based on the grant-date fair value of the equity or liability
instruments issued. In addition, liability awards will be remeasured each reporting
period. Compensation cost will be recognized over the period that an employee
provides service in exchange for the award. SFAS No. 123(R) replaces SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles
Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees.
The Company will adopt the provisions of SFAS No. 123R in 2005. We are evaluating the
impact that the adoption of this standard will have on the Companys results
of operations, financial position or cash flows.

In
December 2004, the FASB issued SFAS No. 153,  Exchanges of Non-monetary Assets,
an amendment of APB Opinion No. 29. We do not expect that the adoption of this
statement will have any impact on the Companys results of operations, financial
position or cash flows.

In
November 2004, the FASB issued SFAS No. 151,  Inventory Costs, to clarify the
accounting for abnormal amounts of idle facility expense, freight, handling
costs, and wasted material. As the Company uses third-party manufacturers and does
not manufacture its own products, we do not expect that the adoption of this
statement will have a material impact on the Companys results of
operations, financial position or cash flows.

Critical
Accounting Policies

Our
significant  accounting  policies are more fully  described in  Note  2 to our
consolidated  financial  statements.  In  preparing  our  financial statements in
accordance with accounting  principles generally  accepted  in the United  States of
America,  management  is required to  make  estimates and  assumptions  that,  among
other things,  affect the  reported  amounts  of assets and  liabilities  and  reported
amounts of  revenues  and  expenses.  These  estimates  are  most  significant  in
connection with our critical  accounting  policies,  namely those of our  accounting
policies  that are most  important  to the  portrayal of our  financial  condition  and
results  and  require  managements  most  difficult,  subjective  or  complex
judgments.  These  judgments  often  result  from the need to make  estimates  about the
effects  of matters  that are  inherently  uncertain.  Actual  results  may differ from
those  estimates  under  different  assumptions  or  conditions.  The  Company  believes
that the following represent its critical accounting policies:

- Revenue recognition.
    Our policy is to recognize revenues under license arrangements when delivery
    has occurred or services have been rendered, persuasive evidence of an arrangement
    exists, the fee is fixed and determinable and collectibility is reasonably
    assured. Royalties are recognized when earned. Consistent with Staff Accounting
    Bulletin No. 104 Revenue Recognition, initial funding of ongoing development
    received from Aventis, after the achievement of certain research and development
    milestones were being recognized on a straight-line basis over the original
    estimated useful life of the related first-to-expire patent of 115 months.
    On November 8, 2004 we received from Aventis notice of termination of the
    agreements between Genta and Aventis, with an effective termination date of
    May 8, 2005. Accordingly, we are recognizing the remaining balance of the
    initial funding on a straight-line basis over the time period from November
    9, 2004 through May 8, 2005 (see Note 12 to our financial statements).

Genta  recognizes  revenue from
product  sales when title  to  product  and  associated  risk of loss has  passed to the
customer and we are reasonably  assured of collecting payment  for the sale.  All revenue
from  product  sales are recorded  net of applicable  allowances for returns,  rebates
and other  applicable  discounts and allowances.  We allow return of our  product for up
to twelve months after product expiration.  In  May  2004  the  Company  eliminated  its
sales  force  and  significantly  reduced its  marketing  support  for  Ganite®.
After  evaluating  various  options,  we  decided  during the  third  quarter  of  2004
to  continue  selective  marketing  support  of the  product.  In  December  2004,  a
wholesaler  contacted the Company to return a significant  portion of its  inventory  of
Ganite®.  The  Company  agreed to the return of  this product and recorded a
provision for sales  returns,  as  well  as  provided  for  potential  returns  from
other  wholesalers.  Our provision  for sales  returns  increased by  $1.2 million in
2004.

34

---



- Research and development costs.
All such costs are expensed as incurred, including raw material costs required to
manufacture drugs for clinical trials. Reimbursements for applicable Genasense®related
costs under the Collaborative Agreement, will continue to be recorded as a reduction
to expense (see Note 4 to our financial statements).

Liquidity and
Capital Resources

At
  December 31, 2004, we had cash, cash equivalents and marketable securities totaling
  $42.2 million, a decline of $40.7 million from $82.9 million at December 31,
  2003. During 2004 cash flow used in operating activities was $61.2 million,
  primarily resulting from a net loss of $32.7 million and non-cash reimbursements
  of research and development expenses of $27.3 million. Partially offsetting
  this outflow, in December we raised $21.6 million, net of issuance costs, from
  the issuance of common stock. Although no assurances can be expressed, management
  believes that at the current rate of spending, the Company should have sufficient
  cash funds to maintain its present operations through 2005.

At
December  31,  2004,  the Company had $7.3  million  outstanding  (compared  to $35.0
million  as of  December  31,  2003) on the Line of  Credit  from  Aventis.  Prior to
June 30,  2004 the Line of  Credit  was  classified  as long  term  debt  and  beginning
June 30,  2004,  it was  classified  as short  term  debt.  During  2004,  as a result of
certain  non-cash  transactions,  the Company reduced amounts owed under the Line  of
Credit  by  $27.7  million.  As  a  result  of  Aventis purchase  commitments  to
Genta,  in September we supplied $15.5 million of vialed  Genasense® drug product and
Genasense® bulk drug substance to Aventis.  This amount is  included  in the  Companys
Consolidated  Statement  of  Operations  as Aventis  reimbursement.  The  companies
agreed to offset  amounts  owed  under  the Line of Credit by $14.8  million  and
accrued  interest on the Line of Credit by $0.7 million.  With the Aventis notice  of
termination,  Genta cannot borrow  additional  funds and the Line of  Credit must be
repaid no later than May 8, 2005. All payments  otherwise  due to Genta  are  applied
against  any  balance  on the Line of Credit  until  the  Line  of  Credit  is  repaid.
In  2004,  $12.9  million  of  reimbursement  due to Genta was  applied  to the  balance
of the Line of  Credit.  Under the terms of the  Collaborative  Agreement,  Aventis will
continue to reimburse Genta for ongoing  Genasense® clinical trials and  development
activities  during the six-month  notice period.  We expect  that a substantial  portion
of the $7.3 million  outstanding on the Line  of Credit will be repaid  through  the
application  of  reimbursements.  After May 8, 2005, all Genasense® costs will be the
responsibility  of  Genta.

The
  terms of the Line of Credit provide for a favorable interest rate, which is
  set two days prior to the first day of each calendar quarter. As security for
  the repayment of the Line of Credit, Genta has granted Aventis a security interest
  in all of its rights to payments under the Collaborative Agreement, as well
  as all inventory related to Genasense®.

At
December  31,  2003  cash,  cash  equivalents  and  marketable  securities  totaling
$82.9 million  declined  $30.8 million from $113.7  million at December 31, 2002.  During
2003,  cash flow used in operating  activities  was $64.4  million,  primarily  resulting
from a net loss of  $50.1 million and lower accounts  payable and accrued  expenses of
$17.4  million.  Partially  offsetting this outflow were  borrowings  under the  Line of
Credit from Aventis of $35.0 million.

At
December  31,  2002  cash,  cash  equivalents  and  marketable  securities  totaling
$113.7 million  increased $59.6 million from $54.1  million at December 31, 2001.  During
2002,  cash flow used in operating  activities  was $20.4  million,  primarily  resulting
from a net loss of  $74.5  million  offset by the initial  $10.0  million  licensing fee
and  $40.0  million  development  funding  received  from  Aventis  under our
collaborative  agreement  in 2002.  The  Company  had  proceeds of $71.0  million from a
private  placement of common stock and $10.0 million from  the sale of convertible debt
to Aventis.

Our
principal  expenditures  relate to our research and development  activities,  primarily
focused on Genasense®,  which include our ongoing  and future clinical  trials.  We
expect these  expenditures to continue. The Company currently anticipates total company average monthly
cash outflows to be in the $3.0 million to $4.0 million range. Although no  assurances  can be expressed,
management  believes that at  the current rate of spending,  the Company should have
sufficient  cash  funds to maintain its present  operations  through 2005. The Company
may  also seek  collaborative  agreements  and other  financing  arrangements  with
potential corporate partners and other sources.  However, there can  be no assurance that
any such collaborative  agreements or other sources  of funding will be available on
favorable  terms, if at all. The Company  will need  substantial  additional funds before
it can expect to realize  significant product revenue.

35

---



If
we obtain NDA  approval  of  Genasense® we  anticipate  seeking  additional  product
development  opportunities  through  potential  acquisitions  or  investments.  Such
acquisitions  or  investments  may  consume  cash  reserves  or  require  additional
cash  or  equity.  Our  working  capital and additional  funding  requirements  will
depend upon  numerous  factors,  including:  (i) the  progress  of our  research  and
development  programs;  (ii) the  timing  and  results  of  pre-clinical  testing  and
clinical  trials;  (iii)  the level of  resources  that we  devote  to  sales  and
marketing  capabilities;  (iv)  technological  advances;  (v) the  activities  of
competitors;  (vi)  our  ability  to  establish and maintain  collaborative  arrangements
with others to fund  certain  research and development  efforts,  to conduct clinical
trials,  to obtain regulatory  approvals and, if such approvals are obtained,  to
manufacture  and market  products  and (vii) legal costs and the outcome  of outstanding
legal proceedings.

Contractual
Obligations

Future
contractual  obligations at December 31, 2004 are as follows  ($ thousands):

|                                     |  |  | Total |        | Less
      than
      1 year |   | 1
      - 3 years |  | 3
      - 5 years |       | More
      than 5
      years |  
|------------------------------------ |  |  | ----- | ------ | ---------------------------- | - | ----------------- |  | ----------------- | ----- | ----------------------------- | -
|                                     |  |  |       |        |                              |   |                   |  |                   |       |                               |  
|Short
      term debt obligation (1) |  |  | $     | 7,312  |                              | $ | 7,312             |  | $                 |      |                               | $
|Operating
      lease obligations    |  |  |       | 13,498 |                              |   | 2,568             |  |                   | 5,330 |                               |  
|                                     |  |  |       |        |                              |   |                   |  |                   |       |                               |  
|Total                                |  |  | $     | 20,810 |                              | $ | 9,880             |  | $                 | 5,330 |                               | $
|                                     |  |  |       |        |                              |   |                   |  |                   |       |                               |  

(1)
Consists  of  amounts  under  our line of credit  with  Aventis  which are due on May 8,
2005.

Not
included  in the  above  table  are any  Genasense® bulk  drug  purchase  obligations
to Avecia per the terms of the  Manufacturing  and  Supply  Agreement  entered  into
between  Avecia and Genta in  December  2002.  The  agreement  calls for Genta to
purchase a  percentage  of our  global  Genasense® bulk drug requirements from Avecia
during the term of  the  agreement.  Due to the  uncertainties  regarding  the timing of
any  Genasense® approval and sales/volume  projections,  specific obligation  amounts
cannot be  estimated  at this time.  Due to past  purchases  of  Genasense® bulk drug
substance,  the Company has access to  sufficient  drug for its current needs.

|Item 7A. |  | Quantitative and Qualitative Disclosures about Market Risk
|-------- |  | ----------------------------------------------------------

Our
carrying  values  of cash,  marketable  securities,  accounts  payable,  accrued
expenses and debt are a reasonable  approximation  of  their fair value.  The  estimated
fair values of financial  instruments  have  been  determined  by us using  available
market  information  and  appropriate  valuation  methodologies  (see  Note  2  to  our
financial  statements).  We have not entered  into and do not expect to enter into,
financial  instruments  for  trading  or  hedging  purposes.  We do  not  currently
anticipate  entering into interest rate swaps and/or  similar  instruments.

Gentas
primary  market risk  exposure  with regard to  financial  instruments  is  to  changes
in  interest  rates,  which  would  impact  interest  income  earned  on  such
instruments.  We  have  no  material  currency  exchange or  interest  rate risk
exposure as of December  31,  2004.  Therefore there will be no ongoing  exposure to
material  adverse  effect on our business,  financial condition or results of operation
for  sensitivity  to changes  in  interest  rates or to  changes in  currency  exchange
rates.

36

---



|Item 8. |  | Financial
        Statements and Supplemental Data
|------- |  | --------------------------------------------------

Genta
IncorporatedIndex to Financial Statements

|Genta Incorporated                                                                                               |  |  |  |    | 
|---------------------------------------------------------------------------------------------------------------- |  |  |  | -- | 
|Report
      of Independent Registered Public Accounting Firm                                                    |  |  |  | 38 | 
|Consolidated
      Balance Sheets at December 31, 2004 and 2003                                                  |  |  |  | 39 | 
|Consolidated
      Statements of Operations for the years ended December 31, 2004, 2003 and
      2002           |  |  |  | 40 | 
|Consolidated
      Statements of Stockholders Equity for the years ended December 31, 2004,
      2003 and 2002 |  |  |  | 41 | 
|Consolidated
      Statements of Cash Flows for the years ended December 31, 2004, 2003 and
      2002           |  |  |  | 43 | 
|Notes
      to Consolidated Financial Statements                                                                 |  |  |  | 44 | 

37

---



REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of
Directors and Stockholders ofGenta Incorporated:

We
have  audited the  accompanying  consolidated  balance  sheets of  Genta  Incorporated
and subsidiaries  (the Company) as of December 31,  2004 and 2003,  and the
related  consolidated  statements of operations,  stockholders equity, and cash
flows for each of the three years in the  period ended  December 31,  2004.  These
financial  statements  are the  responsibility  of the Companys  management.  Our
responsibility is to  express an opinion on these financial statements based on our
audits.

We
conducted  our audits in  accordance  with the  standards of the  Public  Company
Accounting  Oversight  Board  (United  States).  Those  standards  require  that  we
plan  and  perform  the  audit  to  obtain  reasonable  assurance about whether the
financial statements are free of  material  misstatement.  An audit includes
examining,  on a test basis,  evidence  supporting  the  amounts  and  disclosures  in
the  financial  statements.  An audit also includes assessing the accounting
principles  used  and  significant  estimates  made  by  management,  as  well  as
evaluating the overall  financial  statement  presentation.  We believe  that our
audits provide a reasonable basis for our opinion.

In
our  opinion,  such  consolidated  financial  statements  present  fairly,  in all
material  respects,  the  financial  position  of Genta  Incorporated  and subsidiaries
as of December 31, 2004 and 2003, and the  results of their  operations  and their cash
flows for each of the three  years  in the  period  ended  December  31,  2004,  in
conformity  with  accounting  principles  generally  accepted  in  the  United  States
of  America.

As
discussed in Note (1) to the  consolidated  financial  statements  of Genta
Incorporated,  the Company  received  from  Aventis  notice of  termination  of the
agreements  between  Aventis  and  the  Company  in  November 2004. The  implications of
such  termination to the Company are  discussed in Note (1) to the consolidated financial
statements.

We
  have also audited, in accordance with the standards of the Public Company Accounting
  Oversight Board (United States), the effectiveness of the Companys internal
  control over financial reporting as of December 31, 2004, based on the criteria
  established in Internal ControlIntegrated Framework issued by the
  Committee of Sponsoring Organizations of the Treadway Commission and our report
  dated March 14, 2005 expressed an unqualified opinion on managements assessment
  of the effectiveness of the Companys internal control over financial reporting
  and an unqualified opinion on the effectiveness of the Companys internal
  control over financial reporting.

/s/ DELOITTE
& TOUCHE LLP

Parsippany, New
JerseyMarch 14, 2005

38

---



GENTA
INCORPORATEDCONSOLIDATED BALANCE SHEETS

(In thousands,
except par value data)

|                                                                                      |  |  | December
      31, |         
|------------------------------------------------------------------------------------- |  |  | ------------------ | --------
|ASSETS                                                                                |  |  | 2004               |         
|                                                                                      |  |  |                    |         
|Current
      assets:                                                                 |  |  |                    |         
|Cash
      and cash equivalents                                                       |  |  | $                  | 36,489  
|Marketable
      securities (Note 3)                                                  |  |  |                    | 5,758   
|Accounts
      receivable- net (Note 5)                                               |  |  |                    |        
|Inventory
      (Note 6)                                                              |  |  |                    | 354     
|Prepaid
      expenses and other current assets                                       |  |  |                    | 1,910   
|                                                                                      |  |  |                    |         
|Total
      current assets                                                            |  |  |                    | 44,511  
|Property
      and equipment, net (Note 7)                                            |  |  |                    | 2,847   
|Notes
      receivable (Note 8)                                                       |  |  |                    |        
|Intangibles,
      net (Note 9)                                                       |  |  |                    | 286     
|Prepaid
      royalties (Note 10)                                                     |  |  |                    | 1,268   
|Other
      assets                                                                    |  |  |                    | 1,620   
|                                                                                      |  |  |                    |         
|Total
      assets                                                                    |  |  | $                  | 50,532  
|                                                                                      |  |  |                    |         
|                                                                                      |  | 
|LIABILITIES
      AND STOCKHOLDERS EQUITY                                            |  | 
|                                                                                      |  | 
|Current
      liabilities:                                                            |  | 
|Accounts
      payable and accrued expenses (Note 11)                                 |  |  | $                  | 14,424  
|Deferred
      revenues, current portion (Note 12)                                    |  |  |                    | 26,228  
|Notes
      payable                                                                   |  |  |                    | 816     
|Short
      term debt (Note 13)                                                       |  |  |                    | 7,312   
|                                                                                      |  |  |                    |         
|Total
      current liabilities                                                       |  |  |                    | 48,780  
|Deferred
      revenues (Note 12)                                                     |  |  |                    |        
|Convertible
      debt (Note 14)                                                      |  |  |                    |        
|Long
      term debt (Note 13)                                                        |  |  |                    |        
|                                                                                      |  |  |                    |         
|Total
      liabilities                                                               |  |  |                    | 48,780  
|                                                                                      |  |  |                    |         
|                                                                                      |  |  |                   
|Commitments
      and contingencies (Note 19)                                         |  |  |                   
|                                                                                      |  |  |                   
|Stockholders
      equity (Note 17):                                                 |  |  |                   
|Series
      A convertible preferred stock, $.001 par value; 5,000 shares authorized, |  |  |                   
|10
      and 261 shares issued and outstanding, liquidation value of $485             |  |  |                   
|and
      $13,025 at December 31, 2004 and December 31, 2003, respectively            |  |  |                    |        
|Common
      stock, $.001 par value; 150,000 and 120,000 shares authorized,           |  |  |                   
|95,358
      and 75,927 shares issued and outstanding at December 31, 2004            |  |  |                   
|and
      December 31, 2003, respectively                                             |  |  |                    | 95      
|Additional
      paid-in capital                                                      |  |  |                    | 357,714 
|Accumulated
      deficit                                                             |  |  |                    | (355,984
|Deferred
      compensation                                                           |  |  |                    | (41     
|Accumulated
      other comprehensive (loss) income                                   |  |  |                    | (32     
|                                                                                      |  |  |                    |         
|Total
      stockholders equity                                                      |  |  |                    | 1,752   
|                                                                                      |  |  |                    |         
|Total
      liabilities and stockholders equity                                      |  |  | $                  | 50,532  
|                                                                                      |  |  |                    |         

See
accompanying notes to consolidated financial statements.

39

---



GENTA
INCORPORATEDCONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                   |  |  | Years
      Ended December 31, |        
|---------------------------------------------------------------------------------- |  |  | ------------------------------ | -------
|(In
      thousands, except per share data)                                        |  |  | 2004                           |        
|                                                                                   |  |  |                                |        
|Revenues:                                                                          |  |  |                                |        
|License
      fees and royalties (Note 12)                                         |  |  | $                              | 3,022  
|Development
      funding (Note 12)                                                |  |  |                                | 12,105 
|Product
      sales - net                                                          |  |  |                                | (512   
|                                                                                   |  |  |                                |        
|Total
      revenues                                                               |  |  |                                | 14,615 
|                                                                                   |  |  |                                |        
|Cost
      of goods sold                                                           |  |  |                                | 170    
|Provision
      for excess inventory (Note 6)                                      |  |  |                                | 1,350  
|                                                                                   |  |  |                                |        
|Total
      cost of goods sold                                                     |  |  |                                | 1,520  
|                                                                                   |  |  |                                |        
|Gross
      margin                                                                 |  |  |                                | 13,095 
|                                                                                   |  | 
|Costs
      and expenses:                                                          |  | 
|Research
      and development (including non-cash compensation expense            |  | 
|related
      to certain stock options issued in 1999 and 2000                     |  | 
|of
      $158, $209 and $517 for the years ended December 31, 2004,                |  | 
|2003
      and 2002, respectively )                                                |  |  |                                | 71,494 
|                                                                                   |  | 
|Selling,
      general and administrative (including non-cash compensation expense |  | 
|related
      to certain stock options issued in 1999 and 2000                     |  | 
|of
      $62, $227 and $499 for the years ended December 31, 2004,                 |  | 
|2003
      and 2002, respectively)                                                 |  |  |                                | 28,576 
|Loss
      on disposition of property and equipment (Note 7)                       |  |  |                                | 1,254  
|                                                                                   |  |  |                                |        
|Total
      costs and expenses - gross                                             |  |  |                                | 101,324
|Aventis
      reimbursement (Note 4)                                               |  |  |                                | (43,292
|                                                                                   |  |  |                                |        
|Total
      costs and expenses - net                                               |  |  |                                | 58,032 
|                                                                                   |  |  |                                |        
|Gain
      on extinguishment of debt (Note 14)                                     |  |  |                                | 11,495 
|Other
      (expense)/income                                                       |  |  |                                | (147   
|                                                                                   |  |  |                                |        
|Loss
      before income taxes                                                     |  |  |                                | (33,589
|Income
      tax benefit/(expense) (Note 15)                                       |  |  |                                | 904    
|                                                                                   |  |  |                                |        
|Net loss                                                                           |  |  | $                              | (32,685
|                                                                                   |  |  |                                |        
|                                                                                   |  |  |                                |        
|Net loss
      per basic and diluted share                                         |  |  | $                              | (0.41  
|                                                                                   |  |  |                                |        
|Shares
      used in computing net loss per                                        |  | 
|basic
      and diluted share                                                      |  |  |                                | 79,798 
|                                                                                   |  |  |                                |        

See
accompanying notes to consolidated financial statements.

40

---



GENTA
INCORPORATEDCONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITYFor the Years Ended
December 31, 2004, 2003 and 2002

|                                              |  |  | Convertible
      Preferred Stock |         | Common
      Stock |   | Treasury
      Stock |  | Additional
      Paid-in
      Capital |        | Accumulated
      Deficit |   | Deferred 
      Compensation |  | Accumulated 
      Other 
      Comprehensive
      Income (Loss) |      | Total 
      Stockholders
      Equity |  
|--------------------------------------------- |  |  | --------------------------------- | ------- | ------------------ | - | -------------------- |  | -------------------------------------- | ------ | ------------------------- | - | ---------------------------- |  | ----------------------------------------------------------------- | ---- | --------------------------------------- | -
|                                              |  |  |                                   |         |                    |   |                      |  |                                        |        |                           |   |                             
|(In thousands)                                |  |  | Shares                            |         | Amount             |   | Shares               |  | Amount                                 |        | Shares                    |   | Amount                       |  |                                                                   |      |                                         |  
|                                              |  |  |                                   |         |                    |   |                      |  |                                        |        |                           |   |                              |  |                                                                   |      |                                         |  
|Balance
      at January 1, 2002              |  |  |                                   | 261     |                    | $ |                     |  |                                        | 66,000 |                           | $ | 66                           |  |                                                                   |     |                                         | $
|                                              |  | 
|Comprehensive
      loss:                     |  | 
|Net
      loss                                |  |  |                                   |        |                    |   |                     |  |                                        |       |                           |   |                             |  |                                                                   |     |                                         |  
|Unrealized
      investment loss              |  |  |                                   |        |                    |   |                     |  |                                        |       |                           |   |                             |  |                                                                   |     |                                         |  
|                                              |  |  |                                   |        
|Total
      comprehensive loss                |  |  |                                   | (74,437 | )                 
|                                              |  | 
|Issuance
      of common stock in             |  | 
|connection
      with private                 |  | 
|placement,
      net of issuance              |  | 
|costs
      of $899                           |  |  |                                   |        |                    |   |                     |  |                                        | 6,665  |                           |   | 7                            |  |                                                                   |     |                                         |  
|                                              |  | 
|Issuance
      of common stock                |  | 
|in
      connection with exercise             |  | 
|of
      warrants and stock options           |  |  |                                   |        |                    |   |                     |  |                                        | 1,503  |                           |   | 1                            |  |                                                                   |     |                                         |  
|                                              |  |  |                                   |         |                    |   |                      |  |                                        |        |                           |   |                              |  |                                                                   |      |                                         |  
|Purchase
      of treasury stock              |  |  |                                   |        |                    |   |                     |  |                                        |       |                           |   |                             |  |                                                                   | (393 | )                                       |  
|                                              |  | 
|Compensation
      expense related to certain |  | 
|stock
      options issued in 1999 and 2000   |  |  |                                   |        |                    |   |                     |  |                                        |       |                           |   |                             |  |                                                                   |     |                                         |  
|                                              |  |  |                                   |         |                    |   |                      |  |                                        |        |                           |   |                              |  |                                                                   |      |                                         |  
|Balance
      at December 31, 2002            |  |  |                                   | 261     |                    |   |                     |  |                                        | 74,168 |                           |   | 74                           |  |                                                                   | (393 | )                                       |  
|                                              |  | 
|Comprehensive
      loss:                     |  | 
|Net
      Loss                                |  |  |                                   |        |                    |   |                     |  |                                        |       |                           |   |                             |  |                                                                   |     |                                         |  
|Unrealized
      investment loss              |  |  |                                   |        |                    |   |                     |  |                                        |       |                           |   |                             |  |                                                                   |     |                                         |  
|                                              |  |  |                                   |        
|Total
      comprehensive loss                |  |  |                                   |        |                    |   |                     |  |                                        |       |                           |   |                             |  |                                                                   |     |                                         |  
|                                              |  | 
|Issuance
      of common stock                |  | 
|in
      connection with exercise             |  | 
|of
      warrants and stock options           |  |  |                                   |        |                    |   |                     |  |                                        | 1,172  |                           |   | 1                            |  |                                                                   |     |                                         |  
|                                              |  |  |                                   |         |                    |   |                      |  |                                        |        |                           |   |                              |  |                                                                   |      |                                         |  
|Purchase
      of treasury stock              |  |  |                                   |        |                    |   |                     |  |                                        |       |                           |   |                             |  |                                                                   | (51  | )                                       |  
|                                              |  |  |                                   |         |                    |   |                      |  |                                        |        |                           |   |                              |  |                                                                   |      |                                         |  
|Retirement
      of treasury stock            |  |  |                                   |        |                    |   |                     |  |                                        | (444   | )                         |   |                             |  |                                                                   | 444  |                                         |  
|                                              |  | 
|Issuance
      of common stock                |  | 
|in
      connection with acquisition of       |  | 
|Salus
      Therapeutics, Inc.                |  |  |                                   |        |                    |   |                     |  |                                        | 1,031  |                           |   | 1                            |  |                                                                   |     |                                         |  
|                                              |  | 
|Compensation
      expense related to certain |  | 
|stock
      options issued in 1999 and 2000   |  |  |                                   |        |                    |   |                     |  |                                        |       |                           |   |                             |  |                                                                   |     |                                         |  
|                                              |  |  |                                   |         |                    |   |                      |  |                                        |        |                           |   |                              |  |                                                                   |      |                                         |  
|Balance
      at December 31, 2003            |  |  |                                   | 261     |                    | $ |                     |  |                                        | 75,927 |                           | $ | 76                           |  |                                                                   |     |                                         | $

41

---



GENTA
INCORPORATEDCONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITYFor the Years Ended
December 31, 2004, 2003 and 2002

|                                               |  |  | Convertible
      Preferred Stock |      | Common
      Stock |   | Treasury
      Stock |  | Additional
      Paid-in
      Capital |        | Accumulated
      Deficit |   | Deferred 
      Compensation |  | Accumulated 
      Other 
      Comprehensive
      Income (Loss) |   | Total 
      Stockholders
      Equity |  
|---------------------------------------------- |  |  | --------------------------------- | ---- | ------------------ | - | -------------------- |  | -------------------------------------- | ------ | ------------------------- | - | ---------------------------- |  | ----------------------------------------------------------------- | - | --------------------------------------- | -
|                                               |  |  |                                   |      |                    |   |                      |  |                                        |        |                           |   |                             
|(In thousands)                                 |  |  | Shares                            |      | Amount             |   | Shares               |  | Amount                                 |        | Shares                    |   | Amount                       |  |                                                                   |   |                                         |  
|                                               |  |  |                                   |      |                    |   |                      |  |                                        |        |                           |   |                              |  |                                                                   |   |                                         |  
|Comprehensive
      loss:                      |  | 
|Net
      Loss                                 |  |  |                                   |     |                    |   |                     |  |                                        |       |                           |   |                             |  |                                                                   |  |                                         |  
|Unrealized
      investment loss               |  |  |                                   |     |                    |   |                     |  |                                        |       |                           |   |                             |  |                                                                   |  |                                         |  
|                                               |  |  |                                   |     
|Total
      comprehensive loss                 |  |  |                                   |     |                    |   |                     |  |                                        |       |                           |   |                             |  |                                                                   |  |                                         |  
|                                               |  | 
|Issuance
      of common stock                 |  | 
|in
      connection with Series A conversion   |  |  |                                   | (251 | )                  |   |                     |  |                                        | 1,855  |                           |   | 2                            |  |                                                                   |  |                                         |  
|                                               |  | 
|Issuance
      of common stock                 |  | 
|in
      connection with exercise              |  | 
|of
      warrants and stock options            |  |  |                                   |     |                    |   |                     |  |                                        | 2,576  |                           |   | 2                            |  |                                                                   |  |                                         |  
|                                               |  | 
|Issuance
      of common stock                 |  | 
|in
      connection with direct placement, net |  | 
|of
      issuance costs of $960                |  |  |                                   |     |                    |   |                     |  |                                        | 15,000 |                           |   | 15                           |  |                                                                   |  |                                         |  
|                                               |  | 
|Compensation
      expense related to certain  |  | 
|stock
      options issued in 1999 and 2000    |  |  |                                   |     |                    |   |                     |  |                                        |       |                           |   |                             |  |                                                                   |  |                                         |  
|                                               |  |  |                                   |      |                    |   |                      |  |                                        |        |                           |   |                              |  |                                                                   |   |                                         |  
|Balance
      at December 31, 2004             |  |  |                                   | 10   |                    | $ |                     |  |                                        | 95,358 |                           | $ | 95                           |  |                                                                   |  |                                         | $
|                                               |  |  |                                   |      |                    |   |                      |  |                                        |        |                           |   |                              |  |                                                                   |   |                                         |  

42

---



GENTA
INCORPORATEDCONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                              |  |  | Years
      Ended December 31, |        
|--------------------------------------------------------------------------------------------- |  |  | ------------------------------ | -------
|(In thousands)                                                                                |  |  | 2004                           |        
|                                                                                              |  |  |                                |        
|Operating
      activities:                                                                   |  |  |                                |        
|Net loss                                                                                      |  |  | $                              | (32,685
|Items
      reflected in net loss not requiring cash:                                         |  | 
|Depreciation
      and amortization                                                           |  |  |                                | 3,003  
|Loss
      on disposition of property and equipment (Note 7)                                  |  |  |                                | 1,254  
|Non-cash
      reimbursement of research & development expense (Note 5 & 13)                  |  |  |                                | (27,328
|Amortization
      of deferred revenues (Note 12)                                             |  |  |                                | (15,127
|Provision
      for sales returns                                                             |  |  |                                | 1,291  
|Provision
      for excess inventory (Note 6)                                                 |  |  |                                | 1,350  
|Gain
      on extinguishment of debt (Note 14)                                                |  |  |                                | (11,495
|Write-off
      of acquired in-process research and development (Note 2)                      |  |  |                                |       
|Compensation
      expense related to certain stock options issued in 1999 and 2000 (Note 18) |  |  |                                | 220    
|Changes
      in operating assets and liabilities, net of effects of                          |  | 
|acquisition
      of Salus Therapeutics, Inc. in 2003:                                        |  | 
|Accounts
      receivable (Note 5)                                                            |  |  |                                | 15,509 
|Inventory
      (Note 6)                                                                      |  |  |                                | (1,185 
|Notes
      receivable (Note 8)                                                               |  |  |                                | 3,542  
|Prepaid
      expenses and other current assets                                               |  |  |                                | 574    
|Accounts
      payable and accrued expenses                                                   |  |  |                                | 58     
|Deferred
      revenues (Note 12)                                                             |  |  |                                |       
|Other
      assets                                                                            |  |  |                                | (141   
|                                                                                              |  |  |                                |        
|Net cash
      used in operating activities                                                   |  |  |                                | (61,160
|                                                                                              |  |  |                                |        
|Investing
      activities:                                                                   |  | 
|Purchase
      of marketable securities (Note 3)                                              |  |  |                                | (7,281 
|Maturities
      and sales of marketable securities (Note 3)                                  |  |  |                                | 59,241 
|Purchase
      of property and equipment                                                      |  |  |                                | (1,767 
|Proceeds
      from sale of equipment                                                         |  |  |                                | 157    
|Cash
      paid for acquisition of Salus, net of cash acquired (Note 2)                       |  |  |                                |       
|                                                                                              |  |  |                                |        
|Net cash
      provided by (used in) investing activities                                     |  |  |                                | 50,350 
|                                                                                              |  |  |                                |        
|Financing
      activities:                                                                   |  | 
|Issuance
      of common stock, net (Note 17)                                                 |  |  |                                | 21,598 
|Borrowings
      under long term debt (Note 13)                                               |  |  |                                |       
|Issuance
      of convertible debt (Note 14)                                                  |  |  |                                |       
|Borrowings
      under note payable                                                           |  |  |                                | 1,431  
|Repayments
      of note payable                                                              |  |  |                                | (1,363 
|Purchase
      of treasury stock                                                              |  |  |                                |       
|Issuance
      of common stock upon exercise of warrants and options (Note 17 & 18)           |  |  |                                | 480    
|                                                                                              |  |  |                                |        
|Net cash
      provided by financing activities                                               |  |  |                                | 22,146 
|                                                                                              |  |  |                                |        
|Increase
      (decrease) in cash and cash equivalents                                        |  |  |                                | 11,336 
|Cash
      and cash equivalents at beginning of year                                          |  |  |                                | 25,153 
|                                                                                              |  |  |                                |        
|Cash
      and cash equivalents at end of year                                                |  |  | $                              | 36,489 
|                                                                                              |  |  |                                |        

See
accompanying notes to consolidated financial statements.

43

---



GENTA
INCORPORATEDNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years
ended December 31, 2004, 2003 and 2002

1.
Organization and Business

Genta
Incorporated  (Genta or  the  Company)  is  a  biopharmaceutical
company engaged in pharmaceutical (drug) research and  development,  its sole reportable
segment.  The Company is dedicated to  developing  innovative  drugs  to  treat  cancer.
In  the  past,  the  Companys  research efforts have focused primarily on the
development of  antisense drugs,  which  are  designed  to  selectively
prevent  the  production  of  specific  proteins  that  contribute  to  the  cause  or
progression  of disease.  More  recently,  the Company has broadened its  research
portfolio into other DNA  medicines,  which,  in addition to  antisense
drugs,  consist of decoy aptamers and small  molecules,  which  include the Companys
gallium products.

The
Company  has  had  recurring  operating  losses  since  its  inception.  Management
expects that such losses will  continue at least  until its lead  product,  Genasense®,
receives  approval  from the U.S.  Food and Drug Administration  (FDA) for
commercial sale in one or more  indications.  Achievement of profitability  for the
Company is dependent  on the  timing  of  Genasense® regulatory  approvals  in the
U.S.  and  outside  the  U.S.  A  significant  source  of  funds  during  the  last
several years has been from the Companys  collaboration with Aventis, a  member  of
the  sanofi-aventis  Group  (Aventis),  regarding  the  development  and
commercialization  of Genasense®.  On November 8, 2004  the  Company  received  from
Aventis  notice  of  termination  of  the  agreements  between  Genta and  Aventis.
Pursuant to those  agreements,  Aventis will continue to support the  development  of
Genasense® for a  six-month  period lasting until May 8, 2005.  Although no
assurances can  be expressed,  management believes that at the current rate of spending,
the Company  should have  sufficient  cash funds to maintain its present  operations
through 2005.  There are a number of alternatives  available  to the Company to sustain
its  operations  beyond 2005 should there be a  delay in approval of Genasense®.

The
Company  may  also  seek  collaborative  agreements,  equity  financing and other
financing  arrangements  with  potential  corporate  partners and other sources.
However, there can be no assurance that any  such  collaborative  agreements  or other
sources  of  funding  will be  available  on  favorable  terms,  if  at  all.  The
Company  will  need  substantial  additional  funds  before  it  can  expect  to  realize
significant product revenue.

2.
Summary of Significant Accounting Policies

Basis of
Presentation

The
consolidated  financial  statements are presented on the basis  of accounting  principles
generally  accepted in the United States. All  professional  accounting standards that
are effective as of December 31,  2004  have been  considered  in  preparing  the
consolidated  financial  statements.  Such  financial  statements  include  the  accounts
of the  Company  and  all  majority-owned  subsidiaries.  The  preparation  of  financial
statements in conformity with generally  accepted  accounting  principles  requires
management  to  make  certain  estimates  and  assumptions  that  affect  reported
earnings,  financial  position  and  various  disclosures.  Actual results could differ
from those estimates.  Certain  reclassifications  have  been  made to  prior-year
amounts  to  conform to current-year presentation.

44

---



Revenue
Recognition

In
April  2002,  the  Company  entered  into  a  development  and  commercialization
agreement  (Collaborative  Agreement) with Aventis.  Under the terms of the
Collaborative  Agreement, the Company and Aventis  would jointly  develop and
commercialize  Genasense® in the U.S.,  and  Aventis would have  exclusive
development  and marketing  rights to the  compound in all countries  outside of the U.S.
Under the  Collaborative  Agreement,  Aventis  would  pay  75%  of  U.S.  New  Drug
Application  (NDA)-directed  development  costs  incurred by either Genta or Aventis,
subsequent to the execution of the Collaborative  Agreement, and 100% of  all other
development,  marketing,  and sales costs incurred within the  U.S.  and  elsewhere  as
subject  to the  Collaborative  Agreement.  On  November 8, 2004  Aventis  gave notice to
Genta that it was  terminating  its  Collaborative  Agreement  with the Company.  Under
the terms of the  agreement,  Aventis will continue to fund ongoing development
activities  through May 8, 2005.

The
  Company follows the provisions of the Securities and Exchange Commissions
  Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition and Emerging Issues
  Task Force (EITF) No. 00-21 , Accounting for Revenue Arrangements with Multiple
  Deliverables.

In
accordance with EITF No. 00-21 the Company  analyzes its multiple  element  arrangements
to determine whether the elements can be separated  and accounted for  individually  as
separate  units of  accounting.  The  Company  recognizes  license  payments  as  revenue
if the  license  has  stand-alone  value and the fair  value of the  undelivered  items
can be  determined.  If the license is considered to have stand-alone  value but  the
fair value on any of the  undelivered  items  cannot be  determined,  the  license
payments  are  recognized  as  revenue  over the period of  performance  for such
undelivered  items  or  services.  The  Companys  estimate  of the period of
performance  involves  management  judgment.  Amounts  received for milestones are
recognized upon  achievement of the  milestone,  as long as the milestone is deemed to be
substantive and the  Company has no other performance obligations.

The
Company  determined  that,  due to the  nature  of the  ongoing  development  work
related to our  Collaborative  Agreement with Aventis,  the end of the  development
phase and the fair value of the undelivered  elements  were  not  determinable.
Accordingly,  the  Company  deferred  recognition  of the  initial  licensing  fee  and
up-front  development  funding  received  from  Aventis  and  recognized  these  payments
on a  straight-line  basis  over the  original  estimated  useful  life of the  related
first-to-expire patent of 115 months. As a result of the notice  of  termination of the
agreement  with Aventis,  the Company  determined  that the period  over which the
remaining  deferred  revenue  should be  recognized  will be through  May 8, 2005.  In
accordance  with EITF No.  00-21 and SAB No.  104,  the  Company  has  reclassified  the
remaining  deferred  revenue as current and will recognize such revenue through May  8,
2005.

Genta
recognizes  revenue from product  sales when title to product  and  associated  risk of
loss has passed to the customer and the Company  is reasonably  assured of collecting
payment for the sale.  All revenue  from  product  sales  are  recorded  net of
applicable  allowances  for  returns,  rebates and other  applicable  discounts and
allowances.  The  Company  allows  return of its  product  for up to twelve  months
after  product  expiration.  In May 2004 the Company eliminated its sales force  and
significantly  reduced its  marketing  support for  Ganite®.  After  evaluating
various  options,  the  Company  decided  during  the  third  quarter of 2004 to continue
selective  marketing support of the product.  In  December  2004,  a  wholesaler
contacted  the  Company  to return a  significant  portion of its inventory of Ganite®.
The Company agreed to  the return of this product and recorded a provision  for sales
returns,  as well as provided for potential  returns from other  wholesalers.  The
Companys provision for sales returns increased by $1.2 million in 2004.

Research and
Development

Research
and development costs are expensed as incurred,  including  raw  material  costs
required  to  manufacture  products  for  clinical  trials.  Reimbursements for
applicable  Genasense®-related  costs, under  the  Collaborative  Agreement,  have
been  recorded  as a  reduction  to  expenses in the  Consolidated  Statement  of
Operations.  Research  and  development  expenses in 2003 include  $13.5  million from
the write-off  of  acquired  in-process  research  and  development  related  to  the
acquisition of Salus Therapeutics, Inc. in August 2003.

45

---



Cash, Cash
Equivalents and Marketable Securities

The
carrying  amounts of cash,  cash  equivalents  and  marketable  securities  approximate
fair value due to the short-term nature of these  instruments.  Marketable  securities
primarily  consist  of  government  securities,  all  of  which  are  classified  as
available-for-sale  marketable  securities.  Management  determines  the  appropriate
classification  of securities at the time of purchase and reassesses the  classification
at each reporting date.

Property and
Equipment

Property
and equipment is stated at cost and depreciated on the straight-line method over
the estimated useful lives of the assets, ranging from three to five years.
Leasehold improvements incurred in the renovation of the Companys current
offices are being amortized over the remaining life of the leases. The Companys
policy is to evaluate the appropriateness of the carrying value of the undepreciated
value of long-lived assets. If such evaluation were to indicate an impairment of
assets, such impairment would be recognized by a write-down of the applicable
assets. Based on the valuation, no impairment was indicated in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets.

Intangible
Assets

Intangible
assets, consisting of capitalized patent costs, are amortized using the
straight-line method over their estimated useful lives of five years. The Companys
policy is to evaluate the appropriateness of the carrying values of the
unamortized balances of intangible assets. If such evaluation were to indicate an
impairment of these assets, such impairment would be recognized by a write-down of
the applicable assets. Based on the valuation, no impairment was indicated in
accordance with SFAS No. 144,  Accounting for the Impairment or Disposal of
Long-Lived Assets.

Inventories

Inventories
are  stated at the  lower of cost or  market  with cost  being determined using the
first-in, first-out (FIFO) method.

Income Taxes

The
Company  uses the  liability  method of  accounting  for income  taxes.  Deferred  income
taxes are  determined  based on the  estimated  future tax effects of  differences
between the financial  statement and  tax bases of assets and liabilities  given the
provisions of the enacted  tax laws.

Management
records valuation  allowances  against net deferred tax  assets,  if based upon the
available  evidence,  it is more likely than  not that some or all of the  deferred  tax
assets will not be  realized.  The ultimate  realization  of deferred tax assets is
dependent  upon the  generation  of future  taxable  income  and when  temporary
differences  become  deductible.  The  Company  considers,  among  other  available
information,  uncertainties  surrounding the  recoverability of deferred  tax assets,
scheduled reversals of deferred tax liabilities,  projected  future taxable income and
other matters in making this  assessment.  The  Company  reviewed its deferred tax assets
and at both  December 31, 2004  and  December  31,  2003,  used a valuation  allowance
to reduce  these  assets to zero to reflect  that,  more likely than not, they will not
be  realized.

46

---



Stock Options

The
Company has two stock-based compensation plans (Note 18). The Company accounts for
stock-based compensation arrangements in accordance with provisions of Accounting
Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to
Employees and complies with the disclosure provisions of SFAS No. 123, Accounting for Stock-Based Compensation. Under APB Opinion No. 25, compensation
expense is based on the difference, if any, on the date of grant, between the
fair value of the Company's stock and the exercise price. The Company accounts for
stock options issued to non-employees in accordance with the provisions of SFAS
No. 123, and EITF Consensus on Issue No. 96-18, Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services. The Company is amortizing deferred stock
compensation using the graded vesting method, in accordance with Financial
Accounting Standards Board Interpretation (FIN) No. 28, over the vesting
period of each respective option, which is generally four years.

In
December 2004, the FASB issued SFAS No. 123(R) Share-Based Payment that will
require compensation costs related to share-based payment transactions to be
recognized in the financial statements. With limited exceptions, the amount of
compensation cost will be measured based on the grant-date fair value of the
equity or liability instruments issued. In addition, liability awards will be
remeasured each reporting period. Compensation cost will be recognized over the
period that an employee provides service in exchange for the award. SFAS No.
123(R) replaces SFAS No. 123, Accounting for Stock-Based Compensation, and
supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. The Company
will adopt the provisions of SFAS No. 123R in 2005. The Company is evaluating the
impact that the adoption of this standard will have on its results of
operations, financial position or cash flows.

In
December 2002, the FASB issued SFAS No. 148,  Accounting for Stock-Based
Compensation - Transition and Disclosure - Amendment of FASB SFAS No. 123, to
provide alternative methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee compensation and amends the
disclosure requirements of SFAS No. 123. The following table illustrates the
effect on net loss and loss per share if the Company had applied the fair value
recognition provisions of SFAS No. 123 to stock-based employee compensation:

|                                                                                          |  |  | Years Ended December 31, |        
|----------------------------------------------------------------------------------------- |  |  | ------------------------ | -------
|($
      thousands, except per share data)                                                |  |  | 2004                     |        
|                                                                                          |  |  |                          |        
|Net
      loss applicable to common shares, as reported                                   |  |  | $                        | (32,685
|Add:
      Equity related employee compensation expense related to certain stock options  |  | 
|issued
      in 1999 and 2000 included in reported net income, net of related tax effects |  |  |                          | 220    
|Deduct:
      Total stock-based employee compensation expense determined under fair value |  | 
|based
      method for all awards, net of related tax effects                             |  |  |                          | (7,236 
|                                                                                          |  |  |                          |        
|Pro forma
      net loss                                                                  |  |  | $                        | (39,701
|                                                                                          |  |  |                          |        
|                                                                                          |  | 
|Net loss
      per share attributable to common shareholders:                             |  | 
|As reported:
      Basic and diluted                                                      |  |  | $                        | (0.41  
|Pro forma:
      Basic and diluted                                                        |  |  | $                        | (0.50  

The  pro-forma
disclosure  shown above was  calculated  for all  options  using the  Black-Scholes
option-pricing model with the following assumptions:

|                              |  |  | Years
      Ended December 31, |    
|----------------------------- |  |  | ------------------------------ | ---
|                              |  |  | 2004                           |    
|                              |  |  |                                |    
|Risk-free
      interest rate |  |  |                                | 3.5
|Dividend
      yield          |  |  |                                |   
|Expected
      life (years)   |  |  |                                | 4.0
|Volatility                    |  |  |                                | 98 

47

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Net Loss Per
Common Share

Net
loss per common share for the twelve months ended  December 31,  2004,  2003 and 2002,
respectively,  are based on the weighted  average  number of shares of common stock
outstanding  during the periods.  Basic  and diluted loss per share are  identical  for
all periods  presented as  potentially  dilutive  securities,  including  options,
warrants  and  convertible preferred stock,  aggregating 11.4 million, 18.0 million and
16.7 million in 2004,  2003 and 2002,  respectively,  have been excluded  from the
calculation  of the diluted net loss per common share  because  the inclusion of such
securities would be antidilutive.

Recently Issued
Accounting Standards

In
  December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment,
  which will require compensation costs related to share-based payment transactions
  to be recognized in the financial statements. With limited exceptions, the amount
  of compensation cost will be measured based on the grant-date fair value of
  the equity or liability instruments issued. In addition, liability awards will
  be remeasured each reporting period. Compensation cost will be recognized over
  the period that an employee provides service in exchange for the award. SFAS
  No. 123(R) replaces FASB SFAS No. 123, Accounting for Stock-Based Compensation,
  and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees.
  The Company will adopt the provisions of FAS No. 123R in 2005. The Company is
  evaluating the impact that the adoption of this standard will have on its results
  of operations, financial position or cash flows.

In
  December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary Assets,
  an amendment of APB Opinion No. 29. The Company does not expect that the adoption
  of this statement will have any impact on the Companys results of operations,
  financial position or cash flows.

In
  November 2004, the FASB issued SFAS No. 151, Inventory Costs, to clarify
  the accounting for abnormal amounts of idle facility expense, freight, handling
  costs, and wasted material. As the Company uses third-party manufacturers and
  does not manufacture its own products, the Company does not expect that the
  adoption of this statement will have a material impact on its results of operations,
  financial position or cash flows.

3. Marketable
Securities

The
carrying amounts of the companys marketable securities,  which  primarily consist
of government  securities,  approximate fair value due  to the  short-term  nature  of
these  instruments.  The  fair  value of  marketable securities is as follows ($
thousands):

|                        |  |  | Amortized
      costs |        | Unrealized
      gains |   | Unrealized
      losses |  | Fair
      value |    
|----------------------- |  |  | --------------------- | ------ | ---------------------- | - | ----------------------- |  | ---------------- | ---
|                        |  |  |                       |        |                        |   |                         |  |                  |    
|December
      31, 2004 |  |  | $                     | 5,790  |                        | $ | 10                      |  | $                | (42
|                        |  |  |                       |        |                        |   |                         |  |                  |    
|December
      31, 2003 |  |  | $                     | 57,751 |                        | $ | 29                      |  | $                | (4 
|                        |  |  |                       |        |                        |   |                         |  |                  |    

The fair value of marketable securities by contractual maturity, is as follows ($
  thousands):

|                          |  |  | December
      31, |      
|------------------------- |  |  | ------------------ | -----
|                          |  |  | 2004               |      
|                          |  |  |                    |      
|Due
      within one year |  |  | $                  | 5,758
|Due after
      one year  |  |  |                    |     
|                          |  |  |                    |      
|                          |  |  | $                  | 5,758
|                          |  |  |                    |      

The
fair value of each  marketable  security  has been  compared to  its  cost  and
therefore,  an  unrealized  loss  of  approximately  $32  thousand has been recognized in
accumulated other  comprehensive loss at  December 31, 2004.

48

---



4.
Collaborative Agreement

In
April  2002,  the  Company  entered  into  a  development  and  commercialization
agreement  (Collaborative  Agreement) with Aventis.  Under the terms of the
Collaborative Agreement,  Genta and Aventis would  jointly  develop and  commercialize
Genasense® in the U.S, and Aventis  would have exclusive  development  and marketing
rights to the compound  in all  countries  outside the U.S.  Under the  Collaborative
Agreement  Aventis paid 75% of the U.S. NDA-directed  development costs incurred by
either  Genta or Aventis and 100% of all other  development,  marketing,  and sales costs
incurred  within the U.S.  and  elsewhere as subject to  the Collaborative  Agreement.
An analysis of expenses  reimbursed under  the Collaborative Agreement follows ($
thousands):

|                                                          |  |  | Twelve
      Months Ended
      December 31, |        
|--------------------------------------------------------- |  |  | -------------------------------------------- | -------
|                                                          |  |  |                                              |        
|                                                          |  |  | 2004                                         |        
|                                                          |  |  |                                              |        
|Research
      and development expenses, gross            |  |  | $                                            | 71,494 
|Less
      expense reimbursement                          |  |  |                                              | (43,292
|                                                          |  |  |                                              |        
|Research
      and development expenses, net              |  |  | $                                            | 28,202 
|                                                          |  |  |                                              |        
|                                                          |  |  |                                              |        
|Selling,
      general and administrative expenses, gross |  |  |                                              | 28,576 
|Less
      expense reimbursement                          |  |  |                                              |       
|                                                          |  |  |                                              |        
|Selling,
      general and administrative expenses, net   |  |  | $                                            | 28,576 
|                                                          |  |  |                                              |        

5. Accounts
Receivable-Net

Once
Aventis  provided  notice of termination of the  Collaborative  Agreement,  all payments
otherwise due from Aventis are applied against  any  balance  on the Line of Credit
until the Line of Credit is repaid.  Accordingly,  the Accounts  receivable-net  balance
at December 31, 2004  does not include any  reimbursement  from Aventis,  as
reimbursement due  from Aventis has been applied to the Line of Credit.

At
December 31, 2003,  the balance of Accounts  receivable-net  of $16.7  million was
comprised  of $15.5  million in net expense  reimbursements  due from  Aventis  for
various  third-party  costs,  internal  costs of  scientific and technical  personnel and
Genasense® drug supply costs and  $1.2 million  related to the sale of Ganite®,
net of allowances of $0.1  million.

6. Inventory

Inventories
are  stated at the  lower of cost or market  with cost  being  determined  using  the
first-in,  first-out  (FIFO)  method.  Inventories consisted of the following ($
thousands):

|                      |  |  | December
      31 |    
|--------------------- |  |  | ----------------- | ---
|                      |  |  | 2004              |    
|                      |  |  |                   |    
|Raw
      materials   |  |  | $                 | 21 
|Work
      in process |  |  |                   |   
|Finished
      goods  |  |  |                   | 333
|                      |  |  |                   |    
|                      |  |  | $                 | 354
|                      |  |  |                   |    

In
May  2004,  the  Company  eliminated  its  sales  force  and  significantly  reduced  its
marketing  support  for  Ganite®.  After  evaluating  various  options,  the  Company
decided  during  the  third  quarter to continue selective  marketing support of the
product.  During  2004, the Company  recorded  provisions for excess Ganite® inventory
of  $1.4 million.

49

---



7. Property and
Equipment, Net

Property  and
equipment
is  comprised  of  the  following  ($  thousands):

|                                                     |  |  | Estimated 
      Useful Lives |                     | December
      31, |     
|---------------------------------------------------- |  |  | ----------------------------- | ------------------- | ------------------ | ----
|                                                     |  |  |                               | 2004                |                    | 2003
|                                                     |  |  |                               |                     |                    |     
|Computer
      equipment                             |  |  |                               | 3                   |                    | $   
|Software                                             |  |  |                               | 3                   |                    |     
|Furniture
      and fixtures                         |  |  |                               | 5                   |                    |     
|Leasehold
      improvements                         |  |  |                               | Life
      of lease |                    |     
|Equipment                                            |  |  |                               | 5                   |                    |     
|                                                     |  |  |                               |                     |                    |     
|                                                     |  |  |                               |                     |                    |     
|Less
      accumulated depreciation and amortization |  |  |                               |                     |                    |     
|                                                     |  |  |                               |                     |                    |     
|                                                     |  |  |                               |                     |                    | $   
|                                                     |  |  |                               |                     |                    |     

In
August 2004,  the Company  completed the closure of its research  facility  in Salt  Lake
City,  Utah,  sold all  related  equipment  and  assigned its lease on this  facility to
another  company.  Additionally,  the Company disposed of excess equipment at corporate
headquarters.  As  a result of these actions,  the Company recorded a loss of
approximately  $1.3 million.

8. Notes
Receivable

At
December  31,  2003,  the Company had a note  receivable  of $3.5  million relating to
advance financing provided to Avecia  Biotechnology,  Inc.  (Avecia)  for
facility  expansion,  which was to be repaid with  interest  through  future  payments
determined  as a function of future  drug substance  purchases by Genta.  Based on
negotiations  between the  two  companies,  amounts owed to the Company under this note
were offset  against amounts payable to Avecia,  resulting in a non-cash reduction to
Note  receivable  and  Accounts  payable  and  accrued  expenses  of  approximately $4.2
million.

9. Intangibles

Intangible
assets consist of the following ($ thousands):

|                                     |  |  | December 31, |       
|------------------------------------ |  |  | ------------ | ------
|                                     |  |  | 2004         |       
|                                     |  |  |              |       
|Patent
      and patent applications |  |  | $            | 3,992 
|Less
      accumulated amortization  |  |  |              | (3,706
|                                     |  |  |              |       
|                                     |  |  | $            | 286   
|                                     |  |  |              |       

The remaining
intangible asset amount will be fully amortized in 2005.

10. Prepaid
Royalties

In
December  2000,  the Company  recorded  $1.3  million as the fair  value for its
commitment to issue  162,338  shares of common stock to a  major  university  as
consideration  for  an  amendment  to  a  license  agreement  initially  executed  on
August 1, 1991  related to  antisense  technology  licensed from the  university.  The
amendment  provided for  a reduction in the royalty  percentage rate to be paid to the
university  based on the volume of sales of the Companys  products  containing  the
antisense  technology  licensed from such university.  These shares were  issued in the
first  quarter of 2001.  The  Company  will  amortize  the  prepaid royalties upon the
commercialization  of Genasense® through the  term of the  arrangement,  which
expires  twelve years from the date of  first commercial sale.

50

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11. Accounts
Payable and Accrued Expenses

Accounts
payable and accrued expenses is comprised of the following  ($ thousands):

|                                |  |  | December 31, |       
|------------------------------- |  |  | ------------ | ------
|                                |  |  | 2004         |       
|                                |  |  |              |       
|Accounts
      payable          |  |  | $            | 5,683 
|Accrued
      compensation      |  |  |              | 1,957 
|Accrued
      interest          |  |  |              |      
|Reserve
      for sales returns |  |  |              | 1,261 
|Other
      accrued expenses    |  |  |              | 5,523 
|                                |  |  |              |       
|                                |  |  | $            | 14,424
|                                |  |  |              |       

12. Deferred
Revenues

As
of December 31, 2004,  the Company had recorded  $26.2  million,  net  of  amortization
in  current  deferred  revenues  relating  to the  initial  $10.0  million  licensing
fee and  $40.0  million  development  funding  received from Aventis  under the
Collaborative  Agreement.  On  November 8, 2004,  Aventis gave notice to Genta that it
was  terminating  the Collaborative Agreement.  Under the terms of the agreement,
Aventis  will  continue to fund  ongoing  development  activities  through May 8,  2005.
As a result of the notice of termination  of the  agreements  with  Aventis,  the
Company  has  determined  that the period  over which the  remaining  deferred  revenue
should be recognized will be through May 8,  2005.  In  accordance  with EITF No.  00-21
and SAB No. 104, the Company  has  reclassified  the  remaining  deferred  revenue as
current and will  recognize such revenue through May 8, 2005.

13. Short Term
Debt

This
revolving  debt was issued in  connection  with an amendment,  dated March 14, 2003, to
the Collaborative  Agreement that established a  line  of  credit  related  to  the
development,  manufacturing  and  commercialization  of  Genasense® (Line  of
Credit).  The  debt  was  considered  an  advance  against  both  past and  future
costs  and the  borrowing base was adjusted on a monthly  basis.  Prior to June 30, 2004
the Line of Credit was  classified as long-term  debt and beginning June  30, 2004,  it
was  classified  as  short-term  debt.  During 2004,  as a  result of certain  non-cash
transactions,  the Company  reduced amounts  owed under the Line of Credit by $27.7
million.  As a result of Aventis purchase  commitments to Genta, in September the
Company  supplied $15.5  million of vialed  Genasense® drug  product  and  Genasense® bulk
drug  substance  to  Aventis.  This  amount  is  included  in  the  Companys
Consolidated  Statement  of  Operations  as Aventis  reimbursement.  The  companies
agreed to  offset  amounts  owed  under the Line of Credit by  $14.8  million  and
accrued  interest  on the  Line of  Credit  by $0.7  million.  With the Aventis  notice
of  termination,  Genta cannot borrow  additional  funds  and the Line of Credit  must be
repaid no later  than  May 8, 2005.  All payments  otherwise  due to Genta are applied
against  any  balance  on the Line of Credit  until the Line of Credit is repaid.  The
Company  expects  that a  substantial  portion of the $7.3  million  outstanding  on  the
Line  of  Credit  will  be  repaid  through  the  application of  reimbursements.  In
2004, $12.9 million of reimbursement  due from Aventis was applied to the balance of the
Line of Credit.

The
  terms of the Line of Credit provide for a favorable interest rate of the three-month
  London Interbank Offered Rate plus .35% per annum, compounded quarterly, which
  is set two days prior to the first day of each calendar quarter. As security
  for the repayment of the Line of Credit, Genta has granted Aventis a security
  interest in all of its rights to payments under the Collaborative Agreement,
  as well as all inventory related to Genasense®.

51

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14. Convertible
Debt

On
November 8, 2004, Aventis gave notice to Genta that it was  terminating its Collaborative
Agreement with the Company. Under the  terms of the Agreement, Aventis has forgiven the
$10.0 million of  convertible debt, along with its accrued interest, issued to them in
connection with the collaboration, resulting in a gain on  extinguishment of debt of
$11.5 million.

15. Income
Taxes

Significant
components of the Companys  deferred tax assets as of  December 31, 2004 and 2003
and related valuation  reserves are presented  below ($ thousands):

|                                                          |  |  | December 31, |         
|--------------------------------------------------------- |  |  | ------------ | --------
|                                                          |  |  | 2004         |         
|                                                          |  |  |              |         
|Deferred
      tax assets:                                |  |  |              |         
|Deferred
      compensation                               |  |  | $            | 754     
|Net
      operating loss carryforwards                    |  |  |              | 74,138  
|Research
      and development credit carryforwards       |  |  |              | 96,009  
|Purchased
      technology and license fees               |  |  |              | 4,850   
|Deferred
      revenue - current                          |  |  |              | 11,540  
|Deferred
      revenue - non-current                      |  |  |              |        
|New
      Jersey Alternative Minimum Assessment (AMA) Tax |  |  |              | 182     
|New
      Jersey research and development credits         |  |  |              | 7,558   
|Provision
      for excess inventory                      |  |  |              | 2,656   
|Reserve
      for product returns                         |  |  |              | 568     
|Other,
      net                                          |  |  |              | 266     
|                                                          |  |  |              |         
|                                                          |  |  |              | 198,521 
|Valuation
      allowance for deferred tax assets         |  |  |              | (198,505
|                                                          |  |  |              |         
|Net
      deferred tax assets                             |  |  |              | 16      
|                                                          |  | 
|Deferred
      tax liabilities:                           |  | 
|Depreciation,
      net                                   |  |  |              | (16     
|                                                          |  |  |              |         
|Net
      deferred tax assets (liabilities)               |  |  | $            |        
|                                                          |  |  |              |         



A
full  valuation  allowance has been provided at December 31, 2004  and 2003,
respectively,  to reserve  for  deferred  tax  assets,  as it  appears  more likely than
not that net  deferred  tax assets will not be  realized.

New
Jersey has enacted legislation  permitting certain corporations  located  in New Jersey
to sell  state tax loss  carryforwards  and state  research and  development  credits.
During 2004, New Jersey allowed the  Company to sell $11.6  million of its net operating
loss  carryforwards  and  the  Company  received  $0.9  million  from  the  sale,  which
was  recognized as Income tax benefit.

If
still  available  under New Jersey law, the Company will attempt  to sell  its tax loss
carryforwards  in 2005.  The  Company  can not be  assured that the New Jersey  program
will  continue  next year,  nor can  the Company  estimate  what  percentage of its
saleable tax benefits New  Jersey  will  permit it to sell,  how much  money  will be
received  in  connection  with  the  sale,  or if the  Company  will be able to find a
buyer for its tax benefits.

At
December  31,  2004,  the  Company  has  federal  and state net  operating loss
carryforwards of approximately  $169.8 million and $171.9  million,  respectively.  The
federal  tax  loss  carryforwards  began  expiring in 2003. The Company also has federal
research and development  credit carryforwards of $96.0 million, which began expiring in
2003.

52

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16. Operating
Leases

At
December 31, 2004 and December 31, 2003, the Company  maintained  $1.6  million  and
$1.5  million,  respectively,  in  restricted  cash  balances with  financial
institutions  related to lease  obligations on  its corporate  facilities  and leased
fleet  vehicles.  Such  restricted  cash  balances  collateralize  letters of credit
issued by the financial  institutions  in  favor  of  the  Companys  landlord  with
respect  to  corporate  facilities  and to a financial  institution  with  respect to
leased fleet vehicles.

Future
minimum  obligations  under operating leases at December 31,  2004 are as follows ($
thousands):

|           |  |  | Operating
      Leases |       
|---------- |  |  | ---------------------- | ------
|           |  |  |                        |       
|2005       |  |  | $                      | 2,568 
|2006       |  |  |                        | 2,669 
|2007       |  |  |                        | 2,661 
|2008       |  |  |                        | 2,595 
|2009       |  |  |                        | 2,576 
|Thereafter |  |  |                        | 429   
|           |  |  |                        |       
|           |  |  | $                      | 13,498
|           |  |  |                        |       

Annual
rent  expense  incurred by the Company in 2004 and 2003 was  $2.5 million and $2.2
million, respectively.

17.
Stockholders Equity

Common
Stock

In
August  2003,  the  Company  issued 1.03  million  shares of its  common  stock,  with  a
fair  value  of  $13.0  million,  to  Salus  stockholders,  in connection with its
purchase of Salus  Therapeutics in  exchange for all of the outstanding shares of Salus
preferred stock.

In
March 2004, the Board of Directors approved an amendment to  increase the authorized
common stock to 150.0 million shares from 120.0  million.  In June 2004, shareholders
approved this amendment at the  Annual Meeting of Stockholders.

In
December 2004, the Company issued 15.0 million shares of its  common stock through a
direct placement with two institutions and  received net proceeds of approximately $21.6
million.

Preferred
Stock

The
Company has  authorized  5.0 million  shares of preferred  stock  and has  issued and
outstanding  9,700  shares of Series A  Convertible  Preferred Stock as of December 31,
2004.

Series
A Preferred Stock

Each
share of Series A Preferred  Stock is immediately  convertible  into shares of the
Companys  common  stock,  at a rate  determined  by  dividing the aggregate
liquidation  preference of the Series A Preferred  Stock by the  conversion  price.  The
conversion  price is  subject  to  adjustment  for  antidilution.  As of December  31,
2004 and 2003,  each  share of  Series A  Preferred  Stock was  convertible  into  8.4274
and  7.3967 shares of common stock, respectively.

In
the event of a  liquidation  of the Company,  the holders of the  Series A Preferred
Stock are entitled to a liquidation  preference equal  to $50 per share, or $0.5 million
at December 31, 2004.

In
February 2004, substantially all of the Series A Preferred  Stock was converted into
shares of the Companys Common Stock.

53

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Warrants

Summary
information  with  respect  to  outstanding  common  stock  warrants at December 31, 2004
is presented below:

|Outstanding Warrants          |  |  | Exercise
      Price |      | Potential
      
      Warrant
      Exercise 
      Proceeds |   | Common
      
      Equivalents |  | Expiration
      Date
|----------------------------- |  |  | -------------------- | ---- | ------------------------------------------------------------- | - | ------------------------------- |  | ---------------------
|                              |  |  |                      |      |                                                               |   |                                 |  |                      
|June
      1997               |  |  | $                    | 0.86 |                                                               | $ | 22,320                          |  |                      
|                              |  |  |                      |      |                                                               |   |                                 |  |                      
|August
      1999 Androgenics |  |  | $                    | 1.25 |                                                               |   | 100,000                         |  |                      
|                              |  | 
|December
      1999           |  | 
|                              |  |  | $                    | 3.02 |                                                               |   | 372,091                         |  |                      
|                              |  |  | $                    | 4.71 |                                                               |   | 316,027                         |  |                      
|                              |  |  | $                    | 4.25 |                                                               |   | 187,591                         |  |                      
|                              |  |  |                      |      |                                                               |   |                                 |  |                      
|September
      2000          |  |  | $                    | 6.75 |                                                               |   | 76,214                          |  |                      
|                              |  |  |                      |      |                                                               |   |                                 |  |                      
|                              |  |  |                      |      |                                                               | $ | 1,074,243                       |  |                      
|                              |  |  |                      |      |                                                               |   |                                 |  |                      

In
June 1997,  in connection  with a private  equity  placement,  a  series of warrants
were issued.  The remaining  outstanding  warrants  are  exercisable and can be converted
into  approximately  26 thousand  common shares; they expire in December 2007.

In
August  1999,  the Company  acquired  Androgenics  Technologies,  Inc.  (Androgenics)
and as part of that acquisition,  issued a series  of  warrants.  The  outstanding
warrants  that are  exercisable  can be  converted into 80 thousand common shares; they
expire in August 2006.

In
December 1999, in connection with a private equity placement,  a  series of warrants were
issued. The remaining  outstanding  warrants are  exercisable  and can be  converted
into a total  of  approximately  234  thousand  common shares.  These  warrants  expire
in May 2005 or in June  2007.

In
September 2000, in connection with a private equity placement,  a  series of warrants
were issued. The remaining  outstanding  warrants are  exercisable and can be converted
into  approximately  11 thousand common  shares; they expire in September 2005.

Common
Stock Reserved

At
December  31,  2004,  an  aggregate  of 11.5  million  shares of  common stock were
reserved for the  conversion  of preferred  stock and  the exercise of outstanding
options and warrants.

18. Employee
Benefit Plans

1998
Plan

Pursuant
  to the Companys 1998 Stock Incentive Plan as amended (the 1998 Plan),
  18.5 million shares have been provided for the grant of stock options to employees,
  directors, consultants and advisors of the Company. In March 2004, the Board
  of Directors approved an amendment to increase the total number of shares of
  common stock authorized for issuance under the 1998 Plan to 18.5 million shares
  from 17.0 million. In June 2004, the stockholders approved this amendment at
  the Annual Meeting of Stockholders. Options may be designated as incentive stock
  options or non-statutory stock options; however, incentive stock options may
  be granted only to employees of the Company. Options under the 1998 Plan have
  a term of up to ten years and must be granted at not less than the fair market
  value, or 85% of fair market value for non-statutory options, on the date of
  the grant. Common stock sold and options granted pursuant to the 1998 Plan generally
  vest over a period of four years.

54

---



During
1999  and  2000,  the  Company  granted  to  certain  key  employees,  6,188,250 and
325,000  options,  respectively.  Such options  were  granted  with  exercise  prices
below  the  market  value  of the  Companys  common  stock  on the  date of the
grant.  Accordingly,  the  Company recorded deferred  compensation of $2.0 million and
$0.1 million  in 1999 and 2000  attributable  to the intrinsic  value of these options
and amortized  $0.2  million,  $0.2 million and $0.7 million as non-cash  equity  related
compensation  expense  in  2004,  2003  and  2002,  respectively.

In
2001,  the Company  granted  options to purchase  common stock to  members of Gentas
Scientific  Advisory  Board,  for which the  Company  recorded a total of $0.7  million
in  deferred  compensation,  of which  $0.2 million and $0.3 million was amortized as
non-cash  equity  related  compensation expense in 2003 and 2002, respectively.

The
Companys  employees  were  granted  1,442,000,  2,468,300  and  1,274,400  stock
options with exercise prices equal to the fair value on  the  date of  grant  in  2004,
2003  and  2002,  respectively.  Summary  information with respect to the Companys
1998 Stock Plan is as follows:

|1998
      Plan                    |  |  | Shares
      
      Under
      Option |            | Weighted 
      Average 
      Exercise 
      Price
      Per Share |  
|---------------------------------- |  |  | -------------------------------------- | ---------- | -------------------------------------------------------------------- | -
|                                   |  |  |                                        |            |                                                                      |  
|Balance
      at December 31, 2001 |  |  |                                        | 8,295,244  |                                                                      | $
|Granted                            |  |  |                                        | 1,274,400  |                                                                      |  
|Exercised                          |  |  |                                        | (871,632   | )                                                                    |  
|Canceled                           |  |  |                                        | (198,400   | )                                                                    |  
|                                   |  |  |                                        |            |                                                                      |  
|Balance
      at December 31, 2002 |  |  |                                        | 8,499,612  |                                                                      | $
|Granted                            |  |  |                                        | 2,468,300  |                                                                      |  
|Exercised                          |  |  |                                        | (834,400   | )                                                                    |  
|Canceled                           |  |  |                                        | (262,425   | )                                                                    |  
|                                   |  |  |                                        |            |                                                                      |  
|Balance
      at December 31, 2003 |  |  |                                        | 9,871,087  |                                                                      | $
|Granted                            |  |  |                                        | 1,442,000  |                                                                      |  
|Exercised                          |  |  |                                        | (79,775    | )                                                                    |  
|Canceled                           |  |  |                                        | (1,239,492 | )                                                                    |  
|                                   |  |  |                                        |            |                                                                      |  
|Balance
      at December 31, 2004 |  |  |                                        | 9,993,820  |                                                                      | $
|                                   |  |  |                                        |            |                                                                      |  

At
December  31,  2004,  options to purchase  5,570,729  shares of  common stock were
exercisable at a weighted  average  exercise price of  approximately  $4.51 per share and
3,851,323 shares of common stock were  available for grant or sale under the Plan.

1998
Non-Employee Directors Plan

Pursuant
to the Companys  Non-Employee  Directors 1998 Stock Plan  as  amended,  (the
Directors Plan)  3.3  million  shares  have been  provided for the
grant of stock options to  non-employee  members of the  Board of  Directors.  Options
under the  Directors Plan have a term of  up to ten years  and must be  granted  at
not less than the fair  market  value on the date of grant.  As  amended  and  approved,
each  director  shall  be  granted  24,000  options  upon  election  to  the  Board  of
Directors.  Each  option  granted  shall  become  exercisable  over  a  three-year
period. In addition,  annually, each director receives 20,000  options  at the first
Board of  Directors  meeting  they  attend.  Each  option granted shall become
exercisable in full on the date of grant.

In
June 2004,  the  stockholders  approved an amendment to the 1998  Directors Plan at
the Annual Meeting of Stockholders,  whereby the Lead  Director  and  Non-Employee
Chairperson  of a Committee of the Board of  Directors  are  granted an annual  option to
purchase  5,000  shares of  common stock.  Each option  granted shall become  exercisable
in full on  the date of grant.

The
Companys  directors  were granted stock options to purchase a  total of 160,000,
184,000 and 174,667  shares of common  stock in 2004,  2003 and 2002,  respectively,
with an exercise  price equal to the fair  market value of the common stock on the date
of grant.

55

---



Summary
information  with respect to the Companys 1998 Directors Plan is as follows:

|1998
      Directors Plan         |  |  | Shares
      
      Under
      Option |           | Weighted 
      Average 
      Exercise 
      Price
      Per Share |  
|---------------------------------- |  |  | -------------------------------------- | --------- | -------------------------------------------------------------------- | -
|                                   |  |  |                                        |           |                                                                      |  
|Balance
      at December 31, 2001 |  |  |                                        | 1,289,669 |                                                                      | $
|Granted                            |  |  |                                        | 174,667   |                                                                      |  
|Exercised                          |  |  |                                        | (475,000  | )                                                                    |  
|Canceled                           |  |  |                                        | (125,000  | )                                                                    |  
|                                   |  |  |                                        |           |                                                                      |  
|Balance
      at December 31, 2002 |  |  |                                        | 864,336   |                                                                      | $
|Granted                            |  |  |                                        | 184,000   |                                                                      |  
|Exercised                          |  |  |                                        | (100,000  | )                                                                    |  
|Canceled                           |  |  |                                        | (20,000   | )                                                                    |  
|                                   |  |  |                                        |           |                                                                      |  
|Balance
      at December 31, 2003 |  |  |                                        | 928,336   |                                                                      | $
|Granted                            |  |  |                                        | 160,000   |                                                                      |  
|Exercised                          |  |  |                                        | (4,500    | )                                                                    |  
|Canceled                           |  |  |                                        | (59,500   | )                                                                    |  
|                                   |  |  |                                        |           |                                                                      |  
|Balance
      at December 31, 2004 |  |  |                                        | 1,024,336 |                                                                      | $
|                                   |  |  |                                        |           |                                                                      |  

At
December 31, 2004,  options granted under the Directors Plan to  purchase  992,335
shares of common stock were  exercisable at a weighted  average  exercise  price of
approximately  $7.04 per share and  322,877  shares of  common  stock  were  available
for  grant or sale  under the  Directors Plan.

In
2002,  a  combined  total of  1,449,067  options  were  granted  pursuant to the 1998
Plan and 1998  Directors  Plan at fair market value  with a weighted  average  grant date
fair value of $11.81 per share.  In  2003,  a combined  total of 2,656,300  options were
granted  pursuant to  the 1998  Plan and  1998  Directors  Plan at fair  market  value
with a  weighted  average  grant date fair value of $9.72 per share.  In 2004, a  total
of 1,602,000  options  were granted  pursuant to the 1998 Plan and  the 1998  Directors
Plan at fair market  value with a weighted  average  grant date fair value of $7.62 per
share.  No options were granted below  fair market value in 2004, 2003 or 2002.

An
analysis of all options  outstanding  as of December 31, 2004 is  presented below:

|Range
      of Prices |  | Options 
      Outstanding |            | Weighted
      
      Average
      Remaining 
      Life in Years |  | Weighted 
      Average 
      Exercise 
      Price |  | Options 
      Exercisable |       | Weighted 
      Average
      Exercise 
      Price of
      Options 
      Exercisable | 
|--------------------- |  | -------------------------- | ---------- | ------------------------------------------------------------------ |  | ---------------------------------------------------- |  | -------------------------- | ----- | --------------------------------------------------------------------------------------- | 
|                      |  |                            |            |                                                                    |  |                                                      |  |                            |       |                                                                                         | 
|$0.94
      - $3.25   |  |                            | 5,550,462  |                                                                    |  | 5.2                                                  |  | $                          | 2.61  |                                                                                         | 
|$5.63
      - $6.89   |  |                            | 927,033    |                                                                    |  | 6.4                                                  |  | $                          | 6.31  |                                                                                         | 
|$7.08
      - $8.97   |  |                            | 1,427,771  |                                                                    |  | 7.1                                                  |  | $                          | 7.90  |                                                                                         | 
|$9.02
      - $10.99  |  |                            | 1,815,000  |                                                                    |  | 8.6                                                  |  | $                          | 10.04 |                                                                                         | 
|$11.04
      -$18.25  |  |                            | 1,297,889  |                                                                    |  | 7.6                                                  |  | $                          | 13.38 |                                                                                         | 
|                      |  |                            |            |                                                                    |  |                                                      |  |                            |       |                                                                                         | 
|                      |  |                            | 11,018,155 |                                                                    |  | 6.4                                                  |  | $                          | 6.10  |                                                                                         | 
|                      |  |                            |            |                                                                    |  |                                                      |  |                            |       |                                                                                         | 

Employee
Savings Plan

In
January 2001,  the Company  initiated  sponsorship  of the Genta  Incorporated  Savings
and Retirement Plan, a defined  contribution  plan  under  Section  401(k)  of the
Internal  Revenue  Code.  The  Companys  matching  contribution  to the Plan was
$0.7  million,  $0.6 million and  $0.3 million for 2004, 2003 and 2002, respectively.

56

---



19. Commitments
and Contingencies

Litigation
and Potential Claims

In
  2004, numerous complaints were filed in the United States District Court for
  the District of New Jersey against Genta and certain of our principal officers
  on behalf of purported classes of our shareholders who purchased our securities
  during several class periods. The complaints have been consolidated into a single
  action and allege that the Company and certain of its principal officers violated
  the federal securities laws by issuing materially false and misleading statements
  regarding Genasense®for the treatment of melanoma that had the effect of artificially inflating
  the market price of our securities. The shareholder class action complaint in
  the various actions seeks monetary damages in an unspecified amount and recovery
  of plaintiffs costs and attorneys fees. In addition, three shareholder
  derivative actions have been filed against the directors and certain officers
  of Genta in New Jersey State and Federal courts. Based on facts substantially
  similar to those asserted in the shareholder class actions, the derivative plaintiffs
  claim that defendants have breached their fiduciary duties to the shareholders
  and other violations of New Jersey law. The Company believes these litigations
  are without merit and will vigorously defend against these suits.

Under
Gentas  directors  and  officers liability  insurance  coverage,  the
Company is liable  for the first  $1.0  million of legal  expenses.  As it is reasonably
certain that the Company will incur these  expenses, $1.0 million was recorded in June
2004.

Management
does not  believe  that  this  litigation  will  have a  material adverse impact on the
Companys financial results or liquidity.

Contractual
Obligations

Future
contractual  obligations at December 31, 2004 are as follows  ($ thousands):

|                                      |  |  | Total |        | Less
      than 
      1 year |   | 1
      - 3 years |  | 3
      - 5 years |       | More
      than 
      5 years |  
|------------------------------------- |  |  | ----- | ------ | ----------------------------- | - | ----------------- |  | ----------------- | ----- | ------------------------------ | -
|                                      |  |  |       |        |                               |   |                   |  |                   |       |                                |  
|Short
      term debt obligations (1) |  |  | $     | 7,312  |                               | $ | 7,312             |  | $                 |      |                                | $
|Operating
      lease obligations     |  |  |       | 13,498 |                               |   | 2,568             |  |                   | 5,330 |                                |  
|                                      |  |  |       |        |                               |   |                   |  |                   |       |                                |  
|Total                                 |  |  | $     | 20,810 |                               | $ | 9,880             |  | $                 | 5,330 |                                | $
|                                      |  |  |       |        |                               |   |                   |  |                   |       |                                |  

(1)
Consists of amounts outstanding on the line of credit with  Aventis, which are due on May
8, 2005.

Not
included  in the  above  table  are any  Genasense® bulk  drug  purchase  obligations
to Avecia per the terms of the  Manufacturing  and  Supply  Agreement  entered  into
between  Avecia and Genta in  December  2002.  The  agreement  calls for Genta to
purchase a  percentage  of our  global  Genasense® bulk drug requirements from Avecia
during the term of  the  agreement.  Due to the  uncertainties  regarding  the timing of
any  Genasense® approval and sales/volume  projections,  specific obligation  amounts
cannot be  estimated  at this time.  Due to past  purchases  of  Genasense® bulk drug
substance,  the Company has access to  sufficient  drug for its current needs.

20.
Supplemental Disclosure of Cash Flows Information and Non-cash Investing and Financing
Activities

During
2004,  as a result of certain  non-cash  transactions,  the  Company  reduced amounts
owed under the Line of Credit by $27.7 million.  In September the Company  supplied
$15.5  million of vialed  Genasense® drug product and Genasense® bulk drug
substance to Aventis.  This amount  is included in the  Companys  Consolidated
Statement of  Operations as  Aventis  reimbursement.  The  companies  agreed to offset
amounts  owed  under the Line of Credit by $14.8  million and  accrued  interest on the
Line of Credit by $0.7 million.  With the Aventis notice of termination,  Genta  cannot
borrow  additional  funds and the Line of Credit  must be  repaid no later than May 8,
2005.  All payments  otherwise  due to Genta  are applied  against any balance on the
Line of Credit until the Line of  Credit is repaid.  In 2004, $12.9 million of
reimbursement  due to Genta  was applied to the balance of the Line of Credit.

57

---



Based
  on negotiations between the Company and Avecia, amounts owed to Genta under
  a note receivable from Avecia were offset against amounts payable to Avecia,
  resulting in a non-cash reduction to Note receivable and Accounts payable and
  accrued expenses of approximately $4.2 million.

No
interest  was paid for the twelve  months  ended  December  31,  2004, 2003, and 2002,
respectively.

21. Selected
Quarterly Financial Data (Unaudited)

The
Company has experienced  significant  quarterly  fluctuations in  operating results and
it expects that these fluctuations will continue.

|                                           |  |  | Quarter
      Ended |        
|------------------------------------------ |  |  | ------------------- | -------
|2004                                       |  |  |                     |        
|($ thousands,
      except per share data) |  |  | Mar.
      31       |        
|                                           |  |  |                     |        
|Revenues                                   |  |  | $                   | 1,682  
|Gross
      Margin                         |  |  |                     | 1,589  
|Operating
      expenses-net               |  |  |                     | 14,144 
|Net (loss)
      income                    |  |  |                     | (12,532
|Net (loss)
      income per common share:  |  | 
|Basic
      and diluted *                  |  |  | $                   | (0.16  

| | *
Net  (loss)  income  per  common  share  is  calculated  independently  for each  quarter
and the full year based upon  respective average shares outstanding.  Therefore, the sum
of  the  quarterly  amounts  may not  equal  the  annual  amounts  reported
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For
the quarter ended December 31, 2004 the Company  reported income  of  $14.6  million  or
$.18  per  share.  With  the  Aventis  notice  of  termination,  Aventis has forgiven the
$10.0 million of convertible debt  issued to them in  connection  with the
collaboration,  resulting  in a  gain on  extinguishment  of debt of  $11.5  million.  In
addition,  the  Aventis  notice  of  termination  resulted  in the  acceleration  of the
recognition  of  previously  deferred  revenue  over a six-month  period  beginning
November  9, 2004.  As a result,  revenue  recognized  in the  quarter ended December 31,
2004 increased $9.9 million.

|2003                                       |  |  |               |        |               |   |               |   |               |        
|------------------------------------------ |  |  | ------------- | ------ | ------------- | - | ------------- | - | ------------- | -------
|($ thousands,
      except per share data) |  |  | Mar.
      31 |        | Jun.
      30 |   | Sep.
      30 |   | Dec.
      31 |        
|                                           |  |  |               |        |               |   |               |   |               |        
|Revenues                                   |  |  | $             | 1,309  |               | $ | 1,320         |   | $             | 1,296  
|Gross
      Margin                         |  |  |               | 1,309  |               |   | 1,320         |   |               | 1,296  
|Operating
      expenses-net               |  |  |               | 11,224 |               |   | 4,953         |   |               | 18,612 
|Net loss                                   |  |  |               | (9,603 | )             |   | (3,418        | ) |               | (17,165
|Net loss
      per common share:           |  | 
|Basic
      and diluted                    |  |  | $             | (0.13  | )             | $ | (0.05         | ) | $             | (0.23  

|Item 9. |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|------- |  | ------------------------------------------------------------------------------------

None.

58

---



|Item 9A. |  | Controls and Procedures
|-------- |  | -----------------------

Conclusion
Regarding the Effectiveness of Disclosure Controls and Procedures

As
required by Rule 13a-15(b),  Gentas Chief Executive Officer and  Chief  Financial
Officer  conducted an  evaluation as of the end of the  period  covered by this  report
of the  effectiveness  of the  Companys  disclosure  controls and  procedures (as
defined in Exchange Act Rule  13a-15(e)).  Based on that evaluation,  the Chief Executive
Officer and  Chief  Financial  Officer  concluded  that  the  Companys  disclosure
controls and procedures were operating  effectively as of the end of the  period covered
by this report.

Managements
Report on Internal Control Over Financial Reporting

Our
management is responsible  for  establishing  and  maintaining  adequate  internal
control over  financial  reporting,  as such term is  defined in Exchange Act Rules
13a-15(f).  Under the supervision and with  the participation of our management,
including our principal  executive  officer and principal  financial officer,  we
conducted an evaluation of  the  effectiveness  of our  internal  control over  financial
reporting  based on the  framework  in  Internal  Control  -  Integrated  Framework
issued by the  Committee  of  Sponsoring  Organizations  of the Treadway  Commission.
Based on our  evaluation  under the  framework  in Internal  Control   Integrated
Framework,  our  management  concluded  that our  internal  control over financial
reporting was effective as of December  31, 2004.  Our  managements  assessment of
the  effectiveness of our internal  control  over  financial  reporting  as of  December
31,  2004 has been  audited by  Deloitte & Touche  LLP,  an  independent  registered
public  accounting firm, as stated in their report which is included herein.

Changes in
Internal Control Over Financial Reporting

There
were no  changes  in our  internal  control  over  financial  reporting  identified  in
connection  with the  evaluation  required by  paragraph (d) of Exchange Act Rule 13a-15
that occurred  during the last  fiscal quarter that have materially  affected,  or are
reasonably likely  to materially affect, our internal control over financial reporting.

59

---



REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders
ofGenta Incorporated:

We
have audited managements assessment, included in Item 9A Controls and
Procedures  Managements Report on Internal Control Over Financial
Reporting, that Genta Incorporated and subsidiaries (the Company)
maintained effective internal control over financial reporting as of December
31, 2004 based on criteria established in  Internal ControlIntegrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission.  The Companys management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting.  Our responsibility
is to express an opinion on managements assessment and an opinion on the
effectiveness of the Companys internal control over financial reporting
based on our audit.

We
conducted our audit in accordance  with the standards of the  Public  Company  Accounting
Oversight  Board  (United  States).  Those  standards  require  that  we  plan  and
perform  the  audit  to  obtain  reasonable  assurance  about  whether  effective
internal  control over  financial  reporting was maintained in all material respects.  Our
audit  included  obtaining an  understanding of internal control over financial
reporting,  evaluating managements  assessment,  testing and evaluating  the
design  and  operating  effectiveness  of  internal  control,  and  performing  such
other  procedures  as we  considered  necessary  in the  circumstances.  We believe
that our audit  provides a reasonable  basis  for our opinions.

A
companys  internal  control over  financial  reporting is a  process  designed  by,
or  under  the  supervision  of,  the  companys  principal  executive  and
principal  financial  officers,  or  persons  performing  similar  functions,  and
effected by the companys  board of  directors,  management,  and  other  personnel
to  provide  reasonable  assurance  regarding  the  reliability  of financial  reporting
and the  preparation of financial  statements for external purposes in accordance  with
generally  accepted  accounting  principles.  A companys  internal  control
over financial  reporting includes those policies and procedures  that (1)  pertain to
the  maintenance  of records  that,  in  reasonable  detail,  accurately and fairly
reflect the transactions and dispositions  of the assets of the  company;  (2) provide
reasonable  assurance  that  transactions  are  recorded  as  necessary  to  permit
preparation  of  financial  statements in accordance with generally  accepted  accounting
principles,  and that receipts and expenditures of the company are being  made only in
accordance with  authorizations of management and directors  of  the  company;  and  (3)
provide  reasonable  assurance  regarding  prevention  or timely  detection of
unauthorized  acquisition,  use, or  disposition  of the companys  assets that
could have a material  effect  on the financial statements.

Because
of the inherent  limitations  of internal  control over  financial reporting,  including
the possibility of collusion or improper  management override of controls,  material
misstatements due to error or  fraud  may not be  prevented  or  detected  on a  timely
basis.  Also,  projections  of any  evaluation  of the  effectiveness  of the
internal  control over  financial  reporting to future  periods are subject to the  risk
that the  controls  may  become  inadequate  because  of changes in  conditions,  or that
the  degree  of  compliance  with the  policies  or  procedures may deteriorate.

In
our opinion, managements assessment that the Company maintained effective
internal control over financial reporting as of December 31, 2004, is fairly stated,
in all material respects, based on the criteria established in Internal ControlIntegrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission.  Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2004,
based on the criteria established in Internal ControlIntegrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We
have also audited,  in accordance  with the standards of the  Public  Company  Accounting
Oversight  Board  (United  States),  the  consolidated  financial statements as of and
for the year ended December  31, 2004 of the Company  and our report  dated March 14,
2005  expressed  an  unqualified  opinion on those  financial  statements and included an
explanatory  paragraph  regarding the  termination of the  Collaborative  Agreement
between Aventis and the Company.

/s/ DELOITTE
& TOUCHE LLP

Parsippany, New
JerseyMarch 14, 2005

60

---



|Item 9B. |  | Other Information
|-------- |  | -----------------

None.

PART III

|Item 10. |  | Directors and Executive Officers of the Registrant
|-------- |  | --------------------------------------------------

The
information  required in this item is incorporated by reference  from the  Companys
definitive  proxy  statement  to be filed not later  than April 30, 2005 pursuant to
Regulation  14A of the General Rules and  Regulations  under  the  Securities  Exchange
Act of 1934,  as  amended  (Regulation 14A).

|Item 11. |  | Executive Compensation
|-------- |  | ----------------------

The
information  required in this item is incorporated by reference  from the  Companys
definitive  proxy  statement  to be filed not later  than April 30, 2005 pursuant to
Regulation 14A.

|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
|-------- |  | ----------------------------------------------------------------------------------------------

The
information  required in this item is incorporated by reference  from the  Companys
definitive  proxy  statement  to be filed not later  than April 30, 2005 pursuant to
Regulation 14A.

|Item 13. |  | Certain Relationships and Related Transactions
|-------- |  | ----------------------------------------------

The
information  required in this item is incorporated by reference  from the  Companys
definitive  proxy  statement  to be filed not later  than April 30, 2005 pursuant to
Regulation 14A.

|Item 14. |  | Principal Accounting Fees and Services
|-------- |  | --------------------------------------

The
information  required in this item is incorporated by reference  from the  Companys
definitive  proxy  statement  to be filed not later  than April 30, 2005 pursuant to
Regulation 14A.

61

---



PART IV

|Item 15. |  | Exhibits and Financial Statement Schedules.
|-------- |  | -------------------------------------------

|ExhibitNumber |  | Description of Document
|------------- |  | -----------------------

|3.1.a |  | Restated
Certificate of Incorporation of the Company  (incorporated by reference to Exhibit 3(i).1
to the Companys  Annual Report on Form 10-K for the year ended December 31, 1995,
Commission File No. 0-19635)
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.b |  | Certificate
of Designations of Series D Convertible  Preferred Stock of the Company  (incorporated
by reference to  Exhibit  3(i) to the  Companys  Current  Report on Form 8-K filed
on February  28,  1997,  Commission  File No.  0-19635)
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.c |  | Certificate
of Amendment of Restated  Certificate of  Incorporation  of the Company  (incorporated
by reference to  Exhibit  3(i).3 to the  Companys  Annual Report on Form 10-K for
the year ended  December 31, 1999,  Commission  File No. 0-19635)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.d |  | Amended
Certificate  of  Designations  of Series D Convertible  Preferred  Stock of the Company
(incorporated  by  reference to Exhibit  3(i).4 to the Companys  Annual Report on
Form 10-K for the year ended  December 31, 1999,  Commission File No. 0-19635)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.e |  | Certificate
of Increase of Series D  Convertible  Preferred  Stock of the Company  (incorporated  by
reference to  Exhibit  3(i).5 to the  Companys  Annual Report on Form 10-K for the
year ended  December 31, 1999,  Commission  File No. 0-19635)
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.f |  | Certificate
of Amendment of Restated  Certificate of  Incorporation  of the Company  (incorporated
by reference to  Exhibit  3(i).4 to the  Companys  Annual Report on Form 10-K for
the year ended  December 31, 1998,  Commission  File No. 0-19635)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.g |  | Certificate
of Amendment of Restated  Certificate of  Incorporation  of the Company  (incorporated
by reference to  Exhibit  3(i).3 to the  Companys  Annual Report on Form 10-K for
the year ended  December 31, 1998,  Commission  File No. 0-19635)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.h |  | Certificate
of Amendment of Restated  Certificate of  Incorporation  of the Company  (incorporated
by reference to  Exhibit  3(i).8 to the  Companys  Annual Report on Form 10-K for
the year ended  December 31, 1999,  Commission  File No. 0-19635)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.i |  | Certificate
of Amendment of Restated  Certificate of  Incorporation  of the Company  (incorporated
by reference to  Exhibit 3.1.i to the Companys Registration Statement on Form S-1,
Commission File No. 333-110238)
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.j |  | Certificate
of Amendment of Restated  Certificate of  Incorporation  of the Company  (incorporated
by reference to  Exhibit 3.1.j to the Companys Registration Statement on Form S-1,
Commission File No. 333-110238)
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1.k |  | Certificate
of Amendment of Restated  Certificate of  Incorporation  of the Company  (incorporated
by reference to  Exhibit 3.1.k to the  Companys  Quarterly  Report on Form 10-Q for
the quarter ended June 30, 2004,  Commission  File No. 0-19635
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 |  | Amended
and Restated  Bylaws of the Company  (incorporated  by reference to Exhibit 3.2 to the
Companys  Quarterly  Report on Form 10-Q for the quarter ended June 30, 2004,
Commission File No. 0-19635)
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.1 |  | Specimen
Common  Stock  Certificate  (incorporated  by  reference  to Exhibit  4.1 to the  Companys
Registration  Statement on Form S-1, Commission File No. 333-110238)
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.1 |  | Amended
and  Restated  1991 Stock Plan of Genta  Incorporated  (incorporated  by  reference  to
Exhibit 10.1 to the  Companys Registration Statement on Form S-8, Reg. No.
333-101022)
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 |  | Non-Employee
Directors 1998 Stock Option Plan, as amended and restated (incorporated by
reference to Exhibit 99.B  to the  Companys  Definitive  Proxy  Statement  on
Schedule 14A filed on April 30,  2004,  Commission  File No.  0-19635)
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 |  | 1998
Stock  Incentive  Plan,  as amended and  restated,  effective  March 19, 2004
(incorporated  by  reference to  Exhibit 99.A to the Companys  Definitive  Proxy
Statement on Schedule 14A filed on April 30, 2004,  Commission  File No. 0-19635)
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 |  | Form
of Indemnification  Agreement entered into between the Company and its directors and
officers (incorporated by  reference to Exhibit 10.7 to the Companys Registration
Statement on Form S-1, Commission File No. 0-19635)
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

62

---



|ExhibitNumber |  | Description of Document
|------------- |  | -----------------------

|10.5* |  | Development,
License and Supply  Agreement  dated February 2, 1989 between the Company and Gen-Probe
Incorporated  (incorporated  by reference to Exhibit 10.10 to the  Companys
Registration  Statement on Form S-1,  Commission  File No. 0-19635)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.6 |  | Asset
Purchase Agreement,  dated as of March 19, 1999, among JBL Acquisition Corp., JBL
Scientific Incorporated and  the Company  (incorporated by reference to Exhibit 10.2 to
the Companys Quarterly Report filed on Form 10-Q for  the quarter ended March 31,
1999, Commission File No. 0-19635)
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.7 |  | Warrant
Agreement,  dated as of December 23, 1999, among the Company,  ChaseMellon Shareholder
Services, L.L.C., as  warrant agent, and Paramount Capital,  Inc.  (incorporated by
reference to Exhibit 10.67 to the Companys Annual  Report on Form 10-K for the year
ended December 31, 1999, Commission File No. 0-19635)
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.8 |  | Employment
Letter  Agreement,  dated as of October 28, 1999,  from the Company to Raymond P.
Warrell,  Jr.,  M.D.  (incorporated  by  reference to Exhibit  10.70 to the  Companys
Annual  Report on Form 10-K for the year ended  December 31, 1999, Commission File No.
0-19635)
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.9 |  | Stock
Option  Agreement,  dated as of October 28,  1999,  between the Company and Raymond P.
Warrell,  Jr.,  M.D.  (incorporated  by  reference to Exhibit  10.71 to the  Companys
Annual  Report on Form 10-K for the year ended  December 31, 1999, Commission File No.
0-19635)
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.10 |  | Letter
Agreement,  dated March 4, 1999, from SkyePharma Plc to the Company  (incorporated  by
reference to Exhibit  10.72 to the Companys  Annual  Report on Form 10-K for the
year ended  December 31, 1999,  Commission  File No.  0-19635)
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.11 |  | Subscription
Agreement  executed  in  connection  with the  November  26,  2001 sale of common  stock
to  Franklin  Small-Mid  Cap Growth Fund,  Franklin  Biotechnology  Discovery  Fund,  and
SF Capital  Partners  Ltd.,  and the  November 30, 2001 sale of common stock to SF
Capital  Partners Ltd.  (incorporated by reference to Exhibit 10.73  to the Companys
Annual Report on Form 10-K for the year ended December 31, 2001, Commission File No.
0-19635)
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.12 |  | Employment
Letter Agreement,  dated as of March 27, 2001, from the Company to Loretta M. Itri, M.D.
(incorporated  by reference to Exhibit 10.74 to the Companys  Annual Report on Form
10-K for the year ended December 31, 2001,  Commission File No. 0-19635)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.13 |  | Agreement
of Lease dated June 28, 2000 between The Connell  Company and the Company  (incorporated
by reference to  Exhibit 10.76 to the Companys Annual Report on Form 10-K for the
year ended December 31, 2001,  Commission File  No. 0-19635)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.13A |  | Amendment
of Lease,  dated June 19, 2002 between The Connell Company and the Company  (incorporated
by reference to  Exhibit 10.10 to the  Companys  Quarterly  Report on Form 10-Q for
the quarter ended June 30, 2002,  Commission  File No. 0-19635)
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.14 |  | Agreement
of Sublease dated August 13, 2001 between  Expanets,  Inc. and the Company  (incorporated
by reference to  Exhibit 10.77 to the Companys Annual Report on Form 10-K for the
year ended December 31, 2001,  Commission File  No. 0-19635)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.15* |  | U.S.
Commercialization  Agreement  dated  April  26,  2002,  by  and  between  Genta
Incorporated  and  Aventis  Pharmaceuticals Inc.
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------

|10.15A* |  | Amendment
No. 1 dated  March 14, 2003 to the U.S.  Commercialization  Agreement  between  Genta
Incorporated  and  Aventis  Pharmaceuticals  Inc.  (incorporated by reference to Exhibit
10.1 to the Companys  Quarterly Report on  Form 10-Q for the quarter ended March
31, 2003).
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.16* |  | Ex-U.S.
Commercialization Agreement, dated April 26, 2002, by and between Genta Incorporated and
Garliston Limited
|------ |  | ------------------------------------------------------------------------------------------------------------------

|10.17* |  | Global
Supply Agreement,  dated April 26, 2002, by and among Genta Incorporated,  Aventis
Pharmaceuticals Inc. and  Garliston Limited  (incorporated by reference to Exhibit 10.3
to the Companys Quarterly Report on Form 10-Q for  the quarter ended June 30, 2002,
Commission File No. 0-19635)
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.18* |  | Securities
Purchase  Agreement,  dated April 26, 2002, by and between  Genta  Incorporated  and
Garliston  Limited  (incorporated by reference to Exhibit 10.4 to the Companys
Quarterly Report on Form 10-Q for the quarter ended  June 30, 2002, Commission File No.
0-19635)
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

63

---



|ExhibitNumber |  | Description of Document
|------------- |  | -----------------------

|10.19 |  | Standstill
and Voting  Agreement,  dated April 26, 2002, by and between Genta  Incorporated  and
Garliston  Limited  (incorporated by reference to Exhibit 10.5 to the Companys
Quarterly Report on Form 10-Q for the quarter ended  June 30, 2002, Commission File No.
0-19635)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.20 |  | Registration
Rights  Agreement,  dated April 26, 2002, by and between  Genta  Incorporated  and
Garliston  Limited  (incorporated by reference to Exhibit 10.6 to the Companys
Quarterly Report on Form 10-Q for the quarter ended  June 30, 2002, Commission File No.
0-19635)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.21 |  | Convertible
Note Purchase Agreement,  dated April 26, 2002, by and between Genta Incorporated and
Garliston Limited  (incorporated by reference to Exhibit 10.7 to the Companys
Quarterly Report on Form 10-Q for the quarter ended  June 30, 2002, Commission File No.
0-19635)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.22* |  | 5.63%
Convertible  Promissory Note, due April 26, 2009  (incorporated by reference to Exhibit
10.8 to the Companys  Quarterly Report on Form 10-Q for the quarter ended June 30,
2002, Commission File No. 0-19635)
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.23* |  | Subordination
Agreement,  dated  April  26,  2002,  by  and  between  Genta  Incorporated  and
Garliston  Limited  (incorporated by reference to Exhibit 10.9 to the Companys
Quarterly Report on Form 10-Q for the quarter ended  June 30, 2002, Commission File No.
0-19635)
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.24* |  | Manufacture
and Supply  Agreement,  dated December 20, 2002,  between Genta  Incorporated and Avecia
Biotechnology  Inc.  (incorporated by reference to Exhibit 10.88 to the Companys
Annual Report on Form 10-K for the year ended  December 31, 2002, Commission File No.
0-19635)
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.25 |  | Employment
Agreement,  dated as of December  1, 2002,  between the  Company  and  Raymond P.
Warrell,  Jr.,  M.D.  (incorporated  by reference to Exhibit  10.89 to the  Companys
Annual Report on Form 10-K/A for the year ended  December 31, 2001, Commission File No.
0-19635)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.26 |  | Employment
Agreement,  dated as of August 5, 2003, between the Company and Loretta M. Itri, M.D.
(incorporated by  reference to Exhibit 10.1 to the  Companys  Quarterly  Report on
Form 10-Q for the quarter ended June 30, 2003,  Commission File No. 0-19635)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.27* |  | License
Agreement  dated  August 1, 1991,  between  Genta  Incorporated  and the  Trustees  of
the  University  of  Pennsylvania  (incorporated  by reference to Exhibit 99.1 to the
Companys  Current  Report on Form 8-K filed on  October 28, 2003, Commission File
No. 0-19635)
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.27A* |  | Amendment
to License  Agreement,  dated  December  19, 2000,  between  Genta  Incorporated  and the
Trustees of the  University of Pennsylvania  (incorporated  by reference to Exhibit 99.2
to the Companys  Current Report on Form  8-K filed on October 28, 2003, Commission
File No. 0-19635)
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.27AA* |  | Second
Amendment to License  Agreement,  dated October 22, 2003, between Genta Incorporated and
the Trustees of the  University of Pennsylvania  (incorporated  by reference to Exhibit
99.3 to the Companys  Current Report on Form  8-K filed on October 28, 2003,
Commission File No. 0-19635)
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.28* |  | Settlement
Agreement and Release,  dated  October 22, 2003,  between  Genta  Incorporated  and the
Trustees of the  University of Pennsylvania  (incorporated  by reference to Exhibit 99.4
to the Companys  Current Report on Form  8-K filed on October 28, 2003, Commission
File No. 0-19635)
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|21 |  | Subsidiaries
of the Registrant
|-- |  | ------------------------------

|23.1 |  | Consent
of Deloitte & Touche LLP
|---- |  | --------------------------------

|31.1 |  | Certification
by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|---- |  | --------------------------------------------------------------------------------------------------

|31.2 |  | Certification
by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|---- |  | --------------------------------------------------------------------------------------------------

|32.1 |  | Certification
by Chief Executive Officer pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to
Section 906 of  the Sarbanes-Oxley Act of 2002
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

|32.2 |  | Certification
by Chief Financial Officer pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to
Section 906 of  the Sarbanes-Oxley Act of 2002
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

---

|* |  | The
Company has been granted confidential treatment of  certain portions of this exhibit.
|- |  | -----------------------------------------------------------------------------------------

64

---



SIGNATURES

Pursuant
to  the  requirements  of  Section  13 or  15(d)  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, on this 14th day of March 2005.

| | GENTA INCORPORATED                        
| | ------------------------------------------
| |                                           
| | /s/
      RAYMOND P. WARRELL, JR., M.D.   
| | Raymond
      P. Warrell, Jr., M.D.       
| | Chairman
      and Chief Executive Officer

Pursuant
to the  requirements  of the  Securities  Exchange  Act of  1934,  as amended,  this
report has been signed  below by the  following  persons on behalf of the  registrant
and in the  capacities  and on the  dates indicated.

|Signature                               | Capacity                                                                                                          | Date          
|--------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | --------------
|                                        |                                                                                                                   |               
|/s/
      RAYMOND P. WARRELL, JR., M.D. | Chairman
      and Chief Executive Officer                                                                        | March 14, 2005
|Raymond P. Warrell,
      Jr., M.D.     |                                                                                                                  
|                                        |                                                                                                                   |               
|/s/
      WILLIAM P. KEANE              | Vice President,
      Chief Financial Officer
      and Corporate Secretary (Principal 
      Accounting Officer) | March 14, 2005
|William P. Keane                        |                                                                                                                  
|                                        |                                                                                                                   |               
|/s/
      JEROME E. GROOPMAN, M.D.      | Director                                                                                                          | March 14, 2005
|Jerome E. Groopman,
      M.D.          |                                                                                                                  
|                                        |                                                                                                                   |               
|/s/
      BETSY MCCAUGHEY               | Director                                                                                                          | March 14, 2005
|Betsy McCaughey, Ph.D.                  |                                                                                                                  
|                                        |                                                                                                                   |               
|/s/
      PETER TATTLE                  | Director                                                                                                          | March 14, 2005
|Peter T. Tattle                         |                                                                                                                  
|                                        |                                                                                                                   |               
|/s/
      DANIEL D. VON HOFF, M.D.      | Director                                                                                                          | March 14, 2005
|Daniel D. Von Hoff,
      M.D.          |                                                                                                                  
|                                        |                                                                                                                   |               
|/s/
      HARLAN J. WAKOFF              | Director                                                                                                          | March 14, 2005
|Harlan J. Wakoff                        |                                                                                                                  
|                                        |                                                                                                                   |               
|/s/
      DOUGLAS G. WATSON             | Director                                                                                                          | March 14, 2005
|Douglas G. Watson                       |                                                                                                                  
|                                        |                                                                                                                   |               
|/s/
      MICHAEL S. WEISS              | Director                                                                                                          | March 14, 2004
|Michael S. Weiss                        |                                                                                                                  

65

---



|ExhibitNumber |  | Description of Document | Sequentially Numbered Pages
|------------- |  | ----------------------- | ---------------------------



|3.1.a |  | Restated
Certificate  of  Incorporation  of the Company  (incorporated  by  reference to  Exhibit
3(i).1  to the  Companys  Annual  Report  on Form  10-K for the  year  ended
December 31, 1995, Commission File No. 0-19635) | 
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.b |  | Certificate
of  Designations  of Series D  Convertible  Preferred  Stock of the  Company
(incorporated  by reference to Exhibit 3(i) to the  Companys  Current  Report on
Form  8-K filed on February 28, 1997, Commission File No. 0-19635) | 
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.c |  | Certificate
of  Amendment  of  Restated  Certificate  of  Incorporation  of the  Company
(incorporated  by reference to Exhibit  3(i).3 to the Companys  Annual Report on
Form  10-K for the year ended December 31, 1999, Commission File No. 0-19635) | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.d |  | Amended
Certificate  of  Designations  of Series D  Convertible  Preferred  Stock of the  Company
(incorporated  by reference to Exhibit 3(i).4 to the Companys  Annual Report  on
Form 10-K for the year ended December 31, 1999, Commission File No. 0-19635) | 
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.e |  | Certificate
of  Increase  of  Series  D  Convertible  Preferred  Stock  of  the  Company
(incorporated  by reference to Exhibit  3(i).5 to the Companys  Annual Report on
Form  10-K for the year ended December 31, 1999, Commission File No. 0-19635) | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.f |  | Certificate
of  Amendment  of  Restated  Certificate  of  Incorporation  of the  Company
(incorporated  by reference to Exhibit  3(i).4 to the Companys  Annual Report on
Form  10-K for the year ended December 31, 1998, Commission File No. 0-19635) | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.g |  | Certificate
of  Amendment  of  Restated  Certificate  of  Incorporation  of the  Company
(incorporated  by reference to Exhibit  3(i).3 to the Companys  Annual Report on
Form  10-K for the year ended December 31, 1998, Commission File No. 0-19635) | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.h |  | Certificate
of  Amendment  of  Restated  Certificate  of  Incorporation  of the  Company
(incorporated  by reference to Exhibit  3(i).8 to the Companys  Annual Report on
Form  10-K for the year ended December 31, 1999, Commission File No. 0-19635) | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.i |  | Certificate
of  Amendment  of  Restated  Certificate  of  Incorporation  of the  Company
(incorporated  by reference to Exhibit 3.1.i to the Companys  Registration
Statement  on Form S-1, Commission File No. 333-110238) | 
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.j |  | Certificate
of  Amendment  of  Restated  Certificate  of  Incorporation  of the  Company
(incorporated  by reference to Exhibit 3.1.j to the Companys  Registration
Statement  on Form S-1, Commission File No. 333-110238) | 
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|3.1.k |  | Certificate
of  Amendment  of  Restated  Certificate  of  Incorporation  of the  Company
(incorporated by reference to Exhibit 3.1.k to the Companys  Quarterly Report on
Form  10-Q for the quarter ended June 30, 2004, Commission File No. 0-19635 | 
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 

|3.2 |  | Amended
and Restated Bylaws of the Company  (incorporated  by reference to Exhibit 3.2 to  the
Companys  Quarterly  Report on Form 10-Q for the  quarter  ended June 30,  2004,
Commission File No. 0-19635) | 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|4.1 |  | Specimen
Common  Stock  Certificate  (incorporated  by  reference  to Exhibit 4.1 to the  Companys
Registration Statement on Form S-1, Commission File No. 333-110238) | 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.1 |  | Amended
and Restated 1991 Stock Plan of Genta Incorporated  (incorporated by reference to
Exhibit 10.1 to the Companys Registration Statement on Form S-8, Reg. No.
333-101022) | 
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.2 |  | Non-Employee
Directors 1998 Stock Option Plan, as amended and restated (incorporated by
reference to Exhibit 99.B to the Companys  Definitive Proxy Statement on Schedule
14A  filed on April 30, 2004, Commission File No. 0-19635) | 
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

66

---



|ExhibitNumber |  | Description of Document | Sequentially Numbered Pages
|------------- |  | ----------------------- | ---------------------------

|10.3 |  | 1998
Stock  Incentive  Plan,  as  amended  and  restated,  effective  March  19,  2004
(incorporated  by  reference  to  Exhibit  99.A  to  the  Companys  Definitive
Proxy  Statement on Schedule 14A filed on April 30, 2004, Commission File No. 0-19635) | 
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.4 |  | Form
of Indemnification  Agreement entered into between the Company and its directors and
officers  (incorporated  by reference to Exhibit  10.7 to the  Companys
Registration  Statement on Form S-1, Commission File No. 0-19635) | 
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 

|10.5* |  | Development,
License and Supply Agreement dated February 2, 1989 between the Company and  Gen-Probe
Incorporated  (incorporated  by reference to Exhibit 10.10 to the Companys
Registration Statement on Form S-1, Commission File No. 0-19635) | 
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 

|10.6 |  | Asset
Purchase  Agreement,  dated as of March 19, 1999, among JBL Acquisition  Corp., JBL
Scientific  Incorporated and the Company (incorporated by reference to Exhibit 10.2 to
the  Companys  Quarterly  Report  filed on Form 10-Q for the quarter  ended March
31,  1999, Commission File No. 0-19635) | 
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.7 |  | Warrant
Agreement,  dated as of  December  23,  1999,  among  the  Company,  ChaseMellon
Shareholder  Services,  L.L.C.,  as  warrant  agent,  and  Paramount  Capital,  Inc.
(incorporated  by reference to Exhibit  10.67 to the  Companys  Annual Report on
Form  10-K for the year ended December 31, 1999, Commission File No. 0-19635) | 
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.8 |  | Employment
Letter  Agreement,  dated as of October 28, 1999, from the Company to Raymond  P.
Warrell,  Jr., M.D.  (incorporated  by reference to Exhibit 10.70 to the Companys
Annual Report on Form 10-K for the year ended December 31, 1999,  Commission  File No.
0-19635) | 
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.9 |  | Stock
Option Agreement,  dated as of October 28, 1999, between the Company and Raymond P.
Warrell,  Jr.,  M.D.  (incorporated  by  reference to Exhibit  10.71 to the  Companys
Annual Report on Form 10-K for the year ended December 31, 1999,  Commission  File No.
0-19635) | 
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.10 |  | Letter
Agreement,  dated March 4, 1999, from SkyePharma Plc to the Company  (incorporated  by
reference to Exhibit  10.72 to the  Companys  Annual  Report on Form 10-K for the
year ended December 31, 1999, Commission File No. 0-19635) | 
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.11 |  | Subscription
Agreement  executed in connection with the November 26, 2001 sale of common  stock to
Franklin Small-Mid Cap Growth Fund,  Franklin  Biotechnology  Discovery Fund,  and SF
Capital  Partners  Ltd.,  and the  November 30, 2001 sale of common stock to SF  Capital
Partners  Ltd.  (incorporated  by reference to Exhibit 10.73 to the Companys
Annual Report on Form 10-K for the year ended December 31, 2001,  Commission  File No.
0-19635) | 
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.12 |  | Employment
Letter  Agreement,  dated as of March 27, 2001, from the Company to Loretta M.  Itri,
M.D.  (incorporated by reference to Exhibit 10.74 to the Companys Annual Report  on
Form 10-K for the year ended December 31, 2001, Commission File No. 0-19635) | 
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 

|10.13 |  | Agreement
of Lease  dated June 28,  2000  between  The  Connell  Company and the Company
(incorporated  by reference to Exhibit  10.76 to the  Companys  Annual Report on
Form  10-K for the year ended December 31, 2001, Commission File No. 0-19635) | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

67

---



|ExhibitNumber |  | Description of Document | Sequentially Numbered Pages
|------------- |  | ----------------------- | ---------------------------

|10.13A |  | Amendment
of Lease,  dated June 19, 2002  between  The  Connell  Company and the Company
(incorporated by reference to Exhibit 10.10 to the Companys  Quarterly Report on
Form  10-Q for the quarter ended June 30, 2002, Commission File No. 0-19635) | 
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.14 |  | Agreement
of Sublease  dated  August 13, 2001  between  Expanets,  Inc.  and the Company
(incorporated  by reference to Exhibit  10.77 to the  Companys  Annual Report on
Form  10-K for the year ended December 31, 2001, Commission File No. 0-19635) | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.15* |  | U.S.
Commercialization  Agreement dated April 26, 2002, by and between Genta Incorporated  and
Aventis Pharmaceuticals Inc. | 
|------ |  | --------------------------------------------------------------------------------------------------------------------------- | 

|10.15A* |  | Amendment
No. 1 dated March 14,  2003 to the U.S.  Commercialization  Agreement  between  Genta
Incorporated  and Aventis  Pharmaceuticals  Inc.  (incorporated by reference to  Exhibit
10.1 to the  Companys  Quarterly  Report on Form 10-Q for the quarter  ended  March
31, 2003). | 
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.16* |  | Ex-U.S.
Commercialization  Agreement,  dated  April  26,  2002,  by  and  between  Genta
Incorporated and Garliston  Limited  (incorporated by reference to Exhibit 10.2 to the
Companys  Quarterly  Report  on Form  10-Q  for the  quarter  ended  June  30,
2002,  Commission File No. 0-19635) | 
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.17* |  | Global
Supply Agreement,  dated April 26, 2002, by and among Genta Incorporated,  Aventis
Pharmaceuticals Inc. and Garliston Limited  (incorporated by reference to Exhibit 10.3
to the  Companys  Quarterly  Report on Form 10-Q for the quarter ended June 30,
2002,  Commission File No. 0-19635) | 
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.18* |  | Securities
Purchase  Agreement,  dated April 26, 2002, by and between Genta Incorporated  and
Garliston  Limited  (incorporated  by reference to Exhibit 10.4 to the  Companys
Quarterly  Report on Form 10-Q for the quarter  ended June 30, 2002,  Commission  File
No. 0-19635) | 
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.19 |  | Standstill
and Voting Agreement,  dated April 26, 2002, by and between Genta Incorporated  and
Garliston  Limited  (incorporated  by reference to Exhibit 10.5 to the  Companys
Quarterly  Report on Form 10-Q for the quarter  ended June 30, 2002,  Commission  File
No. 0-19635) | 
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 

|10.20 |  | Registration
Rights Agreement,  dated April 26, 2002, by and between Genta  Incorporated  and
Garliston  Limited  (incorporated  by reference to Exhibit 10.6 to the  Companys
Quarterly  Report on Form 10-Q for the quarter  ended June 30, 2002,  Commission  File
No. 0-19635) | 
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.21 |  | Convertible
Note  Purchase  Agreement,  dated  April  26,  2002,  by and  between  Genta
Incorporated and Garliston  Limited  (incorporated by reference to Exhibit 10.7 to the
Companys  Quarterly  Report  on Form  10-Q  for the  quarter  ended  June  30,
2002,  Commission File No. 0-19635) | 
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.22* |  | 5.63%
Convertible  Promissory  Note,  due April 26, 2009  (incorporated  by reference to
Exhibit  10.8 to the  Companys  Quarterly  Report on Form 10-Q for the quarter
ended  June 30, 2002, Commission File No. 0-19635) | 
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.23* |  | Subordination
Agreement,  dated April 26, 2002,  by and between Genta  Incorporated  and  Garliston
Limited  (incorporated  by  reference  to  Exhibit  10.9  to the  Companys
Quarterly  Report on Form 10-Q for the quarter  ended June 30, 2002,  Commission  File
No. 0-19635) | 
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.24* |  | Manufacture
and Supply  Agreement,  dated December 20, 2002,  between Genta  Incorporated  and Avecia
Biotechnology  Inc.  (incorporated  by reference  to Exhibit  10.88 to the  Companys
Annual Report on Form 10-K for the year ended December 31, 2002,  Commission  File No.
0-19635) | 
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.25 |  | Employment
Agreement,  dated as of December 1, 2002,  between the Company and Raymond P.  Warrell,
Jr.,  M.D.  (incorporated  by  reference to Exhibit  10.89 to the  Companys  Annual
Report on Form 10-K/A for the year ended  December 31, 2001,  Commission  File  No.
0-19635) | 
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 

68

---



|ExhibitNumber |  | Description of Document | Sequentially Numbered Pages
|------------- |  | ----------------------- | ---------------------------

|10.26 |  | Employment
Agreement,  dated as of August 5, 2003,  between  the  Company and Loretta M.  Itri,
M.D.  (incorporated  by reference to Exhibit  10.1 to the  Companys  Quarterly
Report on Form 10-Q for the quarter ended June 30, 2003, Commission File No. 0-19635) | 
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.27* |  | License
Agreement dated August 1, 1991,  between Genta  Incorporated and the Trustees of  the
University  of  Pennsylvania  (incorporated  by  reference to Exhibit 99.1 to the  Companys
Current Report on Form 8-K filed on October 28, 2003,  Commission  File No.  0-19635) | 
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.27A* |  | Amendment
to License  Agreement,  dated December 19, 2000, between Genta Incorporated and  the
Trustees of the University of Pennsylvania  (incorporated  by reference to Exhibit  99.2
to the  Companys  Current  Report  on Form  8-K  filed  on  October  28,  2003,
Commission File No. 0-19635) | 
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.27AA* |  | Second
Amendment  to  License  Agreement,  dated  October  22,  2003,  between  Genta
Incorporated  and the Trustees of the  University  of  Pennsylvania  (incorporated  by
reference  to  Exhibit  99.3 to the  Companys  Current  Report  on Form 8-K  filed
on  October 28, 2003, Commission File No. 0-19635) | 
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|10.28 |  | Settlement
Agreement and Release,  dated October 22, 2003, between Genta Incorporated and  the
Trustees of the University of Pennsylvania  (incorporated  by reference to Exhibit  99.4
to the  Companys  Current  Report  on Form  8-K  filed  on  October  28,  2003,
Commission File No. 0-19635) | 
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|21 |  | Subsidiaries
of the Registrant | 
|-- |  | ------------------------------ | 

|23.1 |  | Consent
of Deloitte & Touche LLP | 
|---- |  | -------------------------------- | 

|31.1 |  | Certification
by Chief Executive  Officer  pursuant to Section 302 of the  Sarbanes-Oxley  Act of 2002 | 
|---- |  | ------------------------------------------------------------------------------------------------------ | 

|31.2 |  | Certification
by Chief Financial  Officer  pursuant to Section 302 of the  Sarbanes-Oxley  Act of 2002 | 
|---- |  | ------------------------------------------------------------------------------------------------------ | 

|32.1 |  | Certification
by Chief Executive  Officer pursuant to 18 U.S.C.  Section 1350, as adopted  pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 | 
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------- | 

|32.2 |  | Certification
by Chief Financial  Officer pursuant to 18 U.S.C.  Section 1350, as adopted  pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 | 
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------- | 

69

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