UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


_________________________


FORM
10-K/A


(Amendment
No. 1)


(MARK
ONE)


x  Annual
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934


For the
Fiscal Year Ended December 31, 2007


Or


o  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 33-90516


__________________________


NEOPHARM,
INC.


(Exact
Name of Registrant as Specified in its Charter)


DELAWARE
            51-0327886(State
      or other jurisdiction of
            (I.R.S.
      Employerincorporation
      or organization)
            Identification
      Number)101
      WAUKEGAN ROAD, SUITE 970LAKE
      BLUFF, ILLINOIS 60044(Address
      of Principal Executive Offices) (Zip Code)(847)
      887-0800(Registrant's
      Telephone Number, Including Area Code)SECURITIES
      REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONESECURITIES
      REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:COMMON
      STOCK, $.0002145 PAR VALUEPREFERRED
      STOCK PURCHASE RIGHTS(Title
      of each class)__________________________


Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes  o No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15( d) of the Act.


Yes o  No x





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 o





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





Indicate
by check mark whether registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer or a small reporting company. See definition of
“accelerated filer”, “large accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):





Large
      accelerated filer  o
            Accelerated
      filer o
            Non-accelerated filer o
            Smaller
      reporting company x


Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes o  No x








The
aggregate market value of the registrant's common stock held by non-affiliates
(affiliates being, for these purposes only, directors, executive officers and
holders of 10% of the registrant's stock) of the registrant, par value $.0002145
per share, (based on the closing price of such shares on the NASDAQ on June 30,
2007) was $25,965,000.  As of April 17, 2008 there were 28,491,155
shares of common stock outstanding.










NEOPHARM,
INC.




FORM
10-K/A









EXPLANATORY
NOTE




This Amendment No. 1 on Form 10-K/A
amends our Annual Report on Form 10-K for the year ended December 31, 2007
originally filed March 28, 2008 (“Original Annual Report”) solely to incorporate
information previously omitted from Part III, Items 10, 11, 12, 13 and 14. We
are also updating the Signature Page and Exhibits 31.1 and 31.2. Other than as
set forth herein, the registrant has not undertaken to update any information
provided in the Original Annual Report.




________________________________









INDEX




PART
III




ITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE




ITEM
      11
            EXECUTIVE
      COMPENSATION




ITEM
      12
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS




ITEM
      13
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE




ITEM
      14
            PRINCIPAL
      ACCOUNTING FEES AND SERVICES




PART
IV




ITEM
      15
            EXHIBITS












PART
III




ITEM
10              DIRECTORS,
EXECTUIVE OFFICERS AND CORPORATE GOVERNANCE




Executive
Officers and Directors




The following table sets forth certain
information concerning our executive officers and directors as of April 17,
2008.









Name
            Age
            PositionExecutive
      OfficersLaurence
      P. Birch
            48
            President
      and Chief Executive Officer; Acting Chief Financial Officer; and
      DirectorDr.
      Shahid Ali
            57
            Executive
      Vice President-Research and DevelopmentNon-Employee
      DirectorsJohn
      N. Kapoor
            64
            Chairman
      of the Board of DirectorsFrank
      C. Becker
            72
            DirectorBernard
      A. Fox
            54
            DirectorPaul
      E. Freiman
            73
            Director







Executive
Officers




Laurence P. Birch joined
NeoPharm in March 2007 as President, Chief Executive Officer and as a director
and was appointed Acting Chief Financial Officer in April 2007.  Prior
to joining the Company, Mr. Birch served as Sr. Vice President and CFO, and
Interim President and CEO, of AKSYS, Ltd., a hemodialysis developer and
manufacturer from 2005 to 2006.  Prior to that, Mr. Birch served as
co-founder and managing director of Stratego Partners, a cost management
consulting firm, from 2003 to 2005, Sr. Vice President-Business Development and
CFO of Technology Solutions, Inc., a systems integration and consulting company,
during 2002, CFO of Brigade, Inc., an internet support company, from 1999 to
2000, and five years with MCI Systemhouse where he held a variety of senior
finance and general management positions.  Mr. Birch began his career
with Baxter Healthcare, a manufacturer and supplier of pharmaceuticals and
medical devices, where, over the course of 13 years, he held a variety of
positions.  Mr. Birch is a director of DataTrak International, Inc., a
provider of technology and services to the clinical trial
industry.  Mr. Birch holds a Bachelor of Science-Finance from the
University of Illinois and a MBA from Northwestern University-Kellogg Graduate
Business of Management.  Mr. Birch is also a Certified Public
Accountant.




Dr. Shahid Ali joined
NeoPharm in January 2001, as Associate Director of Research and Development, and
assumed the position of Executive Vice President, Research and Development in
September 2007.  Since joining the Company, Dr. Ali has held positions
of increasing responsibility in Research and Development.  Previously,
Dr. Ali was a Group Leader at EpiGenesis Pharmaceuticals Inc. where he directed
pre-clinical program for antisense oligonucleotide based therapeutic
intervention in pulmonary diseases including bronchial asthma.  Prior
to EpiGenesis, Dr. Ali spent 10 years at School of Medicine, East Carolina
University, most recently serving as an Associate Research Professor in the
departments of Medicine/Pharmacology.  Dr. Ali received his M.S and
Ph.D degrees from Lucknow University, Lucknow, India.




Executive officers are appointed
annually by the Board of Directors.




Non-employee
Directors




John N. Kapoorhas been a
Director of the Company since its formation in 1990 and has served as Chairman
from 1990 to 2004 and from June 2006 to the present.  Dr. Kapoor is the
sole shareholder and President of EJ Financial Enterprises, Inc., a health
care consulting and investment company.  In addition, Dr. Kapoor serves as
a director and Chairman of Akorn, Inc., a manufacturer, distributor and marketer
of generic ophthalmic products and is a director of Introgen Therapeutics, Inc.,
a gene therapy company.  Dr. Kapoor received a Ph.D. in medicinal
chemistry from the State University of New York at Buffalo and a B.S. in
pharmacy from Bombay University, India.




1


Frank C. Becker joined the
Board in November 2004. Mr. Becker is currently the President and a partner
at Greenfield Chemical, a pharmaceutical consulting and sourcing company, which
he founded in January 1998.  From 1999 to 2002, Mr. Becker served as
President and Chief Operating Officer of Sicor Pharmaceuticals, a maker of
injectable pharmaceuticals.  Mr. Becker is a partner in Southport
Marina Development LLC, a firm operating Southport Marina in Kenosha,
Wisconsin.  Prior to the foregoing relationships, Mr. Becker spent
over 35 years at Abbott Laboratories, most recently as Vice President of Process
Research and Chemical Manufacturing.  Mr. Becker also serves on
the Board of Directors of Regis Technologies, a provider of synthesis and
separation services.  Mr. Becker received his MBA in Finance from
the University of Chicago and a B.S. degree in chemical engineering from Purdue
University.




Bernard A. Foxjoined the
Board in November 2004.  Dr. Fox has been Chief of the Laboratory of
Molecular and Tumor Immunology at the Robert W. Franz Cancer Research Center,
within the Earle A. Chiles Research Institute at the Providence Portland Medical
Center in Portland, Oregon and, also, Associate Professor in the Departments of
Molecular Microbiology and Immunology and Environmental & Biomolecular
Systems at Oregon Health and Science University School of Medicine in Portland,
Oregon since 1994.  Dr. Fox received his post-doctoral training as a
Staff Fellow in the Surgery Branch, Division of Cancer Treatment, Clinical
Oncology Program at the National Cancer Institute at the National Institutes of
Health in Bethesda, Maryland from 1985 to 1987 and was a Senior Staff Fellow
there from 1987 to 1990.  Dr. Fox is also Vice President of The
International Society for the Biological Therapy of Cancer, is a member of the
scientific advisory board of the Biological Development Association (Europe),
and serves as President and Chief Executive Officer of UBIVAC LLC, a development
stage biotechnology company.




Paul E. Freiman joined the
Board in November 2004.  Mr. Freiman is currently the President,
Chief Executive Officer and a director of Neurobiological Technologies, Inc., a
biotechnology company, a post he has held since May 1997.  Mr. Freiman
served as Chairman and Chief Executive Officer of Syntex Corporation, a
pharmaceutical company, from 1990-1995.  Mr. Freiman currently serves
on the boards of Penwest Pharmaceutical Co., a pharmaceutical company, Calypte
Biomedical Corporation, a developer of in vitro testing solutions, NovaBay
Pharmaceuticals, Inc., a biopharmaceutical company, and Otsuka America
Pharmaceuticals Inc., a pharmaceutical company.  Mr. Freiman has been
chairman of the Pharmaceutical Manufacturers Association of America (PhRMA) and
has also chaired a number of key PhRMA committees.  Mr. Freiman
holds a B.S. degree in pharmacy from Fordham University and an honorary
doctorate from the Arnold & Marie Schwartz College of Pharmacy.




Section
16(a) Beneficial Ownership Reporting Compliance




Our executive officers, directors and
10% stockholders are required under Section 16(a) of the Securities Exchange Act
of 1934, as amended, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission.  Copies of these reports must
also be furnished to us.




Based solely on our review of copies of
reports furnished to us, or written representations that no reports were
required, we believe that during 2007 our executive officers, directors and 10%
stockholders complied with all filing requirements of Section 16(a) in a timely
manner, with the exception that Director Becker was late in filing a single Form
4 with respect to a disposition of shares.




Code
of Ethics




The Company has adopted a Code of
Business Conduct and Ethics for all directors, officers, employees, agents and
representatives of the Company and a Code of Conduct Grievance
Procedure.  Links to these documents, including printable versions,
are available on the NeoPharm, Inc. website at www.neopharm.com.  The
documents are also available in print upon request.  Any waivers to
the Code of Business Conduct and Ethics will, to the extent required by
applicable law or regulation, be disclosed on the Company’s
website.




Audit
Committee




The Audit Committee currently consists
of Messrs. Becker, Freiman, and Fox, with Mr. Becker serving as
chairman.  The Board of Directors has determined that each of the
current members of the Audit Committee meets the independence criteria
prescribed by the rules of the Securities and Exchange Commission ("SEC") for
audit committee membership and is an “independent director” as defined in NASDAQ
Rule 4200(a)(15).  The Board has determined that Mr. Freiman qualifies
as an audit committee financial expert, as defined by the regulations
promulgated by the SEC.  The Audit Committee operates pursuant to a
written charter, a copy of which is available at the Company’s website at www.neopharm.com.




2


Stockholder
Recommendations for Board Nominees




Our Corporate Governance Committee
evaluates any stockholder recommendations for Board membership.  The
charter for our Corporate Governance Committee is available on our website at
www.neopharm.com.  We
did not implement any changes to our process for evaluating stockholder
recommendations of director nominees during 2007.




ITEM
11.             EXECUTIVE
COMPENSATION




Summary of
Compensation.




The following table sets forth certain
summary compensation information for the fiscal years ended December 31, 2007
and 2006, for services rendered by each person who served as the principal
executive officer of the Company at any time during 2007, other executive
officers of the Company as of December 31, 2007, and two additional former
executive officers who would have been among our most highly compensated
executive officers if they had been serving as executive officers on December
31, 2007.  We refer to these individuals collectively as our “named
executive officers.”




SUMMARY
COMPENSATION TABLE




Name
      and
                Principal Position
              
              Year
              
              Salary($)
              
              
              Bonus($)(6)
              
              
              Stock
                Awards($)(7)
              
              
              Options
                Awards(7)
              
              
              Non-Equity
                Incentive
      Plan Compensation
              
              
              All
      Other
                Compensation(9)(10)
              
              
              TotalLaurence
      P. Birch,(1)
              
              2007
              
              $
              212,596
              
              
              $
              137,500
              
              
              $
              32,886
              
              
              $
              80,528
              
              
              $
              -
              
              
              $
              10,900
              
              
              $
              474,410Chief
      Executive Officer , President & Acting Chief Financial
      OfficerGuillermo
      A. Herrera,(2)
              
              2007
              
              $
              107,343
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              59,345
              
              
              $
              166,688Former
      Chief Executive Officer and President
              
              2006
              
              $
              425,000
              
              
              $
              -
              
              
              $
              -
              
              
              $
              773,671
              (8)
              
              $
              -
              
              
              $
              19,290
              
              
              $
              1,217,961Dr.
      Shahid Ali, (3)
              
              2007
              
              $
              160,370
              
              
              $
              42,863
              
              
              $
              -
              
              
              $
              51,048
              
              
              $
              -
              
              
              $
              5,611
              
              
              $
              259,892Executive
      Vice President,
                Research
      & DevelopmentJeffrey
      Sherman, M.D.,(4)
              
              2007
              
              $
              136,460
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              143,244
              
              
              $
              279,704Former
      Chief Medical Officer and Executive Vice-President
              
              2006
              
              $
              275,000
              
              
              $
              -
              
              
              $
              -
              
              
              $
              94,400
              (8)
              
              $
              -
              
              
              $
              10,824
              
              
              $
              380,224Tim
      Walbert,(5)
              
              2007
              
              $
              100,311
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              125,509
              
              
              $
              225,820Former
      Executive Vice President, Commercial
              
              2006
              
              $
              230,154
              
              
              $
              50,000
              
              
              $
              -
              
              
              $
              153,419
              (8)
              
              $
              -
              
              
              $
              12,088
              
              
              $
              445,661Operations






(1)
                Mr.
      Birch joined the Company as President and CEO on March 23,
      2007.(2)
                Mr.
      Herrera is the Company’s former President and Chief Executive Officer; Mr.
      Herrera’s employment with the Company ended March 23,
  2007.(3)
                Dr.
      Ali joined the Company in January 2001, and was promoted to the position
      of Executive Vice President, Research & Development on
      September 15, 2007.(4)
                Dr.
      Sherman served as the Chief Medical Officer and Executive Vice President
      of the Company until June 18, 2007.(5)
                Mr.
      Walbert served as Executive Vice President-Commercial Operations of the
      Company until May 31, 2007.(6)
                The
      bonus figures for 2007 for Mr. Birch and Dr. Ali reflect amounts earned in
      2007, though the amounts were paid in 2008.  The amount reported
      under this column for Mr. Walbert represents a signing bonus paid upon his
      hire in 2006.(7)
                Amounts
      reported reflect expense determined utilizing FASB Statement No. 123 (R),
      Share Based Payment, related to share and option awards for 2006 and 2007;
      no forfeiture rate assumption is applied.  All options and stock
      amounts vest over four years after the date of grant unless otherwise
      noted.  Please refer to the footnotes to the 2007 and 2006
      financial statements for descriptions of the assumptions utilized to
      determine the compensation expense associated with these
      awards.(8)
                These
      options have all expired following Mr. Herrera's departure from the
      Company in March 2007, Dr. Sherman’s departure from the Company in June
      2007 and Mr. Walbert’s departure from the Company in May
    2007.(9)
                For  2007,
      the amount reported for Mr. Birch represents the Company’s contribution to
      his 401K account ($5,500) and his aggregate car allowance ($5,400); the
      amount reported for Mr. Herrera represents the Company’s contribution to
      his 401K account ($3,220), payments made due to his termination from the
      Company ($53,125) and his aggregate car allowance ($3,000); the amount
      reported for Dr. Ali represents the Company’s contribution to his 401K
      account ($4,811) and his aggregate car allowance ($800); the amount
      reported for Dr. Sherman reflects the Company’s contribution to his 401K
      account ($4,094), his aggregate car allowance ($1,650) and payments made
      due to his termination from the Company ($137,500); the amount reported
      for Mr. Walbert reflects the Company’s contributions to his 401K account
      ($3,009), his aggregate car allowance ($2,500) and payments made due to
      his termination from the Company
($120,000).














3




(10)
                For  2006,
      the amount reported for Mr. Herrera represents the Company’s contribution
      to his 401K account ($6,600), life insurance premiums paid by the Company
      ($690) and his aggregate car allowance ($12,000); the amount reported for
      Dr. Sherman reflects the Company’s contribution to his 401K account
      ($6,600), his aggregate car allowance ($3,600) and life insurance premiums
      paid by the Company ($624); the amount reported for Mr. Walbert reflects
      the Company’s contributions to his 401K account ($6,150), his aggregate
      car allowance ($5,750) and life insurance premiums paid by the Company
      ($188).




Employment
Agreements




Mr.
Birch.On March 23, 2007, the Company entered into an
employment agreement (the “Birch Employment Agreement”) with Mr. Laurence P.
Birch in connection with Mr. Birch’s appointment as President and Chief
Executive Officer of the Company.  Under the terms of the Birch
Employment Agreement, Mr. Birch was provided with a base salary of
$275,000.  Additionally, upon commencing his employment, Mr. Birch was
granted an option to acquire 300,000 shares of the Company’s Common Stock at an
exercise price of  $1.90 per share, which was the average of the high
and low price of the Company’s Common Stock on the date of grant.  Mr.
Birch’s stock option is scheduled to vest in four equal annual installments of
75,000 shares on each of the first four anniversaries of the stock option grant
date provided Mr. Birch is still providing services to the Company on each such
date.  Additionally, and again pursuant to the terms of the Birch
Employment Agreement, in June 2007 the Company provided an award of 180,665
shares of restricted stock (which vests over four years from the date of grant)
to Mr. Birch.  Each year during his employment, Mr. Birch is eligible
to receive a target bonus of up to 50% of base salary and an overachievement
bonus of up to an additional 50% of the base salary, in each case based on the
achievement by the Company and Mr. Birch of certain specific plans and goals
established annually by the Compensation Committee in consultation with Mr.
Birch.




The Birch Employment Agreement provides
for automatic termination in the event of Mr. Birch’s death or in the event that
he suffers a Disability (as defined in the agreement).  In the event
Mr. Birch’s employment terminates on account of his death or Disability, Mr.
Birch (or his estate) would be entitled to receive his accrued base salary
through the date of termination.  Additionally, the Company may
terminate Mr. Birch’s employment at any time, with or without cause (as defined
in the agreement), effective upon written notice and Mr. Birch may terminate his
employment at anytime upon 30 days prior written notice.  In the event
of a termination for cause or upon Mr. Birch’s election to terminate his
employment, Mr. Birch would be entitled to receive accrued base salary through
the date of termination.  In the event of termination by the Company
without cause, Mr. Birch would be entitled to receive a continuation of his then
current base salary for 12 months, subject, however, to cessation of the salary
continuance upon his accepting another full-time position or breach of the
restrictive covenants set forth in the Birch Employment Agreement.  In
addition, following a change of control (as defined in the agreement), if Mr.
Birch’s employment was terminated within one (1) year, or he terminated his
employment for “Good Reason” (as defined in the agreement) within one year after
a change in control, in addition to the 12 month’s of salary continuance, Mr.
Birch would also be entitled to a lump sum payment equal to the prior year’s
bonus, if any, plus all of his unvested options and restricted stock would
become immediately vested and exercisable.




Mr. Herrera.  In
October 2005, NeoPharm entered into an employment agreement with Guillermo A.
Herrera (the “Herrera Agreement”) to serve as its President and CEO and a member
of the Board of Directors.  Under the terms of the Herrera Agreement,
Mr. Herrera received an annual base salary of $425,000 and a grant of 22,075
shares of the Company’s common stock, which at the time of hire had a total fair
market of $200,000 based upon the closing price as of the date of
grant.  Mr. Herrera was also eligible for an annual bonus payment
based upon the performance of the Company and himself and received a monthly car
allowance of $1,000.  Additionally, Mr. Herrera received a common
stock option grant of 500,000 options with a grant price equal to the fair
market value on the date of grant. These options were to vest in four equal
annual installments on the anniversary of the option grant date.




The Herrera Agreement provided for
automatic termination in the event of Mr. Herrera’s death or in the event that
he suffered a Disability (as defined in the agreement).  Additionally,
the Company could terminate Mr. Herrera’s employment at any time, with or
without cause (as defined in the agreement), effective upon written notice and
Mr. Herrera could terminate his employment at anytime upon 30 days prior written
notice.  In the event of a termination for cause or upon Mr. Herrera’s
termination of his employment, Mr. Herrera would be entitled to receive
accrued base salary through the date of termination.  In the event of
termination without cause, Mr. Herrera would be entitled to receive a
continuation of his then current base salary for 12 months.  Provision
was also made for various payments to be made to Mr. Herrera upon a change of
control (as defined in the Agreement).  Mr. Herrera’s employment with
the Company was terminated in March 2007.  While the Company initially
made severance payments to Mr. Herrera, subsequent to the termination of his
employment, the Company ended such payments and is not making any severance
payments to Mr. Herrera at this time.  Subsequent to his departure,
Mr. Herrera has filed suit against the Company.  See Item 3 “Legal
Proceedings.”




4


Other Named Executive
Officers.  Each of the named executive officers, other than Mr.
Birch, Mr. Herrera and Dr. Ali, accepted employment with the Company on the
basis of a written offer which set forth the salary and benefits to be provided
by the Company, including, but not limited to, an undertaking by the Company to
provide salary continuation payments, under certain circumstances, upon a
termination of the individual’s employment with the Company as a result of
termination or a change of control, at the salary level in existence at the date
of termination.




Dr. Shahid
Ali, the Company's Executive Vice President, Research and Development, upon
assuming the position of Executive Vice President, received a base salary of
$175,000 and is eligible for a target bonus of 30% of base salary.




In 2007,
Mr. Timothy Walbert, our former Executive Vice President-Commercial Operations,
received a base salary of $240,000, and was eligible for a target bonus of up to
30% of base salary and an overachievement bonus of up to 50% of base
salary.  Upon being hired in 2006, Mr. Walbert received a sign-on
bonus of $50,000.  Upon his termination of employment in May 2007, the
Company entered into a Separation Agreement with Mr. Walbert.  See
“Separation Agreements” below.




Dr. Jeffrey Sherman, our former
Executive Vice President and Chief Medical Officer in 2007, had a base salary in
2007 of $275,000 and, in accordance with the terms of his employment, was
eligible for discretionary stock options and a bonus of up to a maximum of 50%
of base salary.  Upon his termination of employment, the Company
entered into a Separation Agreement. See “–Separation Agreement”
below.




For each of the named executive
officers, our equity incentive plans provide for vesting of all unvested options
upon the occurrence of a change of control as defined in the applicable
plan.  Each of our named executive officers was also eligible to
receive the benefits generally made available to our employees and
officers.




Separation
Agreements.




On May 10, 2007, the Company and Mr.
Timothy Walbert, our former Executive Vice President-Commercial Operations,
entered into a Separation Agreement and Mutual Release providing for Mr.
Walbert’s termination to take effect May 31, 2007.  Pursuant to the
terms of the separation agreement, NeoPharm paid Mr. Walbert salary continuance
for six months during the period June 1, 2007 through November 30, 2007, at the
rate of $20,000 per month, and reimbursement for COBRA coverage for the period
June 1, 2007 through July 31, 2007.




On May 24, 2007, the Company and Dr.
Jeffrey W. Sherman, our former Executive Vice President-Chief Medical Officer,
entered into a Separation Agreement and Mutual Release providing for Dr.
Sherman’s termination to take effect June 18, 2007.  Pursuant to the
terms of the separation agreement, NeoPharm paid Dr. Sherman salary continuance
for six months during the period June 18, 2007 through December 18, 2007, at the
rate of $22,917 per month, and reimbursement for unused vacation time and for
COBRA coverage for the period June 18, 2007 through August 18,
2007.




Future
Performance Bonus Eligibility




In accordance with the terms of his
employment, the maximum annual cash bonus for 2008, as a percentage of 2008
annual base salary, is set at 100% of Mr. Birch’s base salary, based upon
performance criteria established by the Compensation Committee and the Company’s
overall performance.  For Dr. Ali, the maximum annual cash bonus for
2008, as a percentage of 2008 annual base salary, is set at 30% of Dr. Ali’s
base salary, based upon performance criteria established by the Compensation
Committee and the Company’s overall performance.  It is to be expected
that if other executive officers are hired during 2008, they would also have
eligibility to obtain a performance bonus, however, none of the executive
officers is guaranteed a bonus.  The Compensation Committee may make
actual cash bonus awards that may be greater or less than the maximum annual
cash bonus based on overall corporate performance and individual
performance.





5


Retention
Bonus Arrangements




On April 16, 2007, the Board of
Directors, acting on the recommendation of management, modified the bonus
program with respect to all employees, including, but not limited to, Messrs.
Birch and Ali.  Under the revised bonus plan, each employee employed
as of April 1, 2007, who was still employed by the Company at December 31, 2007,
would be entitled to receive one-third (1/3rd) of
their target bonus award (the “Retention Bonus”) as a result of remaining with
the Company without reference to individual or Company
performance.  Any employee leaving the employ of the Company prior to
that date for any reason, including, but not limited to, resignation or
termination, would not be eligible for any part of the Retention
Bonus.  The remaining two-thirds (2/3rds) of the target bonus, as well
as any overachievement bonus, continued to be subject to the Company’s
performance and the individual’s attaining their personal performance
goals.  In accordance with the Retention Bonus plan, of the named
executive officers set forth in the table above, only Mr. Birch and Dr. Ali
received a Retention Bonus.









Stock
Option Grants and Awards




No stock option grants or awards were
made to any of the named executive officers in 2007, other than the granting of
stock options and a stock award of restricted stock provided to Mr. Birch upon
his joining the Company in March 2007 and the grant of stock options to Dr. Ali
in August 2007 upon his promotion to Executive Vice President.  See
“–Outstanding Equity Awards at December 31, 2007,” below.  The Company
did make stock option grants to certain of its named executive officers at
various times during 2006 in connection either with an annual review or upon
their initial employment by the Company.  All stock options to our
executive officers vest as to 25% of the shares on each of the first four
anniversaries of the grant date, provided the individual is still providing
services to the Company at the applicable vesting date.  Unless
otherwise noted, all stock options are granted at the closing price of the
Company’s stock on the date of grant, with the exception that options granted
under the 2006 Equity Incentive Plan are granted with an exercise price equal to
the average of the high and low price per share of our common stock reported by
NASDAQ on the grant date.  The restricted stock provided to Mr. Birch
vests over four years in four installments on the anniversary date of the
grant.












Outstanding
Equity Awards at December 31, 2007




The following table shows for the
fiscal year ended December 31, 2007, certain information regarding outstanding
equity awards at fiscal year end for the named executive officers.







Option
      Awards(1)
            
            Stock
      AwardsName(2)
            Grant
      Date
            
            Number
      of Securities Underlying Unexercised Options
              (Exercisable)
            
            
            Number
      of Securities Underlying Unexercised Options
              (Unexercisable)
            
            
            Option
      Exercise Price
            
            Option
      Expiration Date
            
            Number
      of Shares or Units of Stock that Have Not Vested
            
            
            Market
      Value of Shares or Units of Stock that Have Not VestedLaurence P. Birch (3)
            3/23/2007
            
            
            
            
            
            300,000
            
            
            $
            1.90
            
            3/23/2017
            
            
            180,665
            
            
            $
            106,592Dr. Shahid Ali (4)
            12/18/2000
            
            
            18,975
            
            
            
            
            
            
            $
            21.64
            
            12/18/20102/01/2002
            
            
            4,312
            
            
            
            
            
            
            
            13.78
            
            2/01/201212/31/2002
            
            
            13,000
            
            
            
            
            
            
            
            8.82
            
            12/31/20122/17/2004
            
            
            9,000
            
            
            
            
            
            
            
            19.91
            
            2/17/20144/28/2005
            
            
            4,950
            
            
            
            4,950
            
            
            
            7.95
            
            4/28/20151/25/2006
            
            
            2,025
            
            
            
            6,075
            
            
            
            12.46
            
            1/25/201612/05/2006
            
            
            3,750
            
            
            
            11,250
            
            
            
            7.11
            
            12/5/20168/16/2007
            
            
            
            
            
            
            50,000
            
            
            
            0.99
            
            8/16/2017




(1)
              All
      outstanding options have exercise prices in excess of the market value of
      the underlying common shares as of December 31, 2007.(2)
              With
      respect to Messrs. Herrera, Walbert and Sherman, each of whom is a named
      executive officer whose employment terminated in 2007, all outstanding
      options expired ninety (90) days after the date of such named executive’s
      termination of employment with the result that such individuals had no
      outstanding options as of December 31, 2007 Also, none held any unvested
      stock awards at that date.(3)
              Mr.
      Birch joined the Company as President and CEO in March
    2007.(4)
              Dr.
      Ali assumed the position of Executive Vice President, Research and
      Development in September
2007.




6


Option
Exercises and Stock Vested in 2007




For the fiscal year ended December 31,
2007, there were no options exercised nor vesting of stock awards by any of the
named executive officers.





Pension
Benefits




We do not provide pension arrangements
or post-retirement health coverage for our executive employees.  Our
executive officers are eligible to participate in our 401(k) defined
contribution plan. At our discretion, we may contribute to each participant a
matching contribution up to 3% of the participant’s eligible
compensation.  All of the named executive officers who were employed
during 2007 participated in our 401(k) and received matching
contributions.




Compensation
of Directors




General




The compensation paid to non-employee
directors of the Board is determined by the Board of Directors based upon the
recommendation of the Corporate Governance Committee, all the members of which
are independent directors.  Under the Board Compensation Plan
recommended by the Corporate Governance Committee and approved by the Board for
the 2007-2008 Board terms, compensation is paid to non-employee directors as
follows:




Board
Membership.A restricted stock grant having a value of $50,000
is awarded upon each non-employee Director’s election to the Board of Directors
at the Annual Meeting.  For the 2007-2008 Board Term, the non-employee
Directors were Messrs. Becker, Fox, Freiman, and Kapoor.  The shares
of Restricted Stock do not vest until one year after the date of
grant.  Non-employee directors elected during the year to fill
vacancies receive pro
rata grants.




Board Chairman. In
addition to the restricted stock grant for Board membership, the individual
serving as Chairman of the Board, currently Dr. Kapoor, receives an additional
restricted stock grant with a value at the time of grant of
$10,000.  These shares also vest one year after the date of the
grant.  In addition, the individual serving as the Chairman of the
Board receives a cash payment of $24,000 per year (payable in four installments
of $6,000 per quarter).





Corporate Governance Committee
Members.Directors serving as members of the Corporate
Governance Committee (currently Messrs. Becker, Fox, and Freiman) receive cash
compensation of $10,000 per year (payable in four installments of $2,500 per
quarter).  The individual serving as the Chairman of the Corporate
Governance Committee, currently Dr. Fox, receives cash compensation of $22,500
per year (payable in four installments of $5,625 per quarter).





Audit Committee
Members.Directors serving as members of the Audit Committee
(currently Messrs. Becker, Fox and Freiman) receive cash compensation of $10,000
per year (payable in four installments of $2,500 per quarter).  The
individual serving as Chairman of the Audit Committee, currently Mr. Becker,
receives cash compensation of $20,000 per year (payable in four installments of
$5,000 per quarter).





Compensation Committee
Members.Directors serving as members of the Compensation
Committee (currently Messrs. Becker, Fox, and Freiman) receive cash compensation
of $4,000 (payable in four installments of $1,000 per quarter).  The
individual serving as Chairman of the Compensation Committee, currently Mr.
Freiman, receives annual cash compensation of $10,000 (payable in four
installments of $2,500 per quarter).





The following table sets forth the
compensation paid to our non-employee directors, including annual board and
committee retainer fees for the fiscal year ended December 31,
2007:




7




Director
      CompensationChange
      in
                
                
                
                
                
                
                
                
                UnvestedFees
                
                
                
                
                
                
                
                
                
                
                
                Pension
      Value
                
                
                
                
                
                
                
                
                RestrictedEarned
                
                
                Restricted
                
                
                
                
                
                Non-Equity
                
                
                and
      Nonqualified
                
                
                All
                
                
                
                
                
                Stockor
      Paid
                
                
                Stock
                
                
                Option
                
                
                Incentive
      Plan
                
                
                Deferred
      Comp
                
                
                Other
                
                
                
                
                
                HoldingsName (1)
                
                in Cash
                
                
                Awards(11)
                
                
                Awards
                
                
                Compensation
                
                
                Earnings
                
                
                Compensation
                
                
                Total
                
                
                in Shares (10)Frank
      C. Becker
                
                $
                44,500
                
                
                $
                41,995
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                86,495
                
                
                
                50,761(2)(3)(4)(8)Bernard
      A. Fox
                
                $
                32,625
                
                
                $
                41,995
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                74,620
                
                
                
                50,761(2)(3)(4)(6)Paul
      E. Freiman
                
                $
                53,500
                
                
                $
                41,995
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                95,495
                
                
                
                50,761(2)(3)(4)(5)John
      N. Kapoor(7)
                
                $
                42,000
                
                
                $
                55,025
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                97,025
                
                
                
                60,913Ronald G.
      Eidell(9)
                
                $
                10,000
                
                
                
                23,150
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                33,150
                
                
                
                -Erick E.
      Hanson(9)
                
                $
                45,823
                
                
                
                23,150
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                68,973
                
                
                
                -Kaveh T. Safavi(9)
                
                $
                37,663
                
                
                
                23,150
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                60,813
                
                
                
                -






(1)
              Does
      not include Mr. Birch, our President and CEO, because, as an employee of
      the Company, he did not receive separate compensation for his services as
      a director.  Mr. Birch’s compensation is set forth in the
      Summary Compensation Table above.(2)
              Messrs.
      Becker, Freiman, and Fox serve as members of the Audit Committee of the
      Board of Directors.(3)
              Messrs.
      Becker, Fox, and Freiman serve as members of the Compensation Committee of
      the Board of Directors.(4)
              Messrs.
      Becker, Fox, and Freiman serve as members of the Corporate Governance
      Committee of the Board of Directors.(5)
              Mr.
      Freiman serves as the Chairman of the Compensation Committee of the Board
      of Directors.(6)
              Dr.
      Fox serves as the Chairman of the Corporate Governance Committee of the
      Board of Directors.(7)
              Dr.
      Kapoor serves as the Chairman of the Board of
Directors.(8)
              Mr.
      Becker serves as the Chairman of the Audit Committee of the Board of
      Directors.(9)
              Each
      of Messrs. Eidell's, Hanson's and Safavi's term as a director ended in
      August 2007, as a result of their respective decisions not to stand for
      re-election to the Board at the Company's 2007 Annual Meeting of
      Stockholders.  Accordingly, the Compensation shown for each of
      these individuals is for service from January 1, 2007 to August 16,
      2007.(10)
              The
      aggregate grant date fair market value for these awards granted in 2007
      was $50,253 for Messrs. Becker, Fox, and Freiman, and $60,304 for Dr.
      Kapoor.(11)
              Amounts
      reported reflect expense determined utilizing FASB Statement No. 123 (R),
      Share Based Payment, related to share awards for 2006 and 2007; no
      forfeiture rate assumption is
applied.




Compensation
Committee Interlocks and Insider Participation




The Compensation Committee consists of
Messrs. Becker, Fox, and Freiman. No member of the Compensation Committee was at
any time during the fiscal year ended December 31, 2007, or formerly, an officer
or employee of NeoPharm, Inc. or any subsidiary of NeoPharm, Inc., nor has any
member of the Compensation Committee had any relationship with NeoPharm, Inc.
during the fiscal year ended December 31, 2007 requiring disclosure under Item
404 of the Regulation S-K under the Securities Exchange Act of
1934.




None of our named executive officers
has served as a director or member of the compensation committee (or other
committee serving an equivalent function) of any other entity, one of whose
executive officers served as a director or member of the Compensation Committee
of NeoPharm, Inc.




ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS.




Except as otherwise noted, the
following table sets forth certain information regarding beneficial ownership of
shares of the Common Stock as of April 17, 2008 (unless otherwise noted) by (i)
all those known by the Company to be beneficial owners of more than 5% of its
outstanding Common Stock, (ii) each director of the Company, (iii) each of
the named executive officers, and (iv) all executives and directors as a
group.  Unless otherwise noted, each person’s address is in care of
NeoPharm, Inc., 101 Waukegan Road, Lake Bluff, Illinois 60044.




8
 
  Name
                
                Amount
      and Nature of Beneficial
      Ownership(1)
                
                
                Percent
      of
                  ClassJohn
      N. Kapoor , Ph.D.
                
                
                5,464,651
                (2)
                
                
                19.18
                %John
      N. Kapoor 1994A Annuity Trust
                
                
                1,955,935
                (3)
                
                
                6.87Nikos
      Hecht
                
                
                1,970,815
                (4)
                
                
                6.91Sporis
      Capital Advisors LLC
                
                
                1,611,130
                (5)
                
                
                5.65GAM
      Holding AG
                
                
                1,706,797
                (6)
                
                
                5.99Frank
      C. Becker
                
                
                68,223
                (7)
                
                
                *Bernard
      A. Fox
                
                
                66,791
                (7)
                
                
                *Paul
      E. Freiman
                
                
                66,191
                (7)
                
                
                *Laurence
      P. Birch
                
                
                255,665
                (8)
                
                
                *Shahid
      Ali
                
                
                60,512
                (9)
                
                
                *Guillermo
      Herrera
                
                
                600
                
                
                
                *Jeffrey
      W. Sherman, M.D.
                
                
                2,281
                
                
                
                *Timothy
      Walbert
                
                
                1,000
                (10)
                
                
                *All
      executive officers and directors as a group (9 persons)
                
                
                5,985,914
                (11)
                
                
                21.01






*
            Indicates
      ownership of less than 1%.




(1)
            Based
      on 28,491,155 shares of Common Stock outstanding as of April 17,
      2008.  Beneficial ownership is determined in accordance with the
      rules of the Securities and Exchange Commission (the “Commission”) and
      generally includes voting or investment power with respect to
      securities.  Shares of Common Stock subject to options
      exercisable within 60 days are deemed outstanding for purposes of
      computing the percentage of the person or group holding such
      options.  In addition, the total also includes 213,196 shares of
      restricted stock which were granted to non-employee directors in August
      2007 as compensation for service on the Board and 180,665 shares of
      restricted stock which were granted to Laurence P. Birch in March 2007
      upon his joining the Company as President, Chief Executive Officer; of
      these restricted shares, 348,695 shares are unvested and remain subject to
      forfeiture.


(2)
            Includes
      60,913 shares that may be acquired pursuant to restricted stock awards,
      1,509,085 shares held by the John N. Kapoor Trust, dated 9/20/89 (the “JNK
      Trust”), of which Dr. Kapoor is the sole trustee and sole beneficiary,
      21,412 shares which are held by Dr. Kapoor directly, and 1,144,586 shares
      held by EJ Financial/NEO Management, L.P. (the “Limited Partnership”) of
      which John N. Kapoor is Managing General Partner.  The amount
      shown also includes: 379,500 shares which are held by the John and Editha
      Kapoor Charitable Foundation (the “Charitable Trust”), of which Dr. Kapoor
      is the sole trustee; 1,955,935 shares which are owned by the John N.
      Kapoor 1994-A Annuity Trust (the “Annuity Trust”) of which the sole
      trustee is Mr. Rao Akella, who is an employee of EJ Financial Enterprises,
      Inc., of which Dr. Kapoor is the sole shareholder and President; and
      393,220 shares which are owned by four trusts which have been established
      for Dr. Kapoor’s children (the “Children’s Trusts”) of which the sole
      trustee is Mr. Akella.  Dr. Kapoor does not have or share
      voting, investment or dispositive power with respect to the shares owned
      by the Annuity Trust (the shares held by the Annuity Trust are also
      reported separately as the Annuity Trust is the owner of 5% or more of the
      Common Stock) or the Children’s Trusts and Dr. Kapoor disclaims beneficial
      ownership of these shares as well as the shares held by the Charitable
      Trust.


(3)
            The
      sole trustee of the John N. Kapoor 1994-A Annuity Trust (the “Annuity
      Trust”) is Mr. Rao Akella, who also serves as trustee for four trusts
      which have been established for the children of Dr. Kapoor (the
      “Childrens’ Trusts”) and which collectively own 393,220
      shares.  Mr. Akella is an employee of EJ Financial Enterprises,
      Inc., of which Dr. Kapoor is the sole shareholder and
      President.  The shares held by the Children’s Trusts are not
      included in the shares reported by the Annuity
  Trust.


(4)
            Beneficial
      ownership of the shares has been reported on a Schedule 13G filed February
      13, 2008 by Mr. Nikos Hecht as the managing member of each of Aspen
      Advisors LLC (which reports beneficial ownership of 359,685 shares) and
      Sporis Capital Advisors LLC (which reports beneficial ownership of
      1,611,130 shares) and as the sole member of the managing member of Sporis
      Capital (whose beneficial ownership with Sporis Partners of 1,279,830
      shares is included in the shares reported by Sporis Capital Advisors) and
      as the owner of a majority of the membership interests in each of Sporis
      Capital, Aspen Advisors and Sporis Capital Advisors.  The
      principal address for Mr. Hecht and Aspen Advisors is 152 W. 57th Street,
      New York, NY 10019.  The principal address of each of Sporis
      Capital Advisors, Sporis Partners and Sporis Capital is 314
      S.  Galena Street, Suite 300, Aspen, Colorado
    81611.


(5)
            Beneficial
      ownership of the shares has been reported on a Schedule 13G filed February
      13, 2008, by Sporis Capital Advisors, LLC, and includes 1,279,830 shares
      held by Sporis Capital Partners, L.P., of which the general partner is
      Sporis Capital, LLC, and 331,300 shares which are owned by private clients
      of Sporis Capital Advisors.  The sharers reported for Sporis
      Capital Advisors are also included in the shares reported for Nikos
      Hecht.  The address of Sporis Capital Advisors is 314 S. Galena
      St., Suite 300, Aspen,
  Colorado  81611.




9




(6)
            The
      address for GAM Holding AG (“GAM”) is Klaustrasse 10, 8008 Zurich,
      Switzerland.  Ownership is as reported by GAM on a Schedule 13G
      filed on January 23, 2008.  GAM states in its Schedule 13G
      filing that, as of December 31, 2007, the Company’s shares are held by its
      subsidiaries, GAM International Management Limited which is the investment
      advisor of GAM North American
Growth.


(7)
            Includes
      50,761 shares of restricted stock which are subject to
      forfeiture.


(8)
            Includes
      75,000 shares that may be acquired pursuant to options exercisable as of
      April 17, 2008 or that will become exercisable within 60 days of April 17,
      2008, and includes 180,665 shares of restricted stock which are subject to
      forfeiture.


(9)
            Includes
      60,512 shares that may be acquired pursuant to options exercisable as of
      April 17, 2008 or that will become exercisable within 60 days of April 17,
      2008.


(10)
            Based
      on information available to the Company as of the date of
      filing.


(11)
            Includes
      135,512 shares that may be acquired pursuant to options exercisable as of
      April 17, 2008 or that will become exercisable within 60 days of April 17,
      2008.




Equity Compensation
Plans




The following table sets forth certain
information as of December 31, 2007, with respect to compensation plans under
which shares of NeoPharm, Inc.’s Common Stock may be issued.




Equity
      Compensation Plan InformationPlan category
              
              Number
      of securities to be
                issued
      upon exercise of
                outstanding options
              
              
              Weighted-average
                exercise
      price of
                outstanding options
              
              
              Number
      of securities
                remaining
      available
                for future issuance(2)Equity
      compensation plansapproved
      by stockholders(1)
              
              
              1,252,326
              
              
              $
              5.35
              
              
              
              2,260,139Equity
      compensation plans not approved by stockholders
              
              
              -
              
              
              
              -
              
              
              
              -Total
              
              
              1,252,326
              
              
              $
              5.35
              
              
              
              2,260,139


(1)
              Includes
      the 1998 Equity Incentive Plan (the “1998 Plan”) and the 2006 Equity
      Incentive Plan (the “2006 Plan”).  The 1998 Plan was replaced in
      June 2006 by the 2006 Plan.  Accordingly, no further equity
      derivative securities can be issued under the 1998 Plan.  The
      1998 Plan and the 2006 Plan are described in more detail in Note 6 in the
      Notes to Consolidated Financial Statements in this Annual Report on Form
      10-K.(2)
              Under
      the terms of the 2006 Plan, securities will again become available for
      issuance under the 2006 Plan if the previously granted options or other
      awards expire without being exercised or are cancelled or terminated for
      any reason other than expiration or termination of the 2006
      Plan.








ITEM
      13
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE




Certain
Relationships And Related Transactions




There were
no transactions since January 1, 2007 through the date of this report, or any
currently proposed transactions, in which the Company was or is to be a
participant and the amount involved exceeds $120,000, and in which any related
person had or will have a direct or indirect material interest except for the
compensation matters described elsewhere in this report.




The
Company has not yet adopted a written related-person transactions
policy.  However, our Audit Committee has been delegated the authority
to review all related party transactions for potential conflict of interest
situations and, as appropriate, approves or disapproves such related party
transactions.  No member of the Audit Committee who has any interest
in a specific related party transaction may participate in the review of such
transaction.  During the upcoming year, the Audit Committee will give
full consideration to the adoption of a formal policy regarding related-person
transactions and, if adopted, promptly post it on the Company’s
website.




10


Board
Determination of Independence




Under applicable rules of the NASDAQ
Stock Market, a director will only qualify as an “independent director” if, in
the opinion of our board of directors, that person does not have a relationship
which would interfere with the exercise of independent judgment in carrying out
the responsibilities of a director.  Our board of directors has
determined that none of Frank Becker, Bernard Fox, or Paul Freiman, has a
relationship which would interfere with the exercise of his or her independent
judgment in carrying out the responsibilities of a director and, therefor, that
each of these directors is an “independent director” as defined under NASDAQ
Rule 4200(a)(15).




The Board of Directors has determined
that each of the current members of the Compensation Committee and Corporate
Governance Committee meets the independence requirements applicable to those
committees prescribed by the NASDAQ.  In addition, the Board of
Directors has determined that each member of the Audit Committee meets the
criteria for independence established by the Securities and Exchange
Commission  (“SEC”) and that all the members of the Audit Committee
are independent directors for NASDAQ purposes.  See Item 10 - “Audit
Committee.”




ITEM
14.             PRINCIPAL
ACCOUNTING FEES AND SERVICES




Principal
Accounting Fees and Services




In July 2007, the Company dismissed
KPMG LLP as its independent registered public accountants and hired BDO Seidman,
LLP as its new independent registered public accountants.  The
aggregate fees billed for professional services rendered by KPMG LLP for fiscal
year 2006 and BDO Seidman, LLP for fiscal year 2007 were as
follows:




2007
            
            
            2006Audit
      fees(1)
            
            $
            189,183
            
            
            $
            457,505Audit
      related fees(2)
            
            
            ---
            
            
            
            91,200Total
            
            $
            189,183
            
            
            $
            548,705


(1)
            Audit
      fees consisted of fees for the audit of our financial statements for
      fiscal years 2007 and 2006 respectively, and reviews of our quarterly
      financial statements.




(2)
            Audit
      related fees include fees from KPMG for fiscal year 2006 for services that
      are reasonably related to the performance of the audit or review of the
      financial statements.  Such fees are not included in Audit fees
      and consist of the review of registration statements and the issuance of
      comfort letters and consents.  Also included in audit related
      fees are fees for accounting advice provided by
  KPMG.




Audit
Committee Pre-Approval Policies and Procedures




The Audit Committee has adopted
policies and procedures that require pre-approval of all audit, audit-related,
tax and other services rendered by the Company’s independent registered public
accounting firm.  Under the policy, an auditor services schedule is
prepared at the beginning of each year that describes each type of service to be
provided by the independent registered public accounting firm and the projected
fees for each such service.  The Audit Committee reviews and approves
in advance, as appropriate, each service listed on the auditor services schedule
and the projected fees for each such service.  Projected fee amounts
listed on the auditor services schedule may be updated, as appropriate in the
Audit Committee’s discretion, at each regularly scheduled meeting of the Audit
Committee.  The Audit Committee may also pre-approve particular
services on a case-by-case basis.  The policy allows the Audit
Committee to delegate pre-approval authority to one or more members of the Audit
Committee.  Any decisions made by the designated pre-approval member
are reported, for informational purposes only, to the full Audit Committee at
its next meeting.









PART
IV




ITEM
      15.
            EXHIBITS




The
      following documents are being filed as part of this report on Form
      10-K/A:




(3)
            Exhibits:




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Exhibit
              Number
            Description of Document31.1
            Certification
      Pursuant to Rule 13(a)-14(a) of the Securities Exchange Act of 1934, as
      amended, pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002




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SIGNATURES




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









NEOPHARM,
      INC.Dated:  April
      25, 2008
              By:
              /s/ Laurence
      P. BirchLaurence
      P. Birch,President
      and Chief Executive Officer (Principal Executive Officer)and
      Acting Chief Financial Officer (Principal Financial
    Officer)





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