<PAGE>   1
=============================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-Q

[ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE PERIOD ENDED NOVEMBER 30, 1997
                                       OR
[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ____________ TO ______________

                         COMMISSION FILE NUMBER 0-24050

                          NORTHFIELD LABORATORIES INC.
             (Exact name of registrant as specified in its charter)
<TABLE>
   <S>                                                                   <C>
                        DELAWARE                                               36-3378733
              (State or other jurisdiction                                  (I.R.S. Employer
            of incorporation or organization)                            Identification Number)
   
   1560 SHERMAN AVENUE, SUITE 1000, EVANSTON, ILLINOIS                         60201-4800
        (Address of principal executive offices)                               (Zip Code)
</TABLE>

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  (847) 864-3500

FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT: NOT APPLICABLE

         INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.

                YES  X                                 NO 
                    ---                                   ---

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

         INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS
AND REPORTS REQUIRED TO BE FILED BY SECTION 12, 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN
CONFIRMED BY A COURT.       YES ___                    NO __

  AS OF NOVEMBER 30, 1997, REGISTRANT HAD 14,092,375 SHARES OF COMMON STOCK
                                 OUTSTANDING.


=============================================================
<PAGE>   2











                     NORTHFIELD LABORATORIES INC.
                     (a company in the development stage)

                     Financial Statements

                     November 30, 1997

                     (See accompanying review report of
                     KPMG Peat Marwick LLP)









<PAGE>   3
                                                                     

                     INDEPENDENT AUDITORS' REVIEW REPORT


The Board of Directors
Northfield Laboratories Inc.:


We have reviewed the balance sheet of Northfield Laboratories Inc. (a company
in the development stage) as of November 30, 1997, the related statements of
operations for the three months ended November 30, 1997 and 1996, and the
related statements of operations, shareholders' equity (deficit), and cash
flows for the six months ended November 30, 1997 and 1996, and for the period
from June 19, 1985 (inception) through November 30, 1997.  These financial
statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the 
American Institute of Certified Public Accountants.  A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters.  It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted       
auditing standards, the balance sheet of Northfield Laboratories Inc. as of May
31, 1997, and the related statements of operations, shareholders' equity
(deficit), and cash flows for the year then ended and for the period from June
19, 1985 (inception) through May 31, 1997 (not presented herein); and in our
report dated July 3, 1997, we expressed an unqualified opinion on those
financial statements.  In our opinion, the information set forth in the
accompanying balance sheet as of May 31, 1997 and in the accompanying statement
of shareholders' (deficit) is fairly stated, in all material respects, in
relation to the statements from which it has been derived.


                                    /s/ KPMG PEAT MARWICK LLP


December 22, 1997





<PAGE>   4


NORTHFIELD LABORATORIES INC.
(a company in the development stage)

Balance Sheets

November 30, 1997 (unaudited) and May 31, 1997

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       November 30,     May 31,
                                             ASSETS                                                        1997          1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                 <C>               <C>
Current assets:
  Cash                                                                                              $    10,175,279    21,367,496
  Short-term marketable securities                                                                       45,656,875    38,926,904
  Prepaid expenses                                                                                          221,647       334,875
  Other current assets                                                                                      241,793       417,693
------------------------------------------------------------------------------------------------------------------------------------
Total current assets                                                                                     56,295,594    61,046,968

Property, plant and equipment, net                                                                        3,155,676     1,263,361
Other assets                                                                                                 27,758        32,432
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    $    59,479,028    62,342,761
------------------------------------------------------------------------------------------------------------------------------------
                              LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------------------------------------
Current liabilities:
  Accounts payable                                                                                          448,528       656,816
  Accrued expenses                                                                                          101,759       121,559
  Accrued compensation and benefits                                                                         264,168       175,800
------------------------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                                                   814,455       954,175
------------------------------------------------------------------------------------------------------------------------------------
Other liabilities                                                                                            91,760        93,823
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                                                                           906,215     1,047,998
------------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
  Preferred stock, $.01 par value.  Authorized 5,000,000 shares;                                    
    none issued and outstanding                                                                                   -             -
  Common stock, $.01 par value.  Authorized 20,000,000 shares;                                      
    issued and outstanding 14,092,375 shares at                                                     
    November 30, 1997 and May 31, 1997                                                                      140,924       140,924
  Additional paid-in capital                                                                            116,011,985   116,011,985
  Deficit accumulated during the development stage                                                      (57,580,096)  (54,856,862)
  Deferred compensation                                                                                           -       (1,284)
------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity                                                                               58,572,813    61,294,763
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    $    59,479,028    62,342,761
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying independent auditors' review report.




<PAGE>   5



NORTHFIELD LABORATORIES INC.
(a company in the development stage)

Statements of Operations

Three and six months ended November 30, 1997 and 1996 and for the period from
June 19, 1985 (inception) through November 30, 1997

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                                    Cumulative   
                                                                Three months                    Six months             from
                                                             ended November 30,             ended November 30,     June 19, 1985   
                                                       --------------------------------------------------------       through
                                                           1997           1996              1997         1996      Nov. 30, 1997
---------------------------------------------------------------------------------------------------------------------------------
                                                       (unaudited)     (unaudited)      (unaudited)   (unaudited)   (unaudited)
<S>                                                  <C>               <C>             <C>            <C>           <C>
Revenues - license income                            $         -                 -             -              -       3,000,000
Costs and expenses:
 Research and development                              1,565,291         1,419,212      3,151,025      2,679,167     48,762,790
 General and administrative                              622,031           541,280      1,204,496      1,080,145     25,765,405
---------------------------------------------------------------------------------------------------------------------------------
                                                       2,187,322         1,960,492      4,355,521      3,759,312     74,528,195
---------------------------------------------------------------------------------------------------------------------------------
Other income and expense:
 Interest income                                         793,882           821,387      1,632,287      1,649,927     14,031,333
 Interest expense                                              -                 -              -              -         83,234
---------------------------------------------------------------------------------------------------------------------------------
                                                         793,882           821,387      1,632,287      1,649,927     13,948,099
---------------------------------------------------------------------------------------------------------------------------------
Net loss                                             $(1,393,440)       (1,139,105)    (2,723,234)    (2,109,385)   (57,580,096)
=================================================================================================================================
Net loss per share                                   $     (0.10)            (0.08)         (0.19)         (0.15)         (7.28)
=================================================================================================================================
Shares used in calculation of per share data          14,092,375        13,984,825     14,092,375     13,893,491      7,911,293
=================================================================================================================================
</TABLE>

See accompanying independent auditors' review report.




<PAGE>   6

NORTHFIELD LABORATORIES INC.
(a company in the development stage)

Statement of Shareholders' Equity (Deficit)

Six months ended November 30, 1997 and for
the period from June 19, 1985 (inception to
November 30, 1997)



<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Preferred stock
                                                                                                      --------------------
                                                                                                    Number           Aggregate
                                                                                                   of shares          amount
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                 <C>             <C>
Issuance of common shares at $0.002 per share on August 27, 1985                                        -           $     -   
Issuance of Series A convertible preferred shares at $4.00 per share on                                                       
  August 27, 1985 (net of costs of issuance of $79,150)                                                 -                 -   
Net loss                                                                                                -                 -   
------------------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1986                                                                                 -                 -   
Net loss                                                                                                -                 -   
Deferred compensation relating to grant of stock options                                                -                 -   
Amortization of deferred compensation                                                                   -                 -   
------------------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1987                                                                                 -                 -   
Issuance of Series B convertible preferred shares at $35.68 per share on                                                      
  August 14, 1987 (net of costs of issuance of $75,450)                                                 -                 -   
Net loss                                                                                                -                 -   
Amortization of deferred compensation                                                                   -                 -   
------------------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1988                                                                                 -                 -   
Issuance of common shares at $24.21 per share on June 7, 1988 (net of costs of issuance of $246,000)    -                 -   
Conversion of Series A convertible preferred shares to common shares on June 7, 1988                    -                 -   
Conversion of Series B convertible preferred shares to common shares on June 7, 1988                    -                 -   
Exercise of stock options at $2.00 per share                                                            -                 -   
Issuance of common shares at $28.49 per share on March 6, 1989 (net of costs of issuance of $21,395)    -                 -   
Issuance of common shares at $28.49 per share on March 30, 1989 (net of costs of issuance of $10,697)   -                 -   
Sale of options at $28.29 per share to purchase common shares at $.20 per share on                                            
  March 30, 1989 (net of costs of issuance of $4,162)                                                   -                 -   
Net loss                                                                                                -                 -   
Deferred compensation relating to grant of stock options                                                -                 -   
Amortization of deferred compensation                                                                   -                 -   
------------------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1989                                                                                 -                 -   
Net loss                                                                                                -                 -   
Deferred compensation relating to grant of stock options                                                -                 -   
Amortization of deferred compensation                                                                   -                 -   
------------------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1990                                                                                 -                 -   
Net loss                                                                                                -                 -   
Amortization of deferred compensation                                                                   -                 -   
------------------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1991                                                                                 -                 -   
Exercise of stock warrants at $5.60 per share                                                           -                 -   
Net loss                                                                                                -                 -   
Amortization of deferred compensation                                                                   -                 -   
------------------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1992                                                                                 -                 -   
Exercise of stock warrants at $7.14 per share                                                           -                 -   
Issuance of common shares at $15.19 per share on April 19, 1993 (net of costs of issuance of $20,724)   -                 -   
Net loss                                                                                                -                 -   
Amortization of deferred compensation                                                                   -                 -   
------------------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1993                                                                                 -           $     -   
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>                                                                    




                                                        (Continued)
<PAGE>   7

NORTHFIELD LABORATORIES INC.
(a company in the development stage)

Statement of Shareholders' Equity (Deficit)

Six months ended November 30, 1997 and for
the period from June 19, 1985 (inception to
November 30, 1997)

<TABLE>                                                       
<CAPTION>                                                     
-----------------------------------------------------------------------------------------------------------------------------------
                                Series A convertible       Series B convertible                  Deficit                  Total
       Common stock                preferred stock           preferred stock                   accumulated                share-
--------------------------  -------------------------    -----------------------   Additional   during the    Deferred   holders'
 Number          Aggregate   Number         Aggregate     Number      Aggregate     paid-in    development     compen-    equity 
of shares         amount    of shares        amount      of shares     amount       capital       stage        sation    (deficit) 
-----------------------------------------------------------------------------------------------------------------------------------
<S>           <C>            <C>            <C>           <C>        <C>       <C>          <C>           <C>            <C>
3,500,000     $     35,000          -       $       -         -      $      -     (28,000)            -            -          7,000 
        -                -    250,000         250,000         -             -     670,850             -            -        920,850
        -                -          -               -         -             -           -      (607,688)           -       (607,688)
-----------------------------------------------------------------------------------------------------------------------------------
3,500,000           35,000    250,000         250,000         -             -     642,850      (607,688)           -        320,162
        -                -          -               -         -             -           -    (2,429,953)           -     (2,429,953)
        -                -          -               -         -             -   2,340,000             -   (2,340,000)             -
        -                -          -               -         -             -           -             -      720,000        720,000
-----------------------------------------------------------------------------------------------------------------------------------
3,500,000           35,000    250,000         250,000         -             -   2,982,850    (3,037,641)  (1,620,000)    (1,389,791)
        -                -          -               -   200,633       200,633   6,882,502             -            -      7,083,135
        -                -          -               -         -             -           -    (3,057,254)           -     (3,057,254)
        -                -          -               -         -             -           -             -      566,136        566,136
-----------------------------------------------------------------------------------------------------------------------------------
3,500,000           35,000    250,000         250,000   200,633       200,633   9,865,352    (6,094,895)  (1,053,864)     3,202,226
  413,020            4,130          -               -         -             -   9,749,870             -            -      9,754,000
1,250,000           12,500   (250,000)       (250,000)        -             -     237,500             -            -              -
1,003,165           10,032          -               -  (200,633)     (200,633)    190,601             -            -              -
   47,115              471          -               -         -             -      93,759             -            -         94,230
  175,525            1,755          -               -         -             -   4,976,855             -            -      4,978,610
   87,760              878          -               -         -             -   2,488,356             -            -      2,489,234
        -                -          -               -         -             -   7,443,118             -            -      7,443,118
        -                -          -               -         -             -           -      (791,206)           -       (791,206)
        -                -          -               -         -             -     683,040             -     (683,040)             -
        -                -          -               -         -             -           -             -      800,729        800,729
-----------------------------------------------------------------------------------------------------------------------------------
6,476,585           64,766          -               -         -             -  35,728,451    (6,886,101)    (936,175)    27,970,941
        -                -          -               -         -             -           -    (3,490,394)           -     (3,490,394)
        -                -          -               -         -             -     699,163             -     (699,163)             -
        -                -          -               -         -             -           -             -      546,278        546,278
-----------------------------------------------------------------------------------------------------------------------------------
6,476,585           64,766          -               -         -             -  36,427,614   (10,376,495)  (1,089,060)    25,026,825
        -                -          -               -         -             -           -    (5,579,872)           -     (5,579,872)
        -                -          -               -         -             -           -             -      435,296        435,296
-----------------------------------------------------------------------------------------------------------------------------------
6,476,585           64,766          -               -         -             -  36,427,614   (15,956,367)    (653,764)    19,882,249
   90,000              900          -               -         -             -     503,100             -            -        504,000
        -                -          -               -         -             -           -    (7,006,495)           -     (7,006,495)
        -                -          -               -         -             -           -             -      254,025        254,025
-----------------------------------------------------------------------------------------------------------------------------------
6,566,585           65,666          -               -         -             -  36,930,714   (22,962,862)    (399,739)    13,633,779
   15,000              150          -               -         -             -     106,890             -            -        107,040
  374,370            3,744          -               -         -             -   5,663,710             -            -      5,667,454
        -                -          -               -         -             -           -    (8,066,609)           -     (8,066,609)
        -                -          -               -         -             -           -             -      254,025        254,025
-----------------------------------------------------------------------------------------------------------------------------------
6,955,955     $     69,560          -        $      -         -      $      -  42,701,314   (31,029,471)    (145,714)    11,595,689
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       



                                                        
<PAGE>   8


NORTHFIELD LABORATORIES INC.
(a company in the development stage)

Statement of Shareholders' Equity (Deficit), Continued

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                              Preferred stock
                                                                                                       -----------------------------
                                                                                                         Number           Aggregate
                                                                                                        of shares          amount
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                     <C>            <C>
Net loss                                                                                                        -      $          -
Issuance of common shares at $6.50 per share on May 26, 1994 (net of costs of issuance of $2,061,149)           -                 -
Cancellation of stock options                                                                                   -                 -
Amortization of deferred compensation                                                                           -                 -
------------------------------------------------------------------------------------------------------------------------------------

Balance at May 31, 1994                                                                                         -                 -
Net loss                                                                                                        -                 -
Issuance of common shares at $6.50 per share on June 20, 1994 (net of issuance costs of $172,500)               -                 -
Exercise of stock options at $7.14 per share                                                                    -                 -
Exercise of stock options at $2.00 per share                                                                    -                 -
Cancellation of stock options                                                                                   -                 -
Amortization of deferred compensation                                                                           -                 -
------------------------------------------------------------------------------------------------------------------------------------

Balance at May 31, 1995                                                                                         -                 -
Net loss                                                                                                        -                 -
Issuance of common stock at $17.75 per share on August 9, 1995 (net of issuance costs of $3,565,125)            -                 -
Issuance of common stock at $17.75 per share on September 11, 1995 (net of issuance costs of $423,238)          -                 -
Exercise of stock options at $2.00 per share                                                                    -                 -
Exercise of stock options at $6.38 per share                                                                    -                 -
Exercise of stock options at $7.14 per share                                                                    -                 -
Cancellation of stock options                                                                                   -                 -
Amortization of deferred compensation                                                                           -                 -
------------------------------------------------------------------------------------------------------------------------------------

Balance at May 31, 1996                                                                                         -                 -
Net loss                                                                                                        -                 -
Exercise of stock options at $0.20 per share                                                                    -                 -
Exercise of stock options at $2.00 per share                                                                    -                 -
Exercise of stock options at $7.14 per share                                                                    -                 -
Amortization of deferred compensation                                                                           -                 -
------------------------------------------------------------------------------------------------------------------------------------

Balance at May 31, 1997                                                                                         -                 -
Net loss (unaudited)                                                                                            -                 -
Amortization of deferred compensation (unaudited)                                                               -                 -
------------------------------------------------------------------------------------------------------------------------------------

Balance at November 30, 1997 (unaudited)                                                                        -      $          -
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying independent auditors' review report.


                                                                                


                        
                                                                (Continued)
<PAGE>   9


NORTHFIELD LABORATORIES INC.
(a company in the development stage)

Statement of Shareholders' Equity (Deficit), Continued

<TABLE>
<CAPTION>

                                     Series A convertible   Series B convertible                  Deficit                 Total
         Common stock                  preferred stock        preferred stock                   accumulated               share-
------------------------------    -----------------------   ---------------------   Additional   during the   Deferred   holders'   
   Number            Aggregate      Number      Aggregate   Number      Aggregate    paid-in    development   compen-     equity 
 of shares            amount      of shares      amount    of shares     amount      capital       stage       sation    (deficit)
----------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>           <C>           <C>          <C>         <C>  <C>            <C>          <C>      <C>
           -       $        -         -        $     -          -      $     -             -    (7,363,810)        -   (7,363,810)
   2,500,000           25,000         -              -          -            -    14,163,851             -         -   14,188,851
           -                -         -              -          -            -       (85,400)            -    85,400            -  
           -                -         -              -          -            -             -             -       267          267  
----------------------------------------------------------------------------------------------------------------------------------
   9,455,955           94,560         -              -          -            -    56,779,765   (38,393,281)  (60,047)  18,420,997  
           -                -         -              -          -            -             -    (7,439,013)        -   (7,439,013)  
     375,000            3,750         -              -          -            -     2,261,250             -         -    2,265,000  
      10,000              100         -              -          -            -        71,300             -         -       71,400  
     187,570            1,875         -              -          -            -       373,264             -         -      375,139  
           -                -         -              -          -            -      (106,750)            -   106,750            -  
           -                -         -              -          -            -             -             -   (67,892)     (67,892)  
----------------------------------------------------------------------------------------------------------------------------------
  10,028,525          100,285         -              -          -            -    59,378,829   (45,832,294)  (21,189)  13,625,631  
           -                -         -              -          -            -             -    (4,778,875)        -   (4,778,875)
   2,925,000           29,250         -              -          -            -    48,324,374             -         -   48,353,624  
     438,750            4,388         -              -          -            -     7,360,187             -         -    7,364,575  
     182,380            1,824         -              -          -            -       362,937             -         -      364,761  
       1,500               15         -              -          -            -         9,555             -         -        9,570  
      10,000              100         -              -          -            -        71,300             -         -       71,400  
           -                -         -              -          -            -       (80,062)            -    80,062            -  
           -                -         -              -          -            -             -             -   (62,726)     (62,726)  
----------------------------------------------------------------------------------------------------------------------------------
  13,586,155          135,862         -              -          -            -   115,427,120   (50,611,169)   (3,853)  64,947,960  
           -                -         -              -          -            -             -    (4,245,693)        -   (4,245,693)  
     263,285            2,633         -              -          -            -        50,025             -         -       52,658  
     232,935            2,329         -              -          -            -       463,540             -         -      465,869  
      10,000              100         -              -          -            -        71,300             -         -       71,400  
           -                -         -              -          -            -             -             -     2,569        2,569  
----------------------------------------------------------------------------------------------------------------------------------
  14,092,375          140,924         -              -          -            -   116,011,985   (54,856,862)   (1,284)  61,294,763  
           -                -         -              -          -            -             -    (2,723,234)        -   (2,723,234)  
           -                -         -              -          -            -             -             -     1,284        1,284  
----------------------------------------------------------------------------------------------------------------------------------
  14,092,375       $  140,924         -        $     -          -     $      -   116,011,985   (57,580,096)         -   58,572,813  
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
        


                                                        (Continued)
<PAGE>   10


NORTHFIELD LABORATORIES INC.
(a company in the development stage)

Statements of Cash Flows

Six months ended November 30, 1997 and 1996 and for the period from
June 19, 1985 (inception) through November 30, 1997

<TABLE>
<CAPTION>
================================================================================================
                                                                                   
                                                                                   Cumulative
                                                                                      from
                                                  Six months ended November 30,   June 19, 1985   
                                                  -----------------------------      through
                                                       1997             1996       Nov. 30, 1997
------------------------------------------------------------------------------------------------
                                                   (unaudited)       (unaudited)    (unaudited)
<S>                                                <C>               <C>           <C>
Cash flows from operating activities:
  Net loss                                         $ (2,723,234)     (2,109,385)   (57,580,096)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
      Depreciation and amortization                     200,505         242,505     13,067,628
      Amortization of deferred compensation               1,284           1,286      3,449,991
      Loss on sale of equipment                            -               -            66,359
      Changes in assets and liabilities:
        Prepaid expenses                                113,228         147,618       (221,647)
        Other current assets                            120,899          (1,342)    (2,183,878)
        Other assets                                      4,168          24,999        (43,156)
        Accounts payable                               (208,288)       (519,224)       448,528
        Accrued expenses                                (19,800)        (60,813)       101,759
        Accrued compensation and benefits                88,368          13,319        264,168
        Other liabilities                                (2,063)         (8,251)        91,760
------------------------------------------------------------------------------------------------
Net cash used in operating activities                (2,424,933)     (2,269,288)   (42,538,584)
------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Purchase of property, plant, equipment, and
    capitalized engineering costs                    (2,037,313)       (189,796)   (14,408,767)
  Proceeds from matured marketable securities        25,039,199      28,049,200    260,781,580
  Proceeds from sale of marketable securities              -               -         7,141,656
  Purchase of marketable securities                 (31,769,170)    (27,018,996)  (313,580,112)
  Proceeds from sale of equipment                          -               -            76,587
------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities  (8,767,284)        840,408    (59,989,056)
------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Proceeds from issuance of common stock                   -            343,867    102,327,828
  Payment of common stock issuance costs                   -               -        (5,072,012)
  Proceeds from issuance of preferred stock                -               -         6,644,953
  Proceeds from sale of stock options to
    purchase common shares                                 -               -         7,443,118
  Proceeds from issuance of notes payable                  -               -         1,500,000
  Repayment of notes payable                               -               -          (140,968)
------------------------------------------------------------------------------------------------
Net cash provided by financing activities                  -            343,867    112,702,919
------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                     (11,192,217)     (1,085,013)    10,175,279

Cash at beginning of period                          21,367,496      11,688,744           -
------------------------------------------------------------------------------------------------
Cash at end of period                              $ 10,175,279      10,603,731     10,175,279
================================================================================================
</TABLE>

See accompanying independent auditors' review report.



<PAGE>   11



NORTHFIELD LABORATORIES INC.
(a company in the development stage)

Notes to Financial Statements

November 30, 1997

===============================================================================


(1) BASIS OF PRESENTATION

    The interim financial statements presented are unaudited but, in the
    opinion of management, have been prepared in conformity with generally
    accepted accounting principles applied on a basis consistent with those of
    the annual financial statements.  Such interim financial statements reflect
    all adjustments (consisting of normal recurring accruals) necessary for a
    fair presentation of the financial position and the results of operations
    for the interim periods presented.  The results of operations for the
    interim period presented are not necessarily indicative of the results to
    be expected for the year ending May 31, 1998.  The interim financial
    statements should be read in connection with the audited financial
    statements for the year ended May 31, 1997.


(2) COMPUTATION OF NET LOSS PER SHARE

    The net loss per common and common equivalent share has been computed using
    the weighted average number of common shares outstanding for each period.
    Common equivalent shares from stock options and warrants are excluded from
    the computation, as their effect is antidilutive.







<PAGE>   12



Item 2.

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

  Since its incorporation in 1985, Northfield Laboratories Inc. ("Northfield"
or the "Company") has devoted substantially all of its efforts and resources to
the research, development and clinical testing of its potential product,
PolyHeme.  Northfield has incurred operating losses during each year of its
operations since inception and expects to incur substantial additional
operating losses for the next several years.  From its inception through
November 30, 1997, Northfield incurred operating losses totaling $57,580,000.

  The Company's success will depend on several factors including its ability to
obtain Food & Drug Administration regulatory approval of PolyHeme and the       
Company's manufacturing facilities, its ability to obtain sufficient quantities
of blood to commercially  manufacture PolyHeme, its ability to manufacture and
distribute PolyHeme in a cost-effective manner, and enforce its patent
positions.  The Company has experienced significant delays in the development
and clinical testing of PolyHeme.  There can be no assurance that the Company
will be able to achieve these goals or that it will be able to realize product
revenues or profitability on a sustained basis or at all.

  The Company anticipates that research and development expenses will increase
during the foreseeable future.  These expected increases are attributable to    
conducting future clinical trials, monitoring and reporting the results of such
trials and continuing process development associated with increases in the
Company's manufacturing capacity to permit commercial scale production of
PolyHeme.  The Company expects that general and administrative expenses will

<PAGE>   13


increase over the foreseeable future due to increased expenses relating to the
expansion of the Company's organization in support of commercial operations.

                             RESULTS OF OPERATIONS

For the Second Quarter Ended November 30, 1997 and 1996.

  The Company reported no revenues for either of the three-month periods ended
November 30, 1997 or 1996.  From its inception through November 30, 1997, the
Company has reported total revenues of $3,000,000, all of which were derived
from licensing fees.

OPERATING EXPENSES

  Operating expenses for the Company's second fiscal quarter ended November 30,
1997 totaled $2,187,000, an increase of $227,000 from the $1,960,000 reported
in the second quarter of fiscal 1997.  Measured on a percentage basis, total
expenses in the second quarter of fiscal 1998 increased by 11.6%.





                                       
<PAGE>   14


  Research and development expenses for the second quarter of fiscal 1998
totaled $1,565,000, an increase of $146,000, or 10.3%, from the $1,419,000
reported in the second quarter of fiscal 1997.  The quarter over quarter
increase in research and development expenses resulted from expanded efforts in
clinical trials and preparatory efforts for commercial manufacturing.

  For the six-month period ended November 30, 1997, research and development
expenses totaled $3,151,000, representing an increase of $472,000, or 17.6%,
from the six-month period ended November 30, 1996.  Substantially all of the
fiscal year to date increase over the comparable prior year period comes from
increased expenses related to the Phase III clinical trials.  Increased
spending was also recorded for preparatory and analysis work for the commercial
manufacturing facility.

  The Company anticipates that research and development expenses will increase
over the next several quarters.  Additional costs are being planned for
expanded multi-center clinical trials, third-party clinical monitoring and
third-party product testing.

  General and administrative expenses in the second quarter of fiscal 1998
totaled $622,000 compared to expenses of $541,000 in the second quarter of
1997, representing an increase of $81,000, or 15.0%.  During the quarter
increased expenses were incurred for professional services related to legal
counsel on multiple contract and patent issues and public relations for
enhanced shareholder information.  Travel expenditures have also increased due





                                       
<PAGE>   15


to business development efforts.  The Company anticipates that general and
administrative expenses will continue to increase over the remainder of the
fiscal year.

  General and administrative expenses for the six-month period ended    
November 30, 1997 totaled $1,205,000 which is a $125,000 increase, or 11.6%,
from the $1,080,000 in the comparable prior year period.  The increases are
principally reported in travel and professional services.  Travel has increased
due to business development efforts and professional services have increased in
the areas of legal and public relations.

INTEREST INCOME

  Interest income in the second quarter of fiscal 1998 equaled $794,000, or a
$27,000 decrease from the $821,000 in interest income reported in the second
quarter of fiscal 1997.  Higher interest rates in fiscal 1998 somewhat offset
lower available investment balances and caused a quarter over quarter decrease
in interest income.

  Interest income for the six-month period ended November 30, 1997 totaled
$1,632,000 or a $18,000 decrease from the comparable prior year period.
Slightly higher interest rates offset declining available investment balances
combined for the slight year over year decline in interest income.





                                       
<PAGE>   16


  Interest income is forecast to decline over the remainder of the fiscal year 
as the cost of expanded clinical trials and investments in a commercial facility
will significantly lower available investment balances.

NET LOSS

  The net loss for the second quarter ended November 30, 1997 was $1,393,000,
or $.10 per share, compared to a net loss of $1,139,000, or $.08 per share, for
the second quarter ended November 30, 1996.  The increase in the net loss per   
share is the result of the increase in the dollar net loss mitigated by an
increase in shares outstanding.

  For the six-month period ended November 30, 1997, Northfield reported a net 
loss of $2,723,000, or $.19 per share, compared to the comparable prior year    
period results of a net loss of $2,109,000, or $.15 per share.  Higher research
and administrative expenses, partially offset by a greater number of shares
outstanding in fiscal 1998, caused the reported net loss and per share net loss
to increase.

LIQUIDITY AND CAPITAL RESOURCES

  From its inception through November 30, 1997, the Company has expended cash
in operating activities and for the purchase of property, plant, equipment and
engineering services in the amount of $56,947,000.  For the three-month and
six-month periods ended November 30, 1997,





                                       
<PAGE>   17


these cash expenditures totaled $2,762,000 and $4,462,000, respectively.  The
second quarter fiscal 1998 net cash outlay was high, compared to the first
quarter expenditure of $1,700,000, due primarily to land acquisition costs
related to the Company's planned commercial-scale manufacturing facility.

  The Company has financed its research and development and other activities to
date through the sale of public and private securities and, to a more limited
extent, through the license of product rights.  As of November 30, 1997, the
Company had cash and marketable securities totaling $55,832,000.

  The Company believes existing capital resources will be adequate to satisfy
its operating capital requirements for approximately the next 18-24 months.
Thereafter, the Company may require substantial additional funds to test and
seek regulatory approval for PolyHeme and to build a commercial capability.
The capital required to construct a commercial scale manufacturing facility is
estimated to be $40-$45 million.

  The Company may use existing resources to finance a commercial manufacturing
facility or it may enter into collaborative arrangements with strategic
partners which could provide the Company with additional funding or absorb
expenses otherwise payable by the Company.  The Company has engaged in
discussions with a number of potential strategic partners, though these
discussions are at preliminary stages and there can be no assurance that any
such arrangement will be consummated.





                                       
<PAGE>   18


  The Company's capital requirements may vary materially from those now
anticipated because of the results of the clinical testing of PolyHeme, the
establishment of relationships with strategic partners, changes in the scale,
timing or cost of the Company's commercial manufacturing facility, competitive
and technological advances, the FDA regulatory process, changes in the
Company's marketing and distribution strategy, and other factors.





                                       
<PAGE>   19



                         PART II.  OTHER INFORMATION


Item 6. Exhibits and Reports on Form 8-K
     
        

        (a) EXHIBIT 10.5.1 - 1996 Stock Option Plan

            EXHIBIT 15 - Letter RE: Unaudited Interim Financial Information

            EXHIBIT 27 - Financial Data Schedule

        (b) None.





<PAGE>   20

                                   SIGNATURES


         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on January 14, 1998.

                         NORTHFIELD  LABORATORIES  INC.



                                        By:
                                                 _________________________
                                                 Richard E. DeWoskin 
                                                 Chairman of the Board and Chief
                                                 Executive Officer


                                        By:
                                                  _________________________
                                                  Jack J. Kogut 
                                                  Vice President - Finance, 
                                                  Secretary and Treasurer 
                                                  (principal financial officer
                                                  and principal accounting 
                                                  officer)