<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, 1998
                                       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, 1998, REGISTRANT HAD 14,114,875 SHARES OF COMMON STOCK
                                 OUTSTANDING.


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

<PAGE>   2
                          NORTHFIELD LABORATORIES INC.
                      (a company in the development stage)

                              Financial Statements

                                November 30, 1998

                       (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, 1998, and the related statements of
operations and for the three-month and six-month periods ended November 30, 1998
and 1997, and cash flows for the six-month periods ended November 30, 1998 and
1997, and for the period from June 19, 1985 (inception) through November 30,
1998. We have also reviewed the statements of shareholders' equity (deficit) for
the six-month period ended November 30, 1998 and for the period from June 19,
1985 (inception) through November 30, 1998. 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, 1998,
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, 1998 (not presented herein); and in our report dated
July 6, 1998, 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, 1998 and in the accompanying statement of shareholders' equity
(deficit) is fairly stated, in all material respects, in relation to the
statement from which it has been derived.






December 21, 1998


<PAGE>   4
 




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

                                 Balance Sheets

                 November 30, 1998 (unaudited) and May 31, 1998



<TABLE>
<CAPTION>
                                                                   NOVEMBER 30          MAY 31,
                                 ASSETS                               1998               1998
                                                                  -------------       ----------
<S>                                                               <C>                 <C>       
Current assets:
 Cash                                                             $  28,118,472       26,473,577
 Short-term marketable securities                                    21,748,144       27,030,902
 Prepaid expenses                                                       263,602          373,151
 Other current assets                                                    43,477           17,657
                                                                  -------------       ----------

     Total current assets                                            50,173,695       53,895,287

Property, plant and equipment, net                                    2,886,021        2,996,937
Other assets                                                             26,749           27,255
                                                                  -------------       ----------

                                                                  $  53,086,465       56,919,479
                                                                  =============       ==========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Accounts payable                                                       523,099        1,037,267
 Accrued expenses                                                        69,893           81,522
 Accrued compensation and benefits                                      265,693          253,345
                                                                  -------------       ----------

     Total current liabilities                                          858,685        1,372,134

Other liabilities                                                       100,000           98,976
                                                                  -------------       ----------

     Total liabilities                                                  958,685        1,471,110
                                                                  -------------       ----------

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 14,114,875 and 14,097,375 shares
  at November 30, 1998 and May 31, 1998, respectively                   141,149          140,974
 Additional paid-in capital                                         116,172,410      116,047,635
 Deficit accumulated during the development stage                   (64,185,779)     (60,740,240)
                                                                  -------------       ----------

     Total shareholders' equity                                      52,127,780       55,448,369
                                                                  -------------       ----------

                                                                  $  53,086,465       56,919,479
                                                                  =============       ==========
</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, 1998 and 1997 and for the
         period from June 19, 1985 (inception) through November 30, 1998

<TABLE>
<CAPTION>
                                                                                                            CUMULATIVE     
                                                                                                              FROM         
                                                 THREE MONTHS ENDED            SIX MONTHS ENDED            JUNE 19, 1985   
                                                      NOVEMBER 30,               NOVEMBER 30,                 THROUGH      
                                               ------------------------     -------------------------    ----------------- 
                                                  1998          1997           1998          1997        NOVEMBER 30, 1998 
                                               -----------  -----------     -----------   -----------    ----------------- 
                                               (UNAUDITED)  (UNAUDITED)     (UNAUDITED)   (UNAUDITED)       (UNAUDITED)    
<S>                                            <C>          <C>             <C>           <C>             <C>              
Revenues - license income                      $       --           --              --            --         3,000,000     

Costs and expenses:                                                                                                        
 Research and development                        1,876,252    1,565,291       3,682,905     3,151,025       55,969,722     
 General and administrative                        560,459      622,031       1,151,018     1,204,496       28,050,378     
                                               -----------   ----------      ----------    ----------      -----------     
                                                                                                                           
                                                 2,436,711    2,187,322       4,833,923     4,355,521       84,020,100     
                                               -----------   ----------      ----------    ----------      -----------     
                                                                                                                           
Other income and expense:                                                                                                  
 Interest income                                   672,046      793,882       1,388,384     1,632,287       16,917,555     
 Interest expense                                      --           --              --            --            83,234     
                                               -----------   ----------      ----------    ----------      -----------     
                                                                                                                           
                                                   672,046      793,882       1,388,384     1,632,287       16,834,321     
                                               -----------   ----------      ----------    ----------      -----------     
                                                                                                                           
    Net loss                                   $(1,764,665)  (1,393,440)     (3,445,539)   (2,723,234)     (64,185,779)    
                                               ===========   ==========      ==========    ==========      ===========     
                                                                                                                           
    Net loss per basic share                   $     (0.13)       (0.10)          (0.24)        (0.19)           (7.66)    
                                               ===========   ==========      ==========    ==========      ===========     

Shares used in calculation of per share data    14,107,045   14,092,375      14,102,184    14,092,375        8,377,541
                                               ===========   ==========      ==========    ==========      =========== 

</TABLE>

See accompanying independent auditors' review report.


<PAGE>   6

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

                  Statements of Shareholders' Equity (Deficit)

                 Six months ended November 30, 1998 and for the
         period from June 19, 1985 (inception) through November 30, 1998

<TABLE>
<CAPTION>
                                                                                                              SERIES A CONVERTIBLE 
                                                           PREFERRED STOCK           COMMON STOCK                PREFERRED STOCK   
                                                        --------------------   ------------------------     -----------------------
                                                         NUMBER    AGGREGATE     NUMBER       AGGREGATE      NUMBER     AGGREGATE  
                                                        OF SHARES    AMOUNT    OF SHARES        AMOUNT      OF SHARES     AMOUNT   
                                                        --------------------   -------------------------    -----------------------
<S>                                                     <C>        <C>         <C>             <C>          <C>         <C> 
Issuance of common stock on August 27, 1985                --       $ --        3,500,000      $35,000         --        $   --   
Issuance of Series A convertible preferred                                                                                         
   stock at $4.00 per share on August 27, 1985                                                                                     
   (net of costs of issuance of $79,150)                   --         --             --           --        250,000       250,000 
Net loss                                                   --         --             --           --           --            --    
                                                         ------     ------     - --------      -------      -------      -------- 
                                                                                                                                   
Balance at May 31, 1986                                    --         --        3,500,000       35,000      250,000       250,000 
Net loss                                                   --         --             --           --           --            --    
Deferred compensation relating to grant of stock options   --         --             --           --           --            --    
Amortization of deferred compensation                      --         --             --           --           --            --    
                                                         ------     ------      ---------      -------      -------      --------
                                                                                                                                   
Balance at May 31, 1987                                    --         --        3,500,000       35,000      250,000       250,000 
Issuance of Series B convertible preferred stock                                                                                   
   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                                    --         --        3,500,000       35,000      250,000       250,000 
Issuance of common stock at $24.21 per share on                                                                                   
   June 7, 1988 (net of costs of issuance of $246,000)     --         --          413,020        4,130        --            --    
Conversion of Series A convertible preferred stock                                                                                
   to common stock on June 7, 1988                         --         --        1,250,000       12,500     (250,000)     (250,000)
Conversion of Series B convertible preferred stock                                                                                
   to common stock on June 7, 1988                         --         --        1,003,165       10,032        --             --   
Exercise of stock options at $2.00 per share               --         --           47,115          471        --             --   
Issuance of common stock at $28.49 per share on                                                                                   
   March 6, 1989 (net of costs of issuance of $21,395)     --         --          175,525        1,755        --             --   
Issuance of common stock at $28.49 per share on                                                                                    
   March 30, 1989 (net of costs of issuance of $10,697)    --         --           87,760          878        --             --   
Sale of options at $28.29 per share to purchase common                                                                             
   stock 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                                    --         --        6,476,585       64,766         --            --   
Net loss                                                   --         --             --           --           --            --    
Deferred compensation relating to grant of stock options   --         --             --           --           --            --    
Amortization of deferred compensation                      --         --             --           --           --            --    
                                                         ------     ------      ---------      -------      ------       --------
                                                                                                                                   
Balance at May 31, 1990                                    --         --        6,476,585       64,766         --            --
Net loss                                                   --         --             --           --           --            --    
Amortization of deferred compensation                      --         --             --           --           --            --    
                                                         ------     ------      ---------      -------      ------       --------
                                                                                                                                   
Balance at May 31, 1991                                    --         --        6,476,585       64,766         --            --
Exercise of stock warrants at $5.60 per share              --         --           90,000          900         --            --    
Net loss                                                   --         --             --           --           --            --    
Amortization of deferred compensation                      --         --             --           --           --            --    
                                                         ------     ------      ---------      -------      ------       --------
                                                                                                                                   
Balance at May 31, 1992                                    --         --        6,566,585       65,666         --            --
Exercise of stock warrants at $7.14 per share              --         --           15,000          150         --            --    
Issuance of common stock at $15.19 per share on                                                                                    
  April 19, 1993 (net of costs of issuance of $20,724)     --         --          374,370        3,744         --            --    
Net loss                                                   --         --             --           --           --            --    
Amortization of deferred compensation                      --         --             --           --           --            --    
                                                         ------     ------      ---------      -------      ------       --------
                                                                                                                                   
Balance at May 31, 1993                                    --       $ --        6,955,955      $69,560         --        $   --   
                                                         ------     ------      ---------      -------      ------       --------
</TABLE>
<PAGE>   7

<TABLE>
<CAPTION>
                                                             SERIES B CONVERTIBLE                             DEFICIT
                                                                 PREFERRED STOCK                            ACCUMULATED
                                                            ------------------------     ADDITIONAL         DURING THE
                                                               NUMBER     AGGREGATE       PAID-IN           DEVELOPMENT
                                                              OF SHARES     AMOUNT        CAPITAL              STAGE
                                                            ------------------------    ------------        -----------
<S>                                                          <C>          <C>           <C>                 <C>            
Issuance of common stock on August 27, 1985                       --            --          (28,000)              --       
Issuance of Series A convertible preferred                                                                                 
   stock at $4.00 per share on August 27, 1985                                                                             
   (net of costs of issuance of $79,150)                          --            --          670,850               --       
Net loss                                                          --            --             --             (607,688)    
                                                                ------        ------     ----------         ----------     
                                                                                                                           
Balance at May 31, 1986                                           --            --          642,850           (607,688)    
Net loss                                                          --            --             --           (2,429,953)    
Deferred compensation relating to grant of                                                                                 
   stock options                                                  --            --        2,340,000               --       
Amortization of deferred compensation                             --            --             --                 --       
                                                                ------        ------     ----------         ----------     
                                                                                                                           
Balance at May 31, 1987                                           --            --        2,982,850         (3,037,641)    
Issuance of Series B convertible preferred stock                                                                           
   at $35.68 per share on August 14, 1987                                                                                  
   (net of costs of issuance of $75,450)                       200,633       200,633      6,882,502               --       
Net loss                                                          --            --             --           (3,057,254)    
Amortization of deferred compensation                             --            --             --                 --       
                                                                ------        ------     ----------         ----------     
                                                                                                                           
Balance at May 31, 1988                                        200,633       200,633      9,865,352         (6,094,895)    
Issuance of common stock at $24.21 per share on                                                                            
   June 7, 1988 (net of costs of issuance of $246,000)            --            --        9,749,870               --       
Conversion of Series A convertible preferred stock                                                                         
   to common stock on June 7, 1988                                --            --          237,500               --       
Conversion of Series B convertible preferred stock                                                                         
   to common stock on June 7, 1988                            (200,633)     (200,633)       190,601               --       
Exercise of stock options at $2.00 per share                      --            --           93,759               --       
Issuance of common stock at $28.49 per share on                                                                            
   March 6, 1989 (net of costs of issuance of $21,395)            --            --        4,976,855               --       
Issuance of common stock at $28.49 per share on                                                                            
   March 30, 1989 (net of costs of issuance of $10,697)           --            --        2,488,356               --       
Sale of options at $28.29 per share to purchase common                                                                     
   stock at $.20 per share on                                                                                              
   March 30, 1989 (net of costs of issuance of $4,162)            --            --        7,443,118               --       
Net loss                                                          --            --             --             (791,206)    
Deferred compensation relating to grant of stock options          --            --          683,040               --       
Amortization of deferred compensation                             --            --             --                 --       
                                                                ------        ------     ----------         ----------     
                                                                                                                           
Balance at May 31, 1989                                           --            --       35,728,451         (6,886,101)    
Net loss                                                          --            --             --           (3,490,394)    
Deferred compensation relating to grant of stock options          --            --          699,163               --       
Amortization of deferred compensation                             --            --             --                 --       
                                                                ------        ------     ----------         ----------     
                                                                                                                           
Balance at May 31, 1990                                           --            --       36,427,614        (10,376,495)    
Net loss                                                          --            --             --           (5,579,872)    
Amortization of deferred compensation                             --            --             --                 --       
                                                                ------        ------     ----------         ----------     
                                                                                                                           
Balance at May 31, 1991                                           --            --       36,427,614        (15,956,367)    
Exercise of stock warrants at $5.60 per share                     --            --          503,100               --       
Net loss                                                          --            --             --           (7,006,495)    
Amortization of deferred compensation                             --            --             --                 --       
                                                                ------        ------     ----------         ----------     
                                                                                                                           
Balance at May 31, 1992                                           --            --       36,930,714        (22,962,862)    
Exercise of stock warrants at $7.14 per share                     --            --          106,890               --       
Issuance of common stock at $15.19 per share on                                                                            
  April 19, 1993 (net of costs of issuance of $20,724)            --            --        5,663,710               --       
Net loss                                                          --            --             --           (8,066,609)    
Amortization of deferred compensation                             --            --             --                 --       
                                                                ------        ------     ----------         ----------     
                                                                                                                           
Balance at May 31, 1993                                           --          $ --       42,701,314        (31,029,471)    
                                                                ------        ------     ----------         ----------
</TABLE>

<PAGE>   8

<TABLE>
<CAPTION>
                                                                                                  TOTAL
                                                                                               SHAREHOLDER'S
                                                                            DEFERRED              EQUITY     
                                                                           COMPENSATION          (DEFICIT) 
                                                                           ------------      -----------------
<S>                                                                         <C>              <C>              
Issuance of common stock on August 27, 1985                                        --                7,000             
Issuance of Series A convertible preferred                                                                             
   stock at $4.00 per share on August 27, 1985                                                                         
   (net of costs of issuance of $79,150)                                           --              920,850             
Net loss                                                                           --             (607,688)            
                                                                            ----------         ------------            
                                                                                                                       
Balance at May 31, 1986                                                            --              320,162             
Net loss                                                                           --           (2,429,953)            
Deferred compensation relating to grant of
    stock options                                                           (2,340,000)               --             
Amortization of deferred compensation                                          720,000             720,000           
                                                                             ---------         -----------          
                                                                                                                    
Balance at May 31, 1987                                                     (1,620,000)         (1,389,791)         
Issuance of Series B convertible preferred stock                                                                    
   at $35.68 per share on August 14, 1987                                                                           
   (net of costs of issuance of $75,450)                                          --             7,083,135          
Net loss                                                                          --            (3,057,254)         
Amortization of deferred compensation                                          566,136             566,136          
                                                                             ---------         -----------          
                                                                                                                    
Balance at May 31, 1988                                                     (1,053,864)          3,202,226          
Issuance of common stock at $24.21 per share on                                                                     
   June 7, 1988 (net of costs of issuance of $246,000)                            --             9,754,000          
Conversion of Series A convertible preferred stock                                                                  
   to common stock on June 7, 1988                                                --                  --            
Conversion of Series B convertible preferred stock                                                                  
   to common stock on June 7, 1988                                                --                  --            
Exercise of stock options at $2.00 per share                                      --                94,230          
Issuance of common stock at $28.49 per share on                                                                     
   March 6, 1989 (net of costs of issuance of $21,395)                            --             4,978,610          
Issuance of common stock at $28.49 per share on                                                                     
   March 30, 1989 (net of costs of issuance of $10,697)                           --             2,489,234          
Sale of options at $28.29 per share to purchase common                                                              
   stock at $.20 per share on                                                                                       
   March 30, 1989 (net of costs of issuance of $4,162)                            --             7,443,118          
Net loss                                                                          --              (791,206)         
Deferred compensation relating to grant of stock options                      (683,040)               --            
Amortization of deferred compensation                                          800,729             800,729          
                                                                             ---------         -----------          
                                                                                                                    
                                                                                                                  
Balance at May 31, 1989                                                       (936,175)         27,970,941          
Net loss                                                                          --            (3,490,394)         
Deferred compensation relating to grant of stock options                      (699,163)               --            
Amortization of deferred compensation                                          546,278             546,278          
                                                                             ---------         -----------          
                                                                                                                    
                                                                                                                  
Balance at May 31, 1990                                                     (1,089,060)         25,026,825          
Net loss                                                                          --            (5,579,872)         
Amortization of deferred compensation                                          435,296             435,296          
                                                                             ---------         -----------          
                                                                                                                    
                                                                                                                  
Balance at May 31, 1991                                                       (653,764)         19,882,249          
Exercise of stock warrants at $5.60 per share                                     --               504,000          
Net loss                                                                          --            (7,006,495)         
Amortization of deferred compensation                                          254,025             254,025          
                                                                             ---------         -----------          
                                                                                                                    
Balance at May 31, 1992                                                       (399,739)         13,633,779          
Exercise of stock warrants at $7.14 per share                                     --               107,040          
Issuance of common stock at $15.19 per share on                                                                     
  April 19, 1993 (net of costs of issuance of $20,724)                            --             5,667,454          
Net loss                                                                          --            (8,066,609)         
Amortization of deferred compensation                                          254,025             254,025          
                                                                             ---------         -----------          
                                                                                                                    
Balance at May 31, 1993                                                       (145,714)         11,595,689          
                                                                             ---------         -----------          
</TABLE> 

<PAGE>   9

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

             Statements of Shareholders' Equity (Deficit), Continued

                 Six months ended November 30, 1998 and for the
         period from June 19, 1985 (inception) through November 30, 1998

<TABLE>
<CAPTION>
                                                                                                           SERIES A CONVERTIBLE 
                                                            PREFERRED STOCK          COMMON STOCK             PREFERRED STOCK   
                                                          --------------------  ----------------------     -------------------- 
                                                           NUMBER    AGGREGATE    NUMBER      AGGREGATE     NUMBER    AGGREGATE 
                                                          OF SHARES   AMOUNT     OF SHARES      AMOUNT     OF SHARES    AMOUNT  
                                                          --------------------  ----------------------     -------------------- 
<S>                                                       <C>        <C>        <C>          <C>           <C>        <C>
Net loss                                                     --       $  --        --          $   --        --      $ --
Issuance of common stock at $6.50 per share on
  May 26, 1994 (net of costs of issuance of $2,061,149)      --          --     2,500,000        25,000      --        --   
Cancellation of stock options                                --          --          --            --        --        --   
Amortization of deferred compensation                        --          --          --            --        --        --   
                                                            ----      ------   ----------   -----------     ----     -----  

Balance at May 31, 1994                                      --          --     9,455,955        94,560      --        --
Net loss                                                     --          --          --            --        --        --   
Issuance of common stock at $6.50 per share on
  June 20, 1994 (net of issuance costs of $172,500)          --          --       375,000         3,750      --        --   
Exercise of stock options at $7.14 per share                 --          --        10,000           100      --        --   
Exercise of stock options at $2.00 per share                 --          --       187,570         1,875      --        --   
Cancellation of stock options                                --          --          --            --        --        --   
Amortization of deferred compensation                        --          --          --            --        --        --   
                                                            ----      ------   ----------   -----------     ----     -----  

Balance at May 31, 1995                                      --          --    10,028,525       100,285      --        --   
Net loss                                                     --          --          --            --        --        --   
Issuance of common stock at $17.75 per share on
  August 9, 1995 (net of issuance costs of $3,565,125)       --          --     2,925,000        29,250      --        --   
Issuance of common stock at $17.75 per share on
  September 11, 1995 (net of issuance costs of $423,238)     --          --       438,750         4,388      --        --   
Exercise of stock options at $2.00 per share                 --          --       182,380         1,824      --        --   
Exercise of stock options at $6.38 per share                 --          --         1,500            15      --        --   
Exercise of stock options at $7.14 per share                 --          --        10,000           100      --        --   
Cancellation of stock options                                --          --          --            --        --        --   
Amortization of deferred compensation                        --          --          --            --        --        --   
                                                            ----      ------   ----------   -----------     ----     -----  

Balance at May 31, 1996                                      --          --    13,586,155       135,862      --   
Net loss                                                     --          --          --            --        --        --   
Exercise of stock options at $0.20 per share                 --          --       263,285         2,633      --        --   
Exercise of stock options at $2.00 per share                 --          --       232,935         2,329      --        --   
Exercise of stock options at $7.14 per share                 --          --        10,000           100      --        --   
Amortization of deferred compensation                        --          --          --            --        --        --   
                                                            ----      ------   ----------   -----------     ----     -----  

Balance at May 31, 1997                                      --          --    14,092,375       140,924      --        -- 
Net loss                                                     --          --          --            --        --        --   
Exercise of stock options at $7.14 per share                 --          --         5,000            50      --        --   
Amortization of deferred compensation                        --          --          --            --        --        --   
                                                            ----      ------   ----------   -----------     ----     -----  

Balance at May 31, 1998                                      --          --    14,097,375       140,974      --        --   
Net loss (unaudited)                                         --          --          --            --        --        --   
Exercise of stock options at $7.14 per share                 --          --        17,500           175      --        --   
                                                            ----      ------   ----------   -----------     ----     -----  

Balance at November 30, 1998 (unaudited)                     --       $  --    14,114,875   $   141,149      --      $ --
                                                            ====      ======   ==========   ===========     ====     =====
</TABLE>

<PAGE>   10

<TABLE>
<CAPTION>
                                                  SERIES B CONVERTIBLE                     DEFICIT     
                                                    PREFERRED STOCK                      ACCUMULATED                       TOTAL  
                                                  --------------------   ADDITIONAL      DURING THE                    STOCKHOLDERS'
                                                   NUMBER    AGGREGATE    PAID-IN        DEVELOPMENT     DEFERRED         EQUITY  
                                                  OF SHARES   AMOUNT      CAPITAL           STAGE       COMPENSATION     (DEFICIT)
                                                  --------------------   -----------     -----------    ------------   ------------
<S>                                               <C>        <C>         <C>             <C>            <C>            <C>         
Net loss                                              --       $ --              --       (7,363,810)         --        (7,363,810)
Issuance of common stock at $6.50 per share on                                                                                     
  May 26, 1994 (net of costs of issuance of                                                                                        
  $2,061,149)                                         --         --       14,163,851            --            --        14,188,851 
Cancellation of stock options                         --         --          (85,400)           --          85,400            --   
Amortization of deferred compensation                 --         --             --              --             267             267 
                                                     ----      -----     -----------     -----------       -------      ---------- 
                                                                                                                                   
Balance at May 31, 1994                               --         --       56,779,765     (38,393,281)      (60,047)     18,420,997 
Net loss                                              --         --             --        (7,439,013)         --        (7,439,013)
Issuance of common stock at $6.50 per share on                                                                                     
  June 20, 1994 (net of issuance costs of                                                                                          
  $172,500)                                           --         --        2,261,250            --            --         2,265,000 
Exercise of stock options at $7.14 per share          --         --           71,300            --            --            71,400 
Exercise of stock options at $2.00 per share          --         --          373,264            --            --           375,139 
Cancellation of stock options                         --         --         (106,750)           --         106,750            --   
Amortization of deferred compensation                 --         --             --              --         (67,892)        (67,892)
                                                     ----      -----     -----------     -----------       -------      ---------- 
                                                                                                                                   
Balance at May 31, 1995                               --         --       59,378,829     (45,832,294)      (21,189)     13,625,631 
Net loss                                              --         --             --        (4,778,875)         --        (4,778,875)
Issuance of common stock at $17.75 per share on                                                                                    
  August 9, 1995 (net of issuance costs of                                                                                         
  $3,565,125)                                         --         --       48,324,374            --            --        48,353,624 
Issuance of common stock at $17.75 per share on                                                                                    
  September 11, 1995 (net of issuance costs of                                                                                     
  $423,23                                             --         --        7,360,187            --            --         7,364,575 
Exercise of stock options at $2.00 per share          --         --          362,937            --            --           364,761 
Exercise of stock options at $6.38 per share          --         --            9,555            --            --             9,570 
Exercise of stock options at $7.14 per share          --         --           71,300            --            --            71,400 
Cancellation of stock options                         --         --          (80,062)           --          80,062            --   
Amortization of deferred compensation                 --         --             --              --         (62,726)        (62,726)
                                                     ----      -----     -----------     -----------       -------      ---------- 
                                                                                                                                   
Balance at May 31, 1996                               --         --      115,427,120     (50,611,169)       (3,853)     64,947,960 
Net loss                                              --         --             --        (4,245,693)         --        (4,245,693)
Exercise of stock options at $0.20 per share          --         --           50,025            --            --            52,658 
Exercise of stock options at $2.00 per share          --         --          463,540            --            --           465,869 
Exercise of stock options at $7.14 per share          --         --           71,300            --            --            71,400 
Amortization of deferred compensation                 --         --             --              --           2,569           2,569 
                                                     ----      -----     -----------     -----------       -------      ---------- 
                                                                                                                                   
Balance at May 31, 1997                               --         --      116,011,985     (54,856,862)       (1,284)     61,294,763 
Net loss                                              --         --             --        (5,883,378)         --        (5,883,378)
Exercise of stock options at $7.14 per share          --         --           35,650            --            --            35,700 
Amortization of deferred compensation                 --         --             --              --           1,284           1,284 
                                                     ----      -----     -----------     -----------       -------      ---------- 
                                                                                                                                   
Balance at May 31, 1998                               --         --      116,047,635     (60,740,240)         --        55,448,369 
Net loss (unaudited)                                  --         --             --        (3,445,539)         --        (3,445,539)
Exercise of stock options at $7.14 per share          --         --          124,775            --            --           124,950 
                                                     ----      -----     -----------     -----------       -------      ---------- 
                                                                                                                                   
Balance at November 30, 1998 (unaudited)              --       $ --      116,172,410     (64,185,779)         --        52,127,780 
                                                     ====      =====     ===========     ===========       =======      ========== 
                                                                                                                                   
</TABLE>


See accompanying notes to financial statements.
<PAGE>   11

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

                            Statements of Cash Flows

  Six months ended November 30, 1998 and 1997 and for the period from June 19,
                   1985 (inception) through November 30, 1998

<TABLE>
<CAPTION>
                                                                                                     CUMULATIVE      
                                                              SIX MONTHS ENDED                           FROM           
                                                                 NOVEMBER 30,                       JUNE 19, 1985    
                                                      ----------------------------------               THROUGH   
                                                            1998                  1997             NOVEMBER 30, 1998
                                                      ----------------------------------          ------------------
                                                         (UNAUDITED)          (UNAUDITED)            (UNAUDITED)
<S>                                                   <C>                     <C>                 <C>         
Cash flows from operating activities:
 Net loss                                             $    (3,445,539)          (2,723,234)           (64,185,779)
 Adjustments to reconcile net loss to net
  cash used in operating activities:
   Depreciation and amortization                              317,652              200,505             13,685,944
   Amortization of deferred compensation                          --                 1,284              3,449,991
   Loss on sale of equipment                                      --                   --                  66,359
   Changes in assets and liabilities:
    Prepaid expenses                                          109,549              113,228               (374,613)
    Other current assets                                      (34,987)             120,899             (1,939,728)
    Other assets                                                  --                 4,168                (42,147)
    Accounts payable                                         (514,168)            (208,288)               523,099
    Accrued expenses                                          (11,629)             (19,800)                69,893
    Accrued compensation and benefits                          12,348               88,368                265,693
    Other liabilities                                           1,024               (2,063)               100,000
                                                      ---------------           ----------            ----------- 

     Net cash used in operating activities                 (3,565,750)          (2,424,933)           (48,381,288)
                                                      ---------------           ----------            ----------- 

Cash flows from investing activities:
 Purchase of property, plant, equipment
  and capitalized engineering costs                          (197,063)          (2,037,313)           (14,692,251)
 Proceeds from matured marketable securities               30,649,200           25,039,199            315,440,781
 Proceeds from sale of marketable securities                      --                   --               7,141,656
 Purchase of marketable securities                        (25,366,442)         (31,769,170)          (344,330,582)
 Proceeds from sale of equipment                                  --                   --                  76,587
                                                      ---------------           ----------            ----------- 

     Net cash used in investing activities                  5,085,695           (8,767,284)           (36,363,809)
                                                      ---------------           ----------            ----------- 

Cash flows from financing activities:
 Proceeds from issuance of common stock                           --                   --             102,363,528
 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                                      124,950                  --               7,568,068
 Proceeds from issuance of notes payable                          --                   --               1,500,000
 Repayment of notes payable                                       --                   --                (140,968)
                                                      ---------------           ----------            ----------- 

     Net cash provided by financing activities                124,950                  --             112,863,569
                                                      ---------------           ----------            ----------- 

     Net increase (decrease) in cash                        1,644,895          (11,192,217)            28,118,472

Cash at beginning of period                                26,473,577           21,367,496                    --

                                                      ---------------           ----------            ----------- 
Cash at end of period                                 $    28,118,472           10,175,279             28,118,472
                                                      ===============           ==========             ==========
</TABLE>


See accompanying independent auditors' review report.

<PAGE>   12


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

                          Notes to Financial Statements

                                November 30, 1998






  (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,
        1999. The interim financial statements should be read in connection with
        the audited financial statements for the year ended May 31, 1998.

  (2)   COMPUTATION OF NET LOSS PER SHARE

        Basic earnings per share is based on the weighted average number of
        shares outstanding and excludes the dilutive effect of unexercised
        common stock equivalents. Diluted earnings per share is based on the
        weighted average number of shares outstanding and includes the dilutive
        effect of unexercised common stock equivalents. Because the Company
        reported a net loss for all periods presented, per share amounts reflect
        the use of the Basic method only.


<PAGE>   13
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, 1998, Northfield incurred operating losses totaling $64,186,000.

         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, obtain sufficient quantities of blood to
manufacture PolyHeme in commercial quantities, 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 anticipated future clinical trials for domestic and
international markets, monitoring and reporting the results of such trials and
continuing process development associated with improving the Company's
manufacturing capacity to permit commercial-scale production of PolyHeme. The
Company expects that general and administrative expenses will increase over the
foreseeable future due to increased expenses relating to the expansion of the
Company's organization in support of expanded commercial operations.

<PAGE>   14











                              RESULTS OF OPERATIONS

          The Company reported no revenues for either of the three-month or
six-month periods ended November 30, 1998 or 1997. From its inception through
November 30, 1998, 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 quarter of fiscal 1999
totaled $2,437,000, an increase of $250,000 from the $2,187,000 reported in the
second quarter of fiscal 1998. Measured on a percentage basis, total expenses in
the second quarter of fiscal 1999 increased by 11.4%. This increase was
primarily due to increased costs associated with the Company's expanding
clinical trials.

         Research and development expenses for the second quarter of fiscal 1999
totaled $1,876,000, an increase of $311,000, or 19.9%, from the $1,565,000
reported in the second quarter of fiscal 1998. The increase in research and
development expenses resulted from expanded efforts in clinical trials and
preparatory efforts for commercial manufacturing. Phase II clinical trials
remain open and are on-going, enrolling high volume trauma patients. During the
quarter, Northfield continued amortizing accumulated capitalized engineering
costs. The Company anticipates that research and development expenses will
increase over the next several quarters. Additional costs are planned for
expanded multi-center clinical trials, third-party clinical monitoring as well
as costs to manufacture additional product.


<PAGE>   15

         For the six-month period ended November 30, 1998, research and
development expenses totaled $3,683,000, representing an increase of $532,000,
or 16.9%, from the six-month period ended November 30, 1997. Substantially all
of the fiscal year to date increase over the comparable prior year period comes
from increased expenses related to the Company's Phase III clinical trials.

         General and administrative expenses in the second quarter of fiscal
1999 totaled $560,000 compared to expenses of $622,000 in the second quarter of
1998, representing a decrease of $62,000, or 10.0%. The decrease was due
primarily to decreased travel, as the Company has continued to focus on clinical
development issues. The Company will continue to prioritize research and
development over general and administrative expansion. The Company anticipates
that general and administration expenses will increase over the balance of the
fiscal year.

          General and administrative expenses for the six-month period ended
November 30, 1998 totaled $1,151,000 which represents a $53,000 or 4.4% decrease
from the $1,205,000 in the comparable prior year period. The decreases are
reported primarily in travel and professional services.

INTEREST INCOME
         Interest income in the second quarter of fiscal 1999 equaled $672,000,
or a $122,000 decrease from the $794,000 in interest income reported in the
second quarter of fiscal 1998. Lower available 


<PAGE>   16
investment balances and lower interest rates caused the decrease in interest
income. Interest income for the six-month period ended November 30, 1998 totaled
$1,388,000 or a $244,000 decrease from the comparable prior year period. Lower
interest rates combined with declining available investment balances caused the
year over year decline in interest income.

         Interest income is forecast to decline over the balance of the fiscal
year as the cost of expanded clinical trials will significantly lower available
investment balances.

NET LOSS

         The net loss for the second quarter ended November 30, 1998 was
$1,765,000, or $.13 per basic share, compared to a net loss of $1,393,000, or
$.10 per basic share, for the second quarter ended November 30, 1997. The
increase in the loss per basic share is the result of the increase in the dollar
loss mitigated somewhat by having additional shares outstanding.

          For the six-month period ended November 30, 1998, Northfield reported
a loss of $3,446,000, or $.24 per basic share, compared to the comparable prior
year period results of a loss of $2,723,000, or $.19 per basic share. Higher
research and development expenses, partially offset by additional shares
outstanding in fiscal 1999, caused the reported loss and per basic share loss to
increase.


<PAGE>   17

LIQUIDITY AND CAPITAL RESOURCES

         From its inception through November 30, 1998, the Company has expended
cash in operating activities and for the purchase of property, plant, equipment
and engineering services in the amount of $63,074,000. For the six-month period
ended November 30, 1998 and 1997, these cash expenditures totaled $3,763,000 and
$4,462,000, respectively. The second quarter fiscal 1998 net cash outlay was
high, compared to the current year expenditure, 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 public and private sale of equity securities and,
to a more limited extent, through the license of product rights. As of November
30, 1998, the Company had cash and marketable securities totaling $49,867,000.

         The Company believes its existing capital resources will be adequate to
satisfy its operating capital requirements and maintain its existing pilot
manufacturing plant and office facilities for approximately the next 30-42
months. Thereafter, the Company is likely to require substantial additional
capital to continue its operations. If the Company uses its own resources to
fund the construction of a commercial-scale manufacturing facility, which is
estimated to cost approximately $45 million, its will significantly accelerate
the Company's need to raise additional capital.

         The Company 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

<PAGE>   18

discussions are at preliminary stages and there can be no assurance that any
such arrangement will be consummated.

         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.

YEAR 2000

          The Company has reviewed its information technology and 
non-information technology applications and has consulted with its vendors who
provide software services. The Company believes it is substantially year 2000
compliant and that any required changes in coding will be handled in a manner
non-disruptive to the business and at a minimal cost.

         Northfield is dependent in its operations on a number of suppliers
whose individual status in achieving a year 2000 conversion is not known at this
time. In the event that Northfield or any of Northfield's significant suppliers
experience disruption due to the year 2000 issue, the Company's operations could
be adversely affected. Northfield has in place an alternative plan for financial
reporting and other systems will be developed on an ad hoc basis.
<PAGE>   19



                         PART II.  OTHER INFORMATION


Item 6. Exhibits and Reports on Form 8-K

        (a) 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 12, 1999.

                                        NORTHFIELD  LABORATORIES  INC.



                                        By:      /s/ Richard E. DeWoskin
                                                 -------------------------------
                                                 Richard E. DeWoskin 
                                                 Chairman of the Board and Chief
                                                 Executive Officer


                                        By:       /s/ Jack J. Kogut
                                                  ------------------------------
                                                  Jack J. Kogut
                                                  Secretary and Treasurer 
                                                  (principal financial officer
                                                  and principal accounting 
                                                  officer)