UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

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

Commission File Number: 000-26658



PHARMACYCLICS, INC.

|Delaware                                                       | 94-3148201                          
|-------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number)

|995 E. Arques Avenue






Sunnyvale, California  94085-4521(408) 774-0330                                        
|------------------------------------------------------------------------------------------------------------------
|(Address of principal executive offices including zip code)and Registrant's telephone number, including area code)

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 reports), and (2) has been subject to such filing
requirements for the past 90 days.  YES    x NO     ̈

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

Large accelerated filer      ̈ Accelerated filer    x Non-accelerated filer     ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). (Check one):
YES     ̈ NO    x As of October 31, 2007, there were 25,968,189 shares of the registrant's Common Stock, par value $0.0001 per share,
outstanding.

This quarterly report on Form 10-Q consists of 19 pages of which this is page 1. The Exhibits Index page immediately follows
page 18.



Note:PDF provided as a courtesyPHARMACYCLICS, INC.
                                         Form 10-Q   
                               Table of Contents

PART I.      Financial Information
Page No.Item 1.   Financial Statements (unaudited):Condensed Balance Sheets
3Condensed Statements of Operations

4Condensed Statements of Cash Flows
5Notes to Condensed Financial Statements
6Item 2.    Management's Discussion and Analysis of Financial
Condition and Results of Operations
8Item 3.   Quantitative and Qualitative Disclosures About Market
Risk
15Item 4.   Controls and Procedures
15PART II.     Other InformationItem 1.   Legal Proceedings
15Item 1A.    Risk Factors
15Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds
16Item 3.   Defaults Upon Senior Securities
16Item 4.   Submission of Matters to a Vote of Security Holders
16Item 5.   Other Information
16Item 6.   Exhibits
17Signatures
18Exhibits Index
#

PHARMACYCLICS®,  (the pentadentate logo.gif) Xcytrin®are
registered U.S. trademarks of Pharmacyclics, Inc. Other trademarks, trade names or service marks used herein are the property of their
respective owners.
PART  I  -  FINANCIAL INFORMATIONItem
1.	Financial StatementsPHARMACYCLICS, INC.
(a development stage enterprise) 
CONDENSED BALANCE SHEETS 
(unaudited; in thousands)
September 30,   June 30,
                                                           2007          2007
                                                       ------------  ------------
                       ASSETS
   Current assets:
     Cash and cash equivalents ...................... $      8,419  $     11,941
     Marketable securities ..........................       23,904        26,821
     Prepaid expenses and other current assets ......        1,058           961
                                                       ------------  ------------
          Total current assets ......................       33,381        39,723
   Property and equipment, net ......................          760           849
   Other assets .....................................          523           523
                                                       ------------  ------------
                                                      $     34,664  $     41,095
                                                       ============  ============

        LIABILITIES AND STOCKHOLDERS' EQUITY
   Current liabilities:
     Accounts payable ............................... $      1,429  $      1,426
     Accrued liabilities ............................          912         1,189
                                                       ------------  ------------
          Total current liabilities .................        2,341         2,615
   Deferred rent ....................................           78            79
                                                       ------------  ------------
          Total liabilities .........................        2,419         2,694
                                                       ------------  ------------
   Stockholders' equity:
     Common stock ...................................            3             3
     Additional paid-in capital .....................      354,237       353,560
     Accumulated other comprehensive loss............          (12)           (9)
     Deficit accumulated during development stage....     (321,983)     (315,153)
                                                       ------------  ------------
         Total stockholders' equity .................       32,245        38,401
                                                       ------------  ------------
                                                      $     34,664  $     41,095
                                                       ============  ============

The accompanying notes are an integral part of these condensed
financial statements.

3
PHARMACYCLICS, INC. 
(a development stage enterprise) 
CONDENSED STATEMENTS OF OPERATIONS 
(unaudited; in thousands, except per share data)



Period From
                                                                             Inception
                                                       Three Months Ended  (April 19, 1991)
                                                          September 30,        through
                                                       ------------------   September 30,
                                                         2007      2006         2007
                                                       --------  --------  --------------
Revenues:
     License and milestone revenues ................. $     --  $     --  $        7,855

     Contract and grant revenues ....................       --        19           6,154
                                                       --------  --------  --------------
            Total revenues ..........................       --        19          14,009
                                                       --------  --------  --------------
Operating expenses:
     Research and development* ......................    5,240     5,078         298,982

     General and administrative* ....................    2,067     1,924          70,876

     Purchased in-process research
        and development .............................       --        --           6,647
                                                       --------  --------  --------------
            Total operating expenses ................    7,307     7,002         376,505
                                                       --------  --------  --------------
Loss from operations ................................   (7,307)   (6,983)       (362,496)

Interest and other income, net ......................      477       492          40,513
                                                       --------  --------  --------------
Net loss ............................................ $ (6,830) $ (6,491) $     (321,983)
                                                       ========  ========  ==============


Basic and diluted net loss per share ................ $  (0.26) $  (0.31)
                                                       ========  ========
Shares used to compute basic and
   diluted net loss per share .......................   25,968    20,968
                                                       ========  ========

* Includes non-cash share-based compensation of
   the following:
     Research and development ....................... $    308  $    468  $        5,323
     General and administrative .....................      369       285  $        5,617

The accompanying notes are an integral part of these condensed
financial statements.

4

PHARMACYCLICS, INC. 
(a development stage enterprise) 
CONDENSED STATEMENTS OF CASH FLOWS 
(unaudited; in thousands)



Period From
                                                                                                  Inception
                                                                             Three Months Ended (April 19, 1991)
                                                                                September 30,       through
                                                                            ------------------  September 30,
                                                                              2007      2006        2007
                                                                            --------  --------  --------------
Cash flows from operating activities:
   Net loss .............................................................. $ (6,830) $ (6,491) $     (321,983)
Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation and amortization .........................................       92       122          14,729
   Amortization of premium/discount on marketable securities, net...........    (56)      (38)            146
   Purchased in-process research and development .........................       --        --           4,500
   Share-based compensation expense ......................................      677       753          10,940
   Gain on sale of marketable securities .................................       (9)       --              49
   Write-down of fixed assets ............................................       --        --             381
   Changes in assets and liabilities:
      Prepaid expenses and other assets ..................................      (97)       81          (1,581)
      Accounts payable ...................................................        3      (229)          1,429
      Accrued liabilities ................................................     (277)     (164)            912
      Deferred rent ......................................................       (1)       (2)             78
                                                                            --------  --------  --------------
         Net cash used in operating activities ...........................   (6,498)   (5,968)       (290,400)
                                                                            --------  --------  --------------
Cash flows from investing activities:
   Purchase of property and equipment ....................................       (3)     (269)        (12,101)
   Proceeds from sale of property and equipment ..........................       --        --             112
   Purchases of marketable securities ....................................       --      (948)       (524,100)
   Proceeds from maturities and sales of marketable securities ...........    2,979        --         499,989
                                                                            --------  --------  --------------
        Net cash provided by (used in) investing activities ..............    2,976    (1,217)        (36,100)
                                                                            --------  --------  --------------
Cash flows from financing activities:
   Issuance of common stock, net of issuance costs .......................       --        --         308,855
   Exercise of stock options .............................................       --       360           6,431
   Proceeds from notes payable ...........................................       --        --           3,000
   Issuance of convertible preferred stock, net of issuance costs ........       --        --          20,514
   Payments under capital lease obligations ..............................       --        --          (3,881)
                                                                            --------  --------  --------------
        Net cash provided by financing activities ........................       --       360         334,919
                                                                            --------  --------  --------------
Increase (decrease) in cash and cash equivalents .........................   (3,522)   (6,825)          8,419
Cash and cash equivalents at beginning of period .........................   11,941    22,283              --
                                                                            --------  --------  --------------
Cash and cash equivalents at end of period ............................... $  8,419  $ 15,458  $        8,419
                                                                            ========  ========  ==============

The accompanying notes are an integral part of these condensed
financial statements.

5PHARMACYCLICS, INC.
(a development stage enterprise) 
NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying interim condensed financial statements have been prepared by
Pharmacyclics, Inc. (the company or Pharmacyclics), without audit, in accordance
with the instructions to Form 10-Q and, therefore, do not necessarily include
all information and footnotes necessary for a fair statement of its financial
position, results of operations and cash flows in accordance with accounting
principles generally accepted in the United States. The balance sheet at June
30, 2007 is derived from the audited balance sheet at that date which is not
presented herein.

In the opinion of management, the unaudited
financial information for the interim periods presented reflects all
adjustments, which are only normal and recurring, necessary for a fair statement
of results of operations, financial position and cash flows. These condensed
financial statements should be read in conjunction with the financial statements
included in the company's Annual Report on Form 10-K for the fiscal year ended
June 30, 2007. Operating results for interim periods are not necessarily
indicative of operating results for an entire fiscal year.

The preparation of financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts and the disclosure of contingent amounts in the company's financial
statements and the accompanying notes. Actual results could differ from those
estimates.

Note 2 - Basic and Diluted Net Loss Per Share

Basic net loss per share is computed using the weighted average number of
common shares outstanding during the period. Diluted net loss per share is
computed using the weighted average number of common and potential common shares
outstanding during the period. Potential common shares consist of shares
issuable upon the exercise of stock options (using the treasury stock method).
Options to purchase 5,339,825 and 4,835,881 shares of common stock were
outstanding at September 30, 2007 and 2006, respectively, but have been excluded
from the computation of diluted net loss per share because their effect was
anti-dilutive.

Note 3 - Share-Based Compensation:

The components of share-based compensation recognized in the company's
statements of operations for the three months ended September 30, 2007 and since
inception are as follows:

Period From
                                                                Inception
                                        Three Months ended   (April 19, 1991)
                                           September 30,         through
                                      -----------------------  September 30
                                          2007        2006         2007
------------------------------------  ----------- ----------- -------------
Research and development              $  308,000  $  468,000  $  5,323,000
General and administrative               369,000     285,000     5,617,000
                                      ----------- ----------- -------------
Total share-based compensation        $  677,000  $  753,000  $ 10,940,000
                                      =========== =========== =============

6The following table summarizes the company's stock option activity for the
three months ended September 30, 2007:

Options Outstanding
                                                   -----------------------------
                                                                      Weighted
                                        Shares                        Average
                                      Available                       Exercise
                                      for Grant       Number           Price
                                     ------------  ------------     ------------
Balance at June 30, 2007                 632,619     5,589,114     $      10.98
Options granted                          (82,632)       82,632             2.51
Options exercised                             --            --               --
Options forfeited or expired             331,921      (331,921)            9.78
                                     ------------  ------------
Balance at September 30, 2007           881,908     5,339,825            10.92
                                     ============  ============

Employee Stock Purchase Plan. The company adopted an Employee Stock
Purchase Plan (the "Purchase Plan") in August 1995. Qualified
employees may elect to have a certain percentage of their salary withheld to
purchase shares of the company's common stock under the Purchase Plan. The
purchase price per share is equal to 85% of the fair market value of the stock
on specified dates. There were no sales under the Purchase Plan in the three
month periods ended September 30, 2007 and 2006.   Shares available for future
purchase under the Purchase Plan are 260,807 at September 30, 2007.
Note 4 - Comprehensive Loss

Comprehensive loss includes net loss and unrealized gains (losses) on
marketable securities that are excluded from the results of operations.

The company's comprehensive losses were as follows:

Three Months Ended
                                                    September 30,
                                            --------------------------
                                                2007          2006
                                            ------------  ------------
Net loss ................................. $ (6,830,000) $ (6,491,000)
Change in net unrealized losses
  on available-for-sale securities .......       (3,000)       93,000
                                            ------------  ------------
Comprehensive loss ....................... $ (6,833,000) $ (6,398,000)
                                            ============  ============

Note 5 - Income Taxes

We adopted the provisions of Financial Accounting Standards Board
("FASB") Interpretation No. 48, Accounting for Uncertainty in
Income Taxes-an interpretation of FASB Statement No. 109 ("FIN
48"), on January 1, 2007. FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in an enterprise's financial statements
in accordance with SFAS No. 109, Accounting for Income Taxes, and
prescribes a recognition threshold and measurement process for financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition. Based on our evaluation, we have concluded that there
are no significant uncertain tax positions requiring recognition in our
financial statements.  We may from time to time be assessed interest or
penalties by major tax jurisdictions, although there have been no such
assessments historically, with no material impact to our financial results. In
the event we receive an assessment for interest and/or penalties, it would be
classified in the financial statements as income tax expense.  As of July 1,
2007 open tax years in major jurisdictions date back to 1991 due to the taxing
authorities' ability to adjust operating loss carry forwards.  The Company does
not anticipate a material change to its total amount of unrecognized tax
benefits within the next 12 months.
7Note 6 - Recent Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting
Standards No. 157 (SFAS No. 157), "Fair Value Measurements" which
clarifies the principle that fair value should be based on the assumptions
market participants would use when pricing an asset or liability and establishes
a fair value hierarchy that prioritizes the information used to develop those
assumptions.  Under the standard, fair value measurements would be separately
disclosed by level within the fair value hierarchy. SFAS No. 157 is effective
the first quarter of our 2008 fiscal year with early adoption permitted.  The
adoption of SFAS No. 157 did not have a material impact on our results from
operations or financial position.

In June 2007, the FASB ratified EITF Issue No. 07-3 ("EITF 07-
3"), Accounting for Nonrefundable Advance Payments for Goods or Services
to Be Used in Future Research and Development Activities. The scope of EITF
07-3 is limited to nonrefundable advance payments for goods and services to be
used or rendered in future research and development activities pursuant to an
executory contractual arrangement. This issue provides that nonrefundable
advance payments for goods or services that will be used or rendered for future
research and development activities should be deferred and capitalized. Such
amounts should be recognized as an expense as the related goods are delivered or
the related services are performed. EITF 07-3 is effective for fiscal years
beginning after December 15, 2007. Earlier application is not permitted.
Companies should report the effects of applying this issue prospectively for new
contracts entered into on or after the effective date of this issue. We are
currently evaluating the impact of this standard on our results of operations
and our financial position.

Item 2.	Management's Discussion and
Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial
condition and results of operations together with our interim financial
statements and the related notes appearing at the beginning of this report. The
interim financial statements and this Management's Discussion and Analysis of
Financial Condition and Results of Operations should be read in conjunction with
the financial statements and notes thereto for the year ended June 30, 2007
and the related Management's Discussion and Analysis of Financial Condition and
Results of Operations, both of which are contained in our Annual Report on Form
10-K filed with the Securities and Exchange Commission on September 13, 2007.

The following discussion contains forward-looking statements that
involve risks and uncertainties. These statements relate to future events, such
as our future clinical and product development, financial performance and
regulatory review of our product candidates. Our actual results could differ
materially from any future performance suggested in this report as a result of
various factors, including those discussed in Part II, Item IA, "Risk
Factors", and elsewhere in this report, in the company's Annual Report on
Form 10-K for the fiscal year ended June 30, 2007 and in our other
Securities and Exchange Commission reports and filings. All forward-looking
statements are based on information currently available to Pharmacyclics; and we
assume no obligation to update such forward-looking statements. Stockholders are
cautioned not to place undue reliance on such statements.

Overview

Pharmacyclics is a pharmaceutical company focused on the development of
products that improve existing therapeutic approaches to cancer and other
diseases.  To date, substantially all of our resources have been dedicated to
the research and development of our products, and we have not generated any
commercial revenues from the sale of our products. We do not expect to generate
any product revenues until we receive the necessary regulatory and marketing
approvals and launch one of our products, if at all.

We have incurred significant operating losses since our inception in 1991,
and as of September 30, 2007, had an accumulated deficit of approximately $322.0
million.  The process of developing and commercializing our products requires
significant research and development, preclinical testing and clinical trials,
manufacturing arrangements as well as regulatory and marketing approvals. These
activities, together with our general and administrative expenses, are expected
to result in significant operating losses until the commercialization of our
products generates sufficient revenues to cover our expenses.  We expect that
losses will fluctuate from quarter to quarter and that such fluctuations may be
substantial. Our achieving profitability depends upon our ability, alone or with
others, to successfully complete the development of our products under
development, obtain required regulatory approvals and successfully manufacture
and market our products.

8Xcytrin, our lead product candidate, is an anti-cancer drug being evaluated
in various clinical trials. Based on the clinical activity seen in our initial
Phase 3 trial in a subset of patients with brain metastases from non-small cell
lung cancer (NSCLC), we conducted a pivotal Phase 3 clinical trial to confirm
the potential clinical benefits observed in patients with brain metastases from
non-small cell lung cancer. This trial, known as the SMART (Study
of Neurologic Progression with Motexafin Gadolinium And
Radiation Therapy) trial, enrolled 554 patients with brain
metastases from non-small cell lung cancer.  The SMART trial was designed to
compare the safety and efficacy of whole brain radiation therapy (WBRT) alone to
WBRT plus Xcytrin. The primary endpoint for the study was time to neurologic
progression (TNP) as determined by a blinded events review committee.
In December 2006, we submitted a New Drug Application (NDA) to the Food
and Drug Administration (FDA) for the use of Xcytrin in combination with
radiation therapy for the treatment of patients with brain metastases from
NSCLC. In February 2007, we received a refuse to file letter from the FDA citing
failure to demonstrate statistically significant differences between treatment
arms in the primary endpoint of the pivotal study to support approval. In the
pivotal SMART trial, investigators found that patients given Xcytrin in addition
to WBRT had a median time to neurologic progression of 15.4 months, compared to
10.0 months for patients who received only WBRT (p=0.12, hazard ratio=0.78), a
trend in favor of Xcytrin.  In April 2007, we requested that the FDA file our
NDA over protest.  File over protest is a procedure permitted by FDA
regulations, which allows sponsors to have their NDA filed and reviewed when
there is disagreement over the acceptability of the NDA.  In April 2007, we
announced that the FDA had filed our NDA. The Prescription Drug User Fee Act
(PDUFA) date for completion of review by FDA is December 31, 2007.  We do not
anticipate presenting to an FDA oncology drug advisory committee (ODAC) meeting
prior to our PDUFA date.  The FDA has also designated Xcytrin as an orphan drug
for the treatment of brain metastases arising from solid tumors.
We also are evaluating Xcytrin for the treatment of a diverse range of
cancer types and in various clinical situations including Xcytrin as a single
agent and in combination with chemotherapy and/or radiation therapy.  One of
Xcytrin's chemical features allows it to be visualized in the body using
standard magnetic resonance imaging (MRI) procedures. Using MRI, we have
established that Xcytrin localizes selectively in cancers.  We own the worldwide
rights to Xcytrin.

We are also developing several other oncology drugs.  PCI-24781 is a
novel compound that inhibits all isoforms of HDAC enzymes.  In the cell nucleus,
DNA is present with proteins as part of a tightly compacted complex called
chromatin.  HDAC enzymes play a role in modifying the structure of chromatin,
allowing DNA transcription - a process by which DNA controls cellular activity -
to occur.  HDAC inhibitors appear to alter the transcription process.  HDAC
inhibitors target tumors through multiple mechanisms, and laboratory studies
have shown that they can prompt cells to stop growing or die.  This may happen
through the expression of tumor suppressor genes, the prevention of
angiogenesis, and the targeting of various critical proteins.

PCI-24781 is now in a Phase 1 trial in patients with advanced solid tumors.
The objective of the trial is to determine the drug's safety and tolerability,
when given intravenously, and also to assess absorption and plasma levels of the
drug following oral administration.  Studies indicate that PCI-24781 achieves
sustained plasma levels following oral administration.  We believe PCI-24781 has
desirable potency and pharmacokinetic properties, which may provide clinical
advantages.

Laboratory studies also demonstrate that PCI-24781 inhibits homologous
recombination, a cellular mechanism of DNA repair. These data suggest that PCI-
24781 could be used successfully in combination with other cancer therapies that
generate DNA damage repaired by homologous recombination, such as gamma-
irradiation, cisplatin, and certain other chemotherapy drugs.

An HDAC-8 selective inhibitor is now in preclinical testing.  We believe that
this compound may exhibit more selectivity for certain types of cancer and may
be useful for treatment of inflammatory and autoimmune diseases.
PCI-24783 is a small molecule inhibitor of Factor VIIa.  This molecule
selectively inhibits Factor VIIa when it is complexed with a protein called
tissue factor (TF).  In cancer, the Factor VIIa:TF complex is found in abundance
in pancreatic, gastric, colon and other tumors, and triggers a host of
physiologic processes that facilitate tumor angiogenesis, growth and invasion.
Laboratory studies and animal models indicate that inhibitors of Factor VIIa may
block tumor growth and metastasis. We are conducting the required preclinical
safety studies to support the potential filing of an Investigational New Drug
(IND) application with the FDA.
PCI-32765 is a small molecule tyrosine kinase inhibitor.  When immune
cells called B-lymphocytes are overactive, the immune system produces
inflammatory cells and antibodies that begin to attack the body's own tissue,
leading to autoimmune diseases such as rheumatoid arthritis.  We are developing
compounds  that can inhibit an enzyme, known as Btk, which is9required for early B-cells to mature into fully functioning cells.  In published studies, these
compounds have demonstrated a dose dependent ability to inhibit disease
development in rheumatoid arthritis animal models.  Recent studies have shown
that these compounds may inhibit the proliferation of lymphoma cells, or
malignancies involving B-cells, indicating their potential for treatment of
certain lymphomas and leukemias.  We are conducting the required preclinical
safety studies to support the potential filing of an IND application with the
FDA.

We are subject to risks common to pharmaceutical companies developing
products, including risks inherent in our research, development and
commercialization efforts, preclinical testing, clinical trials, uncertainty of
regulatory and marketing approvals, uncertainty of market acceptance of our
products, history of and expectation of future operating losses, reliance on
collaborative partners, enforcement of patent and proprietary rights, and the
need for future capital. In order for a product to be commercialized, we must
conduct preclinical tests and clinical trials, demonstrate efficacy and safety
of our product candidates to the satisfaction of regulatory authorities, obtain
marketing approval, enter into manufacturing, distribution and marketing
arrangements, build a U.S. commercial oncology franchise, obtain market
acceptance and, in many cases, obtain adequate coverage of and reimbursement for
our products from government and private insurers. We cannot provide assurance
that we will successfully develop our drug candidates and obtain the necessary
regulatory and marketing approvals to generate revenues or achieve and sustain
profitability in the future.

Results of Operations

Revenues


Three Months ended
                                           September 30,
                                      -----------------------     Percent
                                          2007        2006        change
------------------------------------  ----------- -----------  ------------
Contract and grant revenues           $       --  $   19,000        --

The decrease in contract and grant revenues for the three ended September 30,
2007 is the result of the completion of work associated with a federal grant
awarded by the National Institutes of Health (NIH) in fiscal 2007.
Research and Development


Three Months ended
                                            September 30,
                                      -----------------------    Percent
                                          2007        2006        change
------------------------------------  ----------- -----------  ------------
Research and development expenses     $5,240,000  $5,078,000        3%

The increase of 3% or $162,000 in research and development expenses for the
three months ended September 30, 2007 as compared to the three months ended
September 30, 2006 was primarily due to an increase of $838,000 in drug
manufacturing costs associated with our HDAC, Factor VIIa and Btk programs, and
$677,000 in preclinical costs related to our Factor VIIa program, partially
offset by a reduction of $943,000 in personnel costs due to lower headcount and
a reduction of $250,000 in consulting costs.

We expect research and development expenses in our fiscal second quarter to
increase slightly as compared to our fiscal first quarter.

Research and development costs are identified as either directly attributed
to one of our research and development programs or as an indirect cost, with
only direct costs being tracked by specific program. Direct costs consist of
personnel costs directly associated with a program, preclinical study costs,
clinical trial costs, and related clinical drug and device development and
manufacturing costs, drug formulation costs, contract services and other
research expenditures. Indirect costs consist of personnel costs not directly
associated with a program, overhead and facility costs and other support service
expenses. The following table summarizes our principal product development
initiatives, including the related stages of development for each product, the
direct costs attributable to each product and total indirect costs for each
respective period. The information in the10column labeled "Estimated Completion of Phase" is only our estimate of the timing of completion of
the current in-process development phase. The actual timing of completion of
those phases could differ materially from the estimates provided in the table.
For a discussion of the risks and uncertainties associated with the timing and
cost of completing a product development phase, see Part II, Item IA, "Risk
Factors."

Prior to fiscal 1999, we did not track our research and development expenses
by specific program and for this reason we cannot accurately estimate our total
historical costs on a specific program basis. Direct costs by program and
indirect costs are as follows:

Related R&D Expenses
                                                                                       Three Months ended
                                                                                          September 30,
                                                                                    -----------------------
                                                                        Estimated
                                                     Phase of          Completion
Program                  Description                Development         of Phase        2007        2006
--------------- ----------------------------- ----------------------- ------------- ----------- -----------
XCYTRIN         Cancer                        Several Phase 1 trials  Unknown       $  977,000  $2,265,000
                                              Several Phase 2 trials  Unknown
                                              Phase 3                 Fiscal 2006

HDAC Inhibitors Cancer                        Phase 1                 Unknown          909,000     382,000

Btk Inhibitors  Lymphomas and                 Preclinical             Unknown          595,000          --
                autoimmune diseases

Factor VIIa     Cancer                        Preclinical             Unknown        1,071,000          --
Inhibitor                                                                           ----------- -----------

                Total direct costs.................................................  3,552,000   2,647,000
                Indirect costs.....................................................  1,688,000   2,431,000
                                                                                    ----------- -----------
                Total research and
                   development expenses............................................ $5,240,000  $5,078,000
                                                                                    =========== ===========

General and Administrative


Three Months ended
                                           September 30,
                                      -----------------------    Percent
                                          2007        2006        change
------------------------------------  ----------- -----------  ------------

General and administrative expenses   $2,067,000  $1,924,000        7%

The increase of 7% or $143,000 in general and administrative expenses for the
three months ended September 30, 2007 as compared to the three months ended
September 30, 2006 was primarily due to a $272,000 increase in corporate
communication expenses.

We expect general and administrative expenses in our fiscal second quarter to
be approximately the same as in our fiscal first quarter.

11Interest and Other, Net


Three Months ended
                                            September 30,
                                      -----------------------    Percent
                                          2007        2006        change
------------------------------------  ----------- -----------  ------------

Interest and other, net               $  477,000  $  492,000       -3%

Interest and other, net did not change significantly between the first
quarter of fiscal 2008 and the same period in fiscal 2007 as our investment
balances and interest rates were similar in the two periods.  Our cash
equivalents and marketable securities consist primarily of fixed rate
instruments.

Liquidity and Capital Resources

Our principal sources of working capital have been private and public equity
financings and proceeds from collaborative research and development agreements,
as well as interest income.

As of September 30, 2007, we had approximately $32,323,000 in cash, cash
equivalents and marketable securities. Net cash used in operating activities of
$6,498,000 during the three months ended September 30, 2007, resulted primarily
from our net loss, net of depreciation and amortization, share-based
compensation expense and a decrease in accrued liabilities.

Net cash provided by investing activities of $2,976,000 in the three months
ended September 30, 2007 consisted primarily of maturities and sales of
marketable securities.

Net cash provided by financing activities was $0 in the three months ended
September 30, 2007.

In August 2006, we entered into a common stock purchase agreement with
Azimuth Opportunity Ltd., which provides that, upon the terms and subject to the
conditions set forth in the purchase agreement, Azimuth is committed to
purchase, at our discretion, up to $20.0 million of our common stock, or
4,189,337 shares, whichever occurs first, at a discount of 5% to 7%, to be
determined based on our market capitalization at the start of each sale period.
The term of the purchase agreement is 18 months. Upon each sale of our common
stock to Azimuth under the purchase agreement, we have also agreed to pay
Reedland Capital Partners a placement fee equal to one percent of the aggregate
dollar amount of common stock purchased by Azimuth. Azimuth is not required to
purchase our common stock if the price of our common stock falls below $3.00 per
share.  To date, we have not sold any stock to Azimuth.

In November 2006, we completed a public offering of common stock and sold
4,830,000 shares of common stock at a price of $4.75 per share for net proceeds
of approximately $21,300,000. In February 2007, we filed a registration
statement on Form S-3 to offer and sell, from time to time, equity, debt
securities and warrants in one or more offerings up to a total dollar amount of
$100 million. We may seek to raise funds through additional public offerings in
the future but cannot guarantee that such efforts will be successful.

Our future contractual obligations at September 30, 2007 are as follows:



Operating
                                            Lease
                                         Commitments
                                       ---------------
Remaining 9 months of fiscal 2008 ..   $      714,000
Fiscal 2009 ........................          946,000
Fiscal 2010 ........................          487,000
                                       ---------------
     Total .........................   $    2,147,000
                                       ===============

12In April 2006, we acquired multiple small molecule drug candidates for
the treatment of cancer and other diseases from Celera Genomics, an Applera
Corporation business.  Future milestone payments under the agreement could total
as much as $144 million, although we currently cannot predict if or when any of
the milestones will be achieved.  In addition, Celera will also be entitled to
royalty payments in the mid- to high single digits based on annual sales of any
drugs commercialized from these programs.

Based upon the current status of our product development and
commercialization plans, we believe that our existing cash, cash equivalents and
marketable securities will be adequate to satisfy our capital needs through at
least the next twelve months. We expect research and development expenses, as a
result of on-going and future clinical trials, to consume a large portion of our
existing cash resources. Changes in our research and development plans or other
changes affecting our operating expenses may affect actual future consumption of
existing cash resources as well. In any event, we will need to raise substantial
additional capital to fund our operations in the future. We expect to finance
our future cash needs through public or private financings, collaborative
relationships (partnerships with other drug manufacturers) or other arrangements
to complete commercialization. Our actual capital requirements will depend on
many factors, including the following:


the progress and success of clinical trials of our product candidates;the costs and timing of obtaining regulatory approvals;our ability to establish and the scope of any new collaborations; andthe timing and scope of commercialization expenses for Xcytrin.Our forecast of the period of time through which our financial resources will
be adequate to support our operations is a forward-looking statement that
involves risks and uncertainties, and actual results could vary materially. The
factors described above will impact our future capital requirements and the
adequacy of our available funds. If we are required to raise additional funds,
we cannot be certain that such additional funding will be available on terms
attractive to us, or at all. Furthermore, any additional equity financing may be
dilutive to existing stockholders and debt financing, if available, may involve
restrictive covenants. Collaborative arrangements, if necessary to raise
additional funds, may require us to relinquish rights to certain of our
technologies, products or marketing territories. Our failure to raise capital
when needed could have a material adverse effect on our business, financial
condition and results of operations.

Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future material effect on our financial
condition, changes in our financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies, Estimates and Judgments
This discussion and analysis of financial condition and results of
operations is based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosures. On an on-going basis, we
evaluate our estimates, including those related to revenue recognition and
clinical trial accruals. We base our estimates on historical experience and on
various other factors that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other
sources. Actual results, however, may differ significantly from these estimates
under different assumptions or conditions and may adversely affect the financial
statements.

We believe the following critical accounting policies reflect the more
significant judgments and estimates used in the preparation of our financial
statements and accompanying notes.


Revenue Recognition

Revenues are recognized when persuasive evidence of an arrangement exists,
title has transferred or services have been rendered, the price is fixed and
determinable and collectibility is reasonably assured. License revenue is
typically recognized13over the term of the arrangement and milestone revenue is recognized when
earned as evidenced by achievement of the specified milestone
and the absence of any on-going obligation. License, milestone, contract and
grant revenues are not subject to repayment. Any amounts received in advance of
performance are recorded as deferred revenues.


Cash Equivalents and Marketable Securities

We maintain investment portfolio holdings of various issuers, types and
maturities. We consider all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents. At September 30,
2007, all other investment securities are classified as available-for-sale and
consequently are recorded on the balance sheet at fair value with unrealized
gains and losses reported as a component of accumulated other comprehensive
income (loss) within stockholders' equity. Management assesses whether declines
in the fair value of investment securities are other than temporary. If the
decline in fair value is judged to be other than temporary, the cost basis of
the individual security is written down to fair value and the amount of the
write down is included in earnings. In determining whether a decline is other
than temporary, management considers the following factors:

Length of the time and the extent to which the market value has been less
than cost;The financial condition and near-term prospects of the issuer; andOur intent and ability to retain our investment in the issuer for a period
of time sufficient to allow for any anticipated recovery in market value.To date we have had no declines in fair value that have been identified as
other than temporary.

Research and Development Expenses and Accruals



Research and development expenses include personnel and facility-related
expenses, outside contracted services including clinical trial costs,
manufacturing and process development costs, research costs and other consulting
services. Research and development costs are expensed as incurred. In instances
where we enter into agreements with third parties for clinical trials,
manufacturing and process development, research and other consulting activities,
costs are expensed upon the earlier of when non-refundable amounts are due or as
services are performed. Amounts due under such arrangements may be either fixed
fee or fee for service, and may include upfront payments, monthly payments, and
payments upon the completion of milestones or receipt of deliverables.

Our cost accruals for clinical trials are based on estimates of the services
received and efforts expended pursuant to contracts with numerous clinical trial
centers and clinical research organizations. In the normal course of business we
contract with third parties to perform various clinical trial activities in the
on-going development of potential products. The financial terms of these
agreements are subject to negotiation and vary from contract to contract and may
result in uneven payment flows. Payments under the contracts depend on factors
such as the achievement of certain events, the successful enrollment of
patients, the completion of portions of the clinical trial or similar
conditions. The objective of our accrual policy is to match the recording of
expenses in our financial statements to the actual services received and efforts
expended. As such, expense accruals related to clinical trials are recognized
based on our estimate of the degree of completion of the event or events
specified in the specific clinical study or trial contract.

Share-Based Compensation

We adopted SFAS 123R, Share-Based Payments, effective beginning July
1, 2005 using the modified prospective application transition method. The
modified prospective application transition method requires that companies
recognize compensation expense on new share-based payment awards and existing
share-based payment awards that are modified, repurchased, or cancelled after
the effective date. Additionally, compensation cost of the portion of
awards of which the requisite service has not been rendered that are outstanding
as of the July 1, 2005 shall be recognized as the requisite service is rendered.

The fair value of each stock option is estimated on the date of grant using
the Black-Scholes valuation model. Expected volatility is based on historical
volatility data of the company's stock.  The expected term of stock options
granted is based on historical data and represents the period of time that stock
options are expected to be outstanding.  The expected term is calculated for and
applied to one group of stock options as the company does not expect
substantially different exercise or post-

14

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vesting termination behavior amongst its employee population.
The risk-free interest rate is based on a zero-coupon
United States Treasury bond whose maturity period equals the expected term of
the company's options.

Item 3.	Quantitative and Qualitative Disclosures About
Market Risk

Our exposure to interest rate risk relates primarily to our investment
portfolio. Fixed rate securities may have their fair market value adversely
impacted due to fluctuations in interest rates, while floating rate securities
may produce less income than expected if interest rates fall. Due in part to
these factors, our future investment income may fall short of expectations due
to changes in interest rates or we may suffer losses in principal if forced to
sell securities that have declined in market value due to changes in interest
rates. The primary objective of our investment activities is to preserve
principal while at the same time maximizing yields without significantly
increasing risk. To achieve this objective, we invest in debt instruments of the
U.S. Government and its agencies and high-quality corporate issuers, and, by
policy, restrict our exposure to any single corporate issuer by imposing
concentration limits. To minimize the exposure due to adverse shifts in interest
rates, we maintain investments at an average maturity of generally less than two
years. Assuming a hypothetical increase in interest rates of one percentage
point, the fair value of our total investment portfolio as of September 30, 2007
would have declined by approximately $129,000.

Item 4.	Controls and Procedures

(a) Evaluation of disclosure controls and procedures:As required
by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the
first fiscal quarter of 2008, we carried out an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures. This
evaluation was carried out under the supervision and with the participation of
our management, including our Chief Executive Officer and our Chief Financial
Officer. Based upon that evaluation, our Chief Executive Officer and our Chief
Financial Officer have concluded that our disclosure controls and procedures are
adequate and effective to ensure that information required to be disclosed in
our reports filed or submitted under the Exchange Act is recorded, processed,
summarized, and reported, within the time periods specified in the Securities
and Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in our reports filed under the Exchange Act
is accumulated and communicated to management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.

(b) Changes in internal controls over financial reporting: There
has been no change in our internal control over financial reporting during our
most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, our internal controls over financial reporting.

PART	II.	OTHER INFORMATION

Item	1.	Legal Proceedings

Not Applicable.

Item	1A.	   Risk Factors

In addition to the other information set forth in this report, you should
carefully consider the factors discussed in Part I, "Item 1A.
Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended
June 30, 2007, which have not materially changed other than as set forth below.
Those risks, which could materially affect our business, financial condition or
future results, are not the only risks we face. Additional risks and
uncertainties not currently known to us or that we currently deem to be
immaterial also may materially adversely affect our business, financial
condition and/or operating results.



To generate revenue, we will depend on FDA approval of our lead product
candidate, Xcytrin for the potential treatment of non-small cell lung cancer
patients with brain metastases.  If we are unable to obtain FDA approval, our
ability to generate revenue will be significantly delayed.

15

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Our ability to generate revenue will depend on the successful
development, regulatory approval and commercialization of Xcytrin.  In December
2005, we announced the top line results of our pivotal Phase 3 clinical study of
Xcytrin for the potential treatment of non-small cell lung cancer (NSCLC)
patients with brain metastases.  Although patients receiving Xcytrin had a
longer time to neurologic progression (TNP), the study's primary endpoint, the
difference compared to patients in the control arm did not reach statistical
significance.

Based on our review of the data from the SMART trial, in December 2006 we
submitted a New Drug Application (NDA) to the FDA for the potential treatment of
NSCLC patients with brain metastases. In meetings with FDA in early 2006, FDA
noted that the applicable review Division has not approved drugs based on the
results of non-pre-specified subgroup analyses when the trial has failed to meet
its primary endpoint.  FDA discouraged the submission of an NDA based on subset
analyses from the SMART trial.  However, in subsequent meetings with FDA and
further review of the data, the Agency indicated a willingness to review an NDA
based on analyses which include all of the data.

In February 2007, we received a refuse to file letter from the FDA citing
failure to demonstrate statistically significant differences between treatment
arms in the company's trials.  In April 2007, we requested that the FDA file our
NDA over protest.  File over protest is a procedure permitted by FDA
regulations, which allows sponsors to have their NDA filed and reviewed when
there is disagreement over the acceptability of the NDA.  On April 23, 2007, we
announced that the FDA had filed our NDA. The Prescription Drug User Fee Act
(PDUFA) date for completion of review by FDA is December 31, 2007.

The FDA's Division of Drug Oncology Products often requests that an
outside advisory panel review aspects of a sponsor's NDA.  While we believe that
our NDA qualifies for such a review, we do not anticipate presenting to an FDA
oncology drug advisory committee (ODAC) meeting prior to our PDUFA date.

The FDA could also require that we conduct additional
studies and submit that data before it will approve our application, which would
require us to expend more resources than we planned or than are available to us,
and could substantially delay any approval of our application.  The FDA has
indicated that it is not satisfied with data included in our NDA, and we may
need to expend additional resources or conduct additional studies, including
clinical trials, to obtain data that the FDA believes is sufficient to support
approval.  It is also possible that additional studies may not result in
approval of our application.  Even though the FDA has accepted our NDA for filing
over protest, there can be no assurance that it will be approved in a timely
manner or at all.

We have a history of operating losses and we expect to
continue to have losses in the future.

We have incurred significant operating losses since our inception in 1991
and, as of  September 30, 2007, had an accumulated deficit of approximately
$322.0 million. We expect to continue to incur substantial additional operating
losses until such time, if ever, as the commercialization of our products
generates sufficient revenues to cover our expenses. Our achieving profitability
depends upon our ability, alone or with others, to successfully complete the
development of our products, and to obtain required regulatory approvals and to
successfully manufacture and market our proposed products. If our lead product,
Xcytrin, fails to receive regulatory approval on a timely basis, or at all, our
ability to become profitable would be materially impacted. To date, we have not
generated revenue from the commercial sale of our products.

Item	2.	Unregistered Sales of Equity Securities and
Use of Proceeds

Not Applicable.

Item	3.	Defaults Upon Senior Securities

Not Applicable.

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

Not Applicable.

Item	5.	Other Information

Not Applicable.

16

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Item	6.	Exhibits

| |  | 3.1  | Amended and Restated Bylaws of Pharmacyclics, Inc. (Incorporated
by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q for the quarter
ended December 31, 2001).
| |  | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 3.2  | Amendment to Amended and Restated Bylaws of Pharmacyclics, Inc.,
dated September 17, 2007.                                                                                 
| |  | 31.1 | Rule 13a-14(a)/15d-14(a) Certification of CEO.                                                                                                                             
| |  | 31.2 | Rule 13a-14(a)/15d-14(a) Certification of CFO.                                                                                                                             
| |  | 32.1 | Section 1350 Certifications of CEO and CFO.                                                                                                                                

17

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.

| |                    
| | -------------------
| | Pharmacyclics, Inc.

| |             
| | ------------
| | (Registrant)

|                         |                                       |                            
|------------------------ | ------------------------------------- | ---------------------------
|Dated:  October 31, 2007 | By:                                   | /s/ RICHARD A. MILLER, M.D.
|                         |                                      
|                         | Richard A. Miller, M.D.              
|                         | President and Chief Executive Officer

|                         |                                                                                      |             
|------------------------ | ------------------------------------------------------------------------------------ | ------------
|Dated:  October 31, 2007 | By:                                                                                  | /s/ LEIV LEA
|                         |                                                                                     
|                         | Leiv Lea                                                                            
|                         | Vice President, Finance and Administration and
Chief Financial Officer and Secretary

18

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EXHIBITS INDEX


ExhibitNumber
Description3.1
Amended and Restated Bylaws of Pharmacyclics, Inc. (Incorporated
by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q for the quarter
ended December 31, 2001).3.2
Amendment to Amended and Restated Bylaws of Pharmacyclics, Inc.,
dated September 17, 2007.
     PDF provided as courtesy31.1
Rule 13a-14(a)/15d-14(a) Certification of CEO.
     PDF provided as courtesy31.2
Rule 13a-14(a)/15d-14(a) Certification of CFO.
     PDF provided as courtesy32.1
Section 1350 Certifications of CEO and CFO.
     PDF provided as courtesy