<PAGE>

                                                                    Exhibit 10.7


                        CONFIDENTIAL SEPARATION AGREEMENT
                               AND GENERAL RELEASE

          THIS CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE (this
"Agreement") is entered into as of November 7, 2003 (the "Effective Date"), by
and between Spectrum Pharmaceuticals, Inc., a Delaware corporation (the
"Company") and Michael P. McManus, an individual ("Consultant").

                                    RECITALS

          WHEREAS, Consultant was retained by the Company to provide consulting
services pursuant to certain arrangements made between the Company and McManus
Financial Consultants, Inc. ("MFC") (the "Prior Arrangements");

          WHEREAS, Consultant, MFC and the Company (collectively, the "Parties")
have agreed that Consultant will resign his current duties as a consultant and
officer of the Company pursuant to the Prior Arrangements, and will instead
provide consulting services to the Company pursuant to the terms of this
Agreement;

          WHEREAS, the Parties wish to specify the terms of the resignation and
resolve any outstanding issues between them.

                                    AGREEMENT

          NOW THEREFORE, in consideration of the representations and agreements
contained herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be bound hereby,
the Company and Consultant hereby agree to terminate their Prior Arrangements on
the following basis:

     1.   Termination of the Prior Arrangements. The Prior Arrangements and each
Party's rights thereunder are hereby terminated.

     2.   Separation. Consultant hereby resigns any and all positions with the
Company, including, without limitation, as Controller of the Company and a
consultant to the Company under the Prior Arrangements as of the Effective Date.
Consultant understands and agrees that he is giving up any right or claim to
future consulting arrangements with the Company and any compensation or benefit
of such consulting arrangement, including any compensation and/or benefits owed
to the Consultant pursuant to the Prior Arrangements, except for compensation
and/or benefits provided for in this Agreement. Consultant acknowledges that he
has received all compensation and benefits due to him through the Effective
Date.

     3.   Compensation. In consideration for Consultant's agreement to resign
pursuant to the terms of this Agreement:

          (a) In lieu of severance, within seven (7) days following the
execution of this Agreement by all parties, the Company shall pay MFC the sum of
one hundred eighty thousand

<PAGE>

dollars ($180,000), less applicable statutory deductions, if any, by way of a
certified check or wire transfer.

          (b) The Parties acknowledge that the Investor Relations Consulting
Agreement by and between the Company and McManus & Company, Inc. ("M&C") dated
August 19, 2002 (the "M&C Consulting Agreement") shall remain in full force and
effect until its expiration on July 31, 2004. Consultant and Company agree to,
and Consultant agrees to cause M&C to, continue to honor the terms of the M&C
Consulting Agreement through July 31, 2004; provided that the Company shall only
request that M&C provide reasonable and customary services under the M&C
Consulting Agreement; and, provided, further, that if Consultant believes any
such requested services are unreasonable, Consultant shall be entitled to
contact any member of the Company's board of directors to verify the validity of
the request. The Company shall remain obligated to pay M&C on the first business
day of each month, for the applicable month, fees in the amount of $12,000, due
under such M&C Consulting Agreement through July 31, 2004.

          (c) All stock options previously granted to Consultant shall become
fully vested as of the Effective Date, and Consultant shall be entitled to
exercise such options in whole or in part from time to time during the one year
period commencing on November 17, 2003.

          (d) Consultant is covered and will continue to be covered under the
liability insurance policies currently maintained by the Company for its
directors and officers, with respect to events occurring prior to the Effective
Date, in addition to subsequent events concerning the 10-Q identified in Section
5 below. In the event that the Company renews, extends or replaces such
policies, or purchases "tail" coverage, the Company will include Consultant
under the coverage with respect to events occurring prior to the Effective Date,
in addition to subsequent events concerning the 10-Q, which is identified in
Section 5 below.

          (e) In connection with this Agreement, Consultant retained his own
legal counsel, Yocca Patch & Yocca, LLP ("YPY"). Within seven (7) days following
the execution of this Agreement by all Parties, the Company agrees to pay
Consultant up to $4000 for actual legal expenses incurred by Consultant through
YPY (by check).

     4.   Options. Consultant and the Company are parties to certain written
agreements pursuant to which Consultant has been granted options to purchase
stock in the Company. Consultant acknowledges that although such options might
be identified as incentive stock options, such options may not be qualified for
treatment as incentive stock options, either now or in the future. Consultant is
advised to consult with his personal tax advisor to determine whether the
options are qualified for treatment as incentive stock options. Except as set
forth in Section 3(c) and this Section 4, Consultant's rights under his existing
option agreements are not intended to be modified by this Agreement in any way.

     5.   Future Consulting. Consultant agrees to use his best efforts to assist
with the completion and filing of the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2003 (the "10-Q"). No additional
compensation shall be paid for Consultant's services in connection with the 10-Q
up to the scheduled filing date of November 14, 2003. However, if additional
work is necessary on the 10-Q after November 14, 2003, Consultant shall


                                       2
<PAGE>

be paid at his customary rate of $250 per hour. In addition to the foregoing,
Consultant shall provide consulting services to the Company as may be reasonably
requested by the Company from time to time up to and through May 31, 2004, such
requests to be made on reasonable notice to Consultant. The Company shall
compensate Consultant for these consulting services at the rate of $250 per
hour. It is the express intent of the parties that Consultant shall provide
consulting services to the Company as an independent contractor pursuant to this
Agreement. Consultant will not be an employee of the Company, and Consultant
shall not hold himself out to be an employee of the Company, and shall not have
the authority to enter into or bind the Company to any contract, promise, or
obligation under any circumstances. The Company is interested only in the
results to be achieved by Consultant under this Agreement, and the manner and
method of performing all services of Consultant under this Agreement, and
achieving the desired results, shall be under the exclusive control of
Consultant. The Company shall have no right or authority to direct or control
Consultant with respect to the performance of Consultant's services under this
Agreement, except as otherwise provided by this Agreement. Payments for
consulting services provided pursuant to this Section 5 shall be made to MFC.

     6.   Return of Company Property. Except as expressly provided for herein,
at the Company's request, the Consultant and MFC will return to the Company all
files, records, credit cards, keys, equipment, and any other property of the
Company or documents maintained by him or it for the Company's use or benefit,
on or before the Effective Date.

     7.   Confidentiality. The Parties acknowledge that this Agreement and all
matters relating to or leading up to the negotiation and effectuation of this
Agreement are confidential and shall not be disclosed to any third party except
as follows: the Company may disclose the terms of this Agreement to the public
as required by law, including without limitation, the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended; the Company may
disclose the terms of this Agreement to Company employees with a business
purpose for receiving such information; the Parties may disclose the terms of
the Agreement to their respective legal, accounting and tax advisors to the
extent necessary for them to perform services; and the Parties may disclose the
terms of this Agreement to the Internal Revenue Service and the California
Franchise Tax Board as required by law, rule or regulation, or as otherwise
required by law or necessary to enforce the terms of this Agreement. If any
disclosure is made as permitted by this paragraph other than to governmental
authorities as required by law, then such persons or entities shall be cautioned
about the confidentiality obligations imposed by this Agreement.

     8.   Non-Disclosure and Non-Solicitation.

          (a) Consultant and MFC agree that they will not disclose at any time,
other than to an authorized employee, officer, director or agent of the Company,
any information relating to the Company's business, trade, practices, trade
secrets or know-how or proprietary information without the Company's prior
express written consent. Consultant, MFC and the Company agree that until the
first anniversary of the Effective Date, the Parties shall not directly or
indirectly solicit, induce, recruit or encourage any of the other's employees to
leave their employment or take away such employees to leave their employment or
take away such employees or attempts to solicit, induce, recruit, encourage or
take away the other's employees.


                                       3
<PAGE>

     9.   General Release by Consultant.

          (a) Release of Claims. Consultant and MFC do hereby for themselves and
their respective heirs, successors and assigns, release, acquit and forever
discharge the Company, its parents, subsidiaries and affiliates and any of their
officers, directors, managers, employees, representatives, related entities,
successors and assigns, and all persons acting by, through or in concert with
them (the "Company Releasees") of and from any and all claims, actions, charges,
complaints, causes of action, rights, demands, debts, damages, or accountings of
whatever nature, known or unknown which Consultant or MFC may have against the
Company Releasees, or any of them, based on any actions or events which occurred
prior to the Effective Date, including, but not limited to, those related to, or
arising from, Consultant's employment with the Company or the termination
thereof, including, without limitation, any claims under Title VII of the Civil
Rights Act of 1964, the Americans with Disabilities Act and the California Fair
Employment and Housing Act (collectively, the "Claims" or individually,
"Claim"), but excluding any claims arising under the Company's agreements with
McManus & Company, Inc and any claims for defense and indemnity under the
Company's Certificate of Incorporation and Bylaws.

          (b) Release of Unknown Claims. In addition, Consultant and MFC
expressly waive all rights under Section 1542 of the Civil Code of the State of
California, which reads as follows:

               A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES
               NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
               EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
               AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

          (c) No Assignment of Claims. Consultant and MFC represent and warrants
to the Company Releasees that there has been no assignment or other transfer of
any interest in any Claim which Consultant or MFC may have against the Company
Releasees, or any of them, and Consultant and MFC agree to indemnify and hold
the Company Releasees harmless from any liability, claims, demands, damages,
costs, expenses and attorneys' fees incurred as a result of any person asserting
any such assignment or transfer of any rights or Claims if Consultant or MFC
have made such assignment or transfer from such party.

          (d) No Suits or Actions. Consultant and MFC represent and warrant to
the Company that there have been no claims, suits, actions, complaints, or
charges filed by either of them against the Company Releasees, or any of them.

          (e) No Admission. Consultant and MFC further understand and agree that
neither the payment of money nor the execution of this Release shall constitute
or be construed as an admission of any liability whatsoever by the Company
Releasees.

     10.  General Release by the Company.

          (a) Release of Claims. The Company does hereby for itself and its
respective successors and assigns, release, acquit and forever discharge
Consultant and MFC and each of


                                       4
<PAGE>

their heirs, estates, successors and assigns, and all persons acting by, through
or in concert with them (the "Consultant Releasees") of and from any and all
claims, actions, charges, complaints, causes of action, rights, demands, debts,
damages, or accountings of whatever nature, known or unknown which the Company
may have against the Consultant Releasees, or any of them, based on any actions
or events which occurred prior to the Effective Date, including, but not limited
to, those related to, or arising from, Consultant's and MFC's Prior Arrangements
with the Company or the termination thereof (collectively, the "Claims" or
individually, "Claim"), but excluding any claims arising under the Company's
agreements with McManus & Company, Inc.

          (b) Release of Unknown Claims. In addition, the Company expressly
waives all rights under Section 1542 of the Civil Code of the State of
California, which reads as follows:

               A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES
               NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
               EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
               AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

          (c) No Assignment of Claims. The Company represents and warrants to
the Consultant Releasees that there has been no assignment or other transfer of
any interest in any Claim which the Company may have against the Consultant
Releasees, or any of them, and the Company agrees to indemnify and hold the
Consultant Releasees harmless from any liability, claims, demands, damages,
costs, expenses and attorneys' fees incurred as a result of any person asserting
any such assignment or transfer of any rights or Claims if the Company has made
such assignment or transfer from such party.

          (d) No Admission. The Company further understands and agrees that
neither the payment of money nor the execution of this Release shall constitute
or be construed as an admission of any liability whatsoever by the Consultant
Releasees.

     11.  Nondisparagement. The Company, Consultant and MFC agree not to make
any disparaging or derogatory comments, public or otherwise, concerning each
other, or M&C or MFC, and Consultant shall refrain and shall cause M&C and MFC
to refrain from making any disparaging comments, public or otherwise, concerning
any employees, officers or directors of the Company. The Company's obligation
under this provision shall be limited to (i) causing its officers and directors
and (ii) using its best efforts to cause other employees, to refrain from making
any disparaging or derogatory comments, public or otherwise, concerning
Consultant, M&C and MFC. The Company will advise its officers, directors and
employees in writing of the existence of this obligation. In addition, the
Company shall provide Consultant a reasonable opportunity to review and comment
in advance on any press release or filing with the Securities and Exchange
Commission regarding Consultant's employment or separation from the Company, and
M&C and MFC's consulting relationship with the Company, and the Company shall
not unreasonably disregard any such comments provided by Consultant.

     12.  Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and assigns. Notwithstanding the foregoing, neither this Agreement
nor any rights hereunder may be assigned


                                       5
<PAGE>

to any party by the Company, MFC or Consultant without the prior written consent
of the other parties hereto.

     13.  Entire Agreement/No Oral Modification. This Agreement contains all of
the terms, promises, representations, and understandings, oral or written, made
between the Company, MFC and Consultant with respect to the subject matter
hereof and supersedes all prior representations, understandings, or agreements,
oral or written, between the Company and/or MFC and/or Consultant, with respect
to such matters, which the Parties acknowledge have been merged into this
Agreement. This Agreement may not be modified other than with a writing executed
by both parties and stating an intent to modify this agreement.

     14.  Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 5:00 p.m. (Pacific Standard Time) on a
business day, (b) the next business day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a business day or later than 5:00
p.m. (Pacific Standard Time) on any business day, or (c) the business day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service such as Federal Express. The address for such notices and
communications shall be as follows:

          If to the Company:

          Spectrum Pharmaceuticals, Inc.
          157 Technology Drive
          Irvine, CA 92618
          Attn:  CEO
          Fax No.:  (949) 788-6706

          If to the Consultant:

          Michael P. McManus
          P.O. Box 7002
          624 Lariat Circle #4
          Incline Village, NV 89450-7002

          If to MFC:

          McManus Financial Consultants, Inc.
          P.O. Box 7002
          624 Laria Circle #4
          Incline Village, NV 89450-7002
          Attn:  Michael P. McManus

          Unless otherwise stated above, such communications shall be effective
when they are received by the addressee thereof in conformity with this Section.
Any party may change its


                                       6
<PAGE>

address for such communications by giving notice thereof to the other parties in
conformity with this Section.

     15.  Governing Law and Forum Selection. This Agreement shall be governed by
the laws of the State of California, without regard for conflict of law
principles. Any actions arising out of or relating to this Agreement shall be
filed in either the Superior Court of the State of California for the County of
Orange, or the United States District Court for the Central District of
California, Southern Division, located in the County of Orange.

     16.  Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.


                                       7
<PAGE>

          IN WITNESS WHEREOF, this Agreement is executed by the parties set
forth below as of the date first indicated above.

THE COMPANY                                     CONSULTANT

SPECTRUM PHARMACEUTICALS, INC.                  MICHAEL P. MCMANUS,
a Delaware corporation                          an individual



By:  /s/ Rajesh C. Shrotriya                     /s/ Michael P. McManus
    --------------------------------            --------------------------------

Title: Chairman, CEO & President
       -----------------------------


MFC

MCMANUS FINANCIAL CONSULTANTS, INC.
a Nevada corporation



By:  /s/ Michael P. McManus
    --------------------------------

Title:  Executive Vice President
       -----------------------------



                                       8