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     ̈ Non-accelerated filer     ̈  
Small reporting Company    x

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 April 29, 2008 there were 25,994,490 shares of the registrant's Common Stock, par value $0.0001 per share,
outstanding.

This quarterly report on Form 10-Q consists of 23 pages of which this is page 1. The Exhibits Index page immediately follows
page 22.



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
16Item 4.   Controls and Procedures
16PART II.     Other InformationItem 1.   Legal Proceedings
16Item 1A.    Risk Factors

16Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds
21Item 3.   Defaults Upon Senior Securities
21Item 4.   Submission of Matters to a Vote of Security Holders
21Item 5.   Other Information
21Item 6.   Exhibits
22Signatures
23Exhibits Index
#

PHARMACYCLICS®,  (the pentadentate logo.gif) 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 Statements
PHARMACYCLICS, INC.
(a development stage enterprise) 
CONDENSED BALANCE SHEETS 
(unaudited; in thousands)


March 31,     June 30,
                                                           2008          2007
                                                       ------------  ------------
                       ASSETS
   Current assets:
     Cash and cash equivalents ...................... $     16,279  $     11,941
     Marketable securities ..........................        4,993        26,821
     Prepaid expenses and other current assets ......          611           961
                                                       ------------  ------------
          Total current assets ......................       21,883        39,723
   Property and equipment, net ......................          633           849
   Other assets .....................................          523           523
                                                       ------------  ------------
                                                      $     23,039  $     41,095
                                                       ============  ============

        LIABILITIES AND STOCKHOLDERS' EQUITY
   Current liabilities:
     Accounts payable ............................... $      1,594  $      1,426
     Accrued liabilities ............................          754         1,189
                                                       ------------  ------------
          Total current liabilities .................        2,348         2,615
   Deferred rent ....................................           74            79
                                                       ------------  ------------
          Total liabilities .........................        2,422         2,694
                                                       ------------  ------------
   Stockholders' equity:
     Common stock ...................................            3             3
     Additional paid-in capital .....................      355,410       353,560
     Accumulated other comprehensive income (loss)...           27            (9)
     Deficit accumulated during development stage....     (334,823)     (315,153)
                                                       ------------  ------------
         Total stockholders' equity .................       20,617        38,401
                                                       ------------  ------------
                                                      $     23,039  $     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  Nine Months Ended   (April 19, 1991)
                                                       March 31,           March 31,              through
                                                       ------------------  ------------------    March 31,
                                                         2008      2007      2008      2007         2008
                                                       --------  --------  --------  --------  --------------
Revenues:
     License and milestone revenues ................. $     --  $     --  $     --  $     --  $        7,855

     Contract and grant revenues ....................       --        --                  19           6,154
                                                       --------  --------  --------  --------  --------------
            Total revenues ..........................       --        --                  19          14,009
                                                       --------  --------  --------  --------  --------------
Operating expenses:
     Research and development* ......................    5,120     5,669    14,822    15,557         308,564

     General and administrative* ....................    2,100     1,705     5,923     5,315          74,732

     Purchased in-process research
        and development .............................       --        --        --        --           6,647
                                                       --------  --------  --------  --------  --------------
            Total operating expenses ................    7,220     7,374    20,745    20,872         389,943
                                                       --------  --------  --------  --------  --------------
Loss from operations ................................   (7,220)   (7,374)  (20,745)  (20,853)       (375,934)

Interest and other income, net ......................      240       615     1,075     1,626          41,111
                                                       --------  --------  --------  --------  --------------
Net loss ............................................ $ (6,980) $ (6,759)  (19,670)  (19,227) $     (334,823)
                                                       ========  ========  ========  ========  ==============


Basic and diluted net loss per share ................ $  (0.27) $  (0.26)    (0.76)    (0.82)
                                                       ========  ========  ========  ========
Shares used to compute basic and
   diluted net loss per share .......................   25,994    25,938    25,983     23581
                                                       ========  ========  ========  ========

* Includes non-cash share-based compensation of
   the following:
     Research and development ....................... $    196  $    561  $    751  $  1,379  $        5,766
     General and administrative .....................      330       360      1051       940           6,299

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
                                                                            Nine Months Ended   (April 19, 1991)
                                                                                 March 31,          through
                                                                            ------------------     March 31,
                                                                              2008      2007         2008
                                                                            --------  --------  --------------
Cash flows from operating activities:
   Net loss .............................................................. $(19,670) $(19,227) $     (334,823)
Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation and amortization .........................................      263       343          14,900
   Amortization (accretion) of premium (discount) on marketable securities,    (123)      (78)             79
   Purchased in-process research and development .........................       --        --           4,500
   Share-based compensation expense ......................................    1,802     2,319          12,065
   Gain (loss) on sale of marketable securities ..........................       (7)       --              51
   Write-down of fixed assets ............................................       --        --             381
   Changes in assets and liabilities:
      Prepaid expenses and other assets ..................................      350      (140)         (1,134)
      Accounts payable ...................................................      168      (908)          1,594
      Accrued liabilities ................................................     (435)      (44)            754
      Deferred rent ......................................................       (5)        5              74
                                                                            --------  --------  --------------
         Net cash used in operating activities ...........................  (17,657)  (17,730)       (301,559)
                                                                            --------  --------  --------------
Cash flows from investing activities:
   Purchase of property and equipment ....................................      (47)     (447)        (12,145)
   Proceeds from sale of property and equipment ..........................       --        --             112
   Purchases of marketable securities ....................................       --   (14,867)       (524,100)
   Proceeds from maturities and sales of marketable securities ...........   21,994     6,500         519,004
                                                                            --------  --------  --------------
        Net cash provided by (used in) investing activities ..............   21,947    (8,814)        (17,129)
                                                                            --------  --------  --------------
Cash flows from financing activities:
   Issuance of common stock, net of issuance costs .......................       48    21,426         308,903
   Exercise of stock options .............................................       --       583           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 ........................       48    22,009         334,967
                                                                            --------  --------  --------------
Increase (decrease) in cash and cash equivalents .........................    4,338    (4,535)         16,279
Cash and cash equivalents at beginning of period .........................   11,941    22,283              --
                                                                            --------  --------  --------------
Cash and cash equivalents at end of period ............................... $ 16,279  $ 17,748  $       16,279
                                                                            ========  ========  ==============

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

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

Note 1 - The Company and Summary of Significant Accounting Policies

The Company

Pharmacyclics is a pharmaceutical company leveraging our small-molecule drug
development expertise to build a pipeline in oncology and immune mediated
diseases based on novel targets, pathways, and mechanisms. 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 March 31, 2008, had an accumulated deficit of approximately $334.8
million.  Based upon our recent reduction in headcount and related expenses
and the current status of our product
development and 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.  Currently,
we are actively seeking partnership collaborations for our product candidates.
If we are unsuccessful in obtaining a partnership for one or more of our product
candidates, providing sufficient funding for our product development, we will be
required to raise additional funds through the public or private sale of
securities or bank debt or otherwise.  If we are unable to raise additional
capital sufficient to fund our current operations, we may be required to reduce
operating expenses. Our actual capital requirements will depend on many factors,
including the following:


our ability to establish and the scope of any new partnership
collaborations;the progress and success of preclinical studies and clinical trials of our
product candidates; andthe costs and timing of obtaining regulatory approvals.Our estimate 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 and on acceptable terms, would require us to reduce our operating
expenses and would limit our ability to respond to competitive pressures or
unanticipated requirements, to develop our product candidates, and to continue
operations, any of which would have a material adverse effect on our business,
financial condition and results of operations.

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.

6The 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 5,660,942 and 5,613,864 shares of common stock were
outstanding at March 31, 2008 and 2007, 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 and nine months ended March 31, 2008 and
2007, and since inception are as follows:


Period From
                                                                                            Inception
                                        Three Months Ended         Nine Months Ended      April 19, 1991
                                             March 31,                  March 31,            through
                                      -----------------------  -------------------------  December 31,
                                          2008        2007          2008        2007          2008
------------------------------------  ----------- -----------  ------------ ------------  --------------
Research and development              $  196,000  $  561,000   $   751,000  $ 1,379,000  $   5,766,000
General and administrative               330,000     360,000     1,051,000      940,000      6,299,000

Total share-based compensation        $  526,000  $  921,000   $ 1,802,000  $ 2,319,000  $  12,065,000

The following table summarizes the company's stock option activity for the nine months ended March 31, 2008:Options Outstanding
                                                   -----------------------------
                                                                      Weighted
                                        Shares                        Average
                                      Available                       Exercise
                                      for Grant       Number           Price
                                     ------------  ------------     ------------
Balance at June 30, 2007                 532,619     5,589,114     $      10.98
Options granted                       (1,461,017)    1,461,017             1.07
Options forfeited or expired           1,389,189    (1,389,189)           10.54
                                     ------------  ------------
Balance at March 31, 2008                460,791     5,660,942             8.53
                                     ============  ============


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.  Sales under the Purchase Plan in the nine month periods
ended March 31, 2008 and 2007 were 26,301 and 28,233 shares of common stock at
an average price of $1.84 and $4.58, respectively.  Shares available for future
purchase under the Purchase Plan are 234,506 at March 31, 2008.
7Note 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          Nine Months Ended
                                                       March 31,                 March 31,
                                            --------------------------  --------------------------
                                                2008          2007          2008          2007
                                            ------------  ------------  ------------  ------------
Net loss ................................. $ (6,980,000) $ (6,759,000) $(19,670,000) $(19,227,000)
Change in net unrealized losses
  on available-for-sale securities .......        9,000        30,000        36,000       154,000
                                            ------------  ------------  ------------  ------------
Comprehensive loss ....................... $ (6,971,000) $ (6,729,000) $(19,634,000) $(19,073,000)
                                            ============  ============  ============  ============

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 July 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.
Note 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 2009 fiscal year.

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.


8The 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 leveraging our small-molecule drug
development expertise to build a pipeline in oncology and immune mediated
diseases based on novel targets, pathways, and mechanisms.  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 March 31, 2008, had an accumulated deficit of approximately $334.8
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.

Motexafin gadolinium (MGd), 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 MGd. The primary endpoint for the study was time to neurologic
progression (TNP) as determined by a blinded events review committee.
In the pivotal SMART trial, investigators found that patients given MGd
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.  Although not statistically significant, the trend was in favor of
MGd.  In April 2007, we announced that the FDA had filed our NDA over protest.
In December 2007, we announced that the FDA determined that our NDA was non-
approvable which will require us, among other things, to conduct additional
studies and submit that data before the FDA will approve MGd for marketing.  We
are seeking corporate partners to aid in the future development of MGd.  The FDA
has also designated MGd as an orphan drug for the treatment of brain metastases
arising from solid tumors.
We also are evaluating MGd for the treatment of a diverse range of cancer
types and in various clinical situations including MGd as a single agent and in
combination with chemotherapy for treatment of recurrent lung cancer.  We own
the worldwide rights to MGd.

We are also developing several other drugs to various molecular
targets in oncology and autoimmune diseases.  PCI-24781 is a novel compound that
inhibits all isoforms of histone deacetylase (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.

9Laboratory 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.

PCI-24781 is now in a Phase 1 trial in patients with advanced solid tumors.
The objective of the trial is to determine the safety and tolerability of an
oral formulation of the drug, determine the maximum tolerated dose, and also to
assess absorption and plasma levels of the drug. 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.

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-27483 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 lung, breast, pancreatic, gastric, and colon 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. Factor VIIa is also involved in blood
coagulation and plays an important role in the increased incidence of thromboses
seen in patients with cancer. We believe that PCI-27483 may be used for the
treatment of cancer or cancer related thromboses. We are conducting the required
preclinical safety studies to support the potential submission of an
Investigational New Drug (IND) application with the FDA which is anticipated in
the second half of calendar 2008.
PCI-32765 is an oral, 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 is required for
immature B-cells to mature into fully functioning cells.  In published studies,
these compounds have demonstrated a dose dependent ability to inhibit disease
development in animal models of rheumatoid arthritis and other immune diseases.
Laboratory studies also 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
submission of an IND application with the FDA which is anticipated in the second
half of calendar 2008.

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                       Nine Months ended
                                             March 31,                                March 31,
                                      -----------------------     Percent   ---------------------------  Percent
                                          2008        2007         change       2008          2007       change
------------------------------------  ----------- -----------    ---------- ------------ -------------- ---------
Contract and grant revenues           $       --  $       --         --     $        --  $      19,000     --


The decrease in contract and grant revenues for the three and nine months
ended March 31, 2008 is the result of the completion of work associated with a
federal grant awarded by the National Institutes of Health (NIH) in fiscal
2007.

10Research and Development


Three Months Ended                       Nine Months Ended
                                             March 31,                                March 31,
                                      -----------------------     Percent   ---------------------------  Percent
                                          2008        2007         change       2008          2007       change
------------------------------------  ----------- -----------    ---------- ------------ -------------- ---------
Research and development expenses     $5,120,000  $5,669,000        -10%    $14,822,000  $  15,557,000     -5%

The decrease of 10% or $549,000 in research and development expenses for the
three months ended March 31, 2008 as compared to the three months ended March
31, 2007 was primarily due to a decrease of $995,000 in personnel costs due to
lower headcount and a decrease in share-based compensation of $365,000 partially
offset by an increase of $498,000 in drug manufacturing costs and $275,000 of
outside pre-clinical costs associated with our HDAC, Factor VIIa and Btk
programs.
The decrease of 5% or $735,000 in research and development expenses for the
nine months ended March 31, 2008 as compared to the nine months ended March 31,
2007 was primarily due to a decrease of $2,719,000 in personnel costs due to
lower headcount, a decrease in share-based compensation of $628,000 and a
reduction of $574,000 in consulting costs partially offset by an increase of
$2,073,000 in drug manufacturing costs and $1,107,000 in outside preclinical
costs associated with our HDAC, Factor VIIa and Btk programs.
We expect research and development expenses in our fiscal fourth quarter to
be lower than our fiscal third 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 the column 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:

11Related R&D Expenses    Related R&D Expenses
                                                                                        Three Months Ended       Nine Months Ended
                                                                                             March 31,                March 31,
                                                                                    ----------------------- -------------------------
                                                                        Estimated
                                                     Phase of          Completion
Program                  Description                Development         of Phase        2008        2007        2008         2007
--------------- ----------------------------- ----------------------- ------------- ----------- ----------- ------------ ------------
MGd             Cancer                        Several Phase 2 trials  Unknown       $  662,000  $1,878,000  $ 2,224,000  $ 6,070,000

HDAC Inhibitors Cancer                        Phase 1                 Fiscal 2009    1,122,000     893,000    2,964,000    1,738,000

Btk Inhibitors  Lymphomas and                 Preclinical             Fiscal 2009      950,000     396,000    2,511,000      740,000
                autoimmune diseases

Factor VIIa     Cancer                        Preclinical             Fiscal 2009      483,000     122,000    1,801,000      134,000
Inhibitor                                                                           ----------- ----------- ------------ ------------

                Total direct costs.................................................  3,217,000   3,289,000    9,500,000    8,682,000
                Indirect costs.....................................................  1,903,000   2,380,000    5,322,000    6,875,000
                                                                                    ----------- ----------- ------------ ------------
                Total research and
                   development expenses............................................ $5,120,000  $5,669,000  $14,822,000  $15,557,000
                                                                                    =========== =========== ============ ============


General and Administrative

Three Months ended                       Nine Months ended
                                             March 31,                                March 31,
                                      -----------------------     Percent   ---------------------------  Percent
                                          2008        2007         change       2008          2007       change
------------------------------------  ----------- -----------    ---------- ------------ -------------- ---------

General and administrative expenses   $2,100,000  $1,705,000        23%     $ 5,923,000  $   5,315,000     11%


The increase of 23% or $395,000 in general and administrative expenses for
the three months ended March 31, 2008 as compared to the three months ended
March 31, 2007, was primarily due to $244,000 in involuntary employee severance
costs and a $102,000 increase in legal and patent expenses.

The increase of 11% or $608,000 in general and administrative expenses for
the nine months ended March 31, 2008 compared to the nine months ended March 31,
2007 was primarily due to an increase $339,000 in personnel costs (including
employee severance costs of $244,000), and an increase of $429,000 in corporate
communication expenses partially offset by a decrease of $128,000 in patent
expenses.

We expect general and administrative expenses in our fiscal fourth quarter to
be lower than our fiscal third quarter.

Interest and Other, Net


Three Months Ended                      Nine Months Ended
                                             March 31,                              March 31,
                                      -----------------------     Percent   ---------------------------  Percent
                                          2008        2007         change       2008          2007       change
------------------------------------  ----------- -----------    ---------- ------------ -------------- ---------

Interest and other, net               $  240,000  $  615,000        -61%    $ 1,075,000  $   1,626,000    -34%

Interest and other, net declined in both periods of fiscal 2008 as
compared to fiscal 2007 due primarily to lower average investment balances.  Our
cash equivalents and marketable securities consist primarily of fixed rate
instruments.


12Liquidity 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 March 31, 2008, we had approximately $21,272,000 in cash, cash
equivalents and marketable securities. As of March 31, 2008, our portfolio of
cash, cash equivalents and marketable securities had an average maturity of
approximately 48 days and consisted of debt instruments of corporations and
government entities with strong credit ratings.

Net cash used in operating activities of $17,657,000 during the nine months
ended March 31, 2008, resulted primarily from our net loss, net of depreciation
and amortization and share-based compensation expense.

Net cash provided by investing activities of $21,947,000 in the nine months
ended March 31, 2008 consisted primarily of maturities and sales of marketable
securities.  Net cash used in investing activities of $8,814,000 in the nine
months ended March 31, 2007 consisted primarily of purchases of marketable
securities, net of maturities and sales of marketable securities.

Net cash provided by financing activities of $48,000 in the nine months ended
March 31, 2008 was due to sales of stock under the Company's employee stock
purchase plan.  Net cash provided by financing activities of 22,009,000 in the
nine months ended March 31, 2007, consisted primarily of proceeds from a public
offering of common stock.

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 March 31, 2008 are as follows:

Operating
                                            Lease
                                         Commitments
                                       ---------------
Remaining 3 months of fiscal 2008 ..   $      233,000
Fiscal 2009 ........................          946,000
Fiscal 2010 ........................          487,000
                                       ---------------
     Total .........................   $    1,666,000
                                       ===============

In 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 our recent reduction in headcount and related expenses and the
current status of our product development and 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.  Currently, we are actively seeking partnership
collaborations for our product candidates.  If we are unsuccessful in obtaining
a partnership for one or more of our product candidates, providing sufficient
funding for our product development, we will be required to raise additional
funds through the public or private sale of securities, bank debt or otherwise.
If we are unable to raise additional capital sufficient to fund our current
operations, we may be required to reduce operating expenses. Our actual capital
requirements will depend on many factors, including the following:

13our ability to establish and the scope of any new partnership
collaborations;the progress and success of preclinical studies and clinical trials of our
product candidates; andthe costs and timing of obtaining regulatory approvals.In addition, our ability to raise additional capital may be dependent upon
our stock being quoted on the NASDAQ Global Market. On April 17, 2008, we
received a notice from the Listing Qualifications Department of The NASDAQ Stock
Market indicating that the Company does not comply with the $1.00 minimum bid
price requirement for continued listing set forth in NASDAQ Marketplace Rule
4450(a)(5). The notice further stated that pursuant to Marketplace Rule
4450(e)(2), we will be provided 180 calendar days, or until October 14,
2008 to regain compliance. If, at any time before October 14, 2008, the bid
price of our common stock closes at $1.00 per share or more for a minimum of 10
consecutive business days, and if we remain in compliance with other listing
requirements, NASDAQ will notify the Company that we have regained compliance
with NASDAQ's Marketplace Rules. NASDAQ may, in its sole discretion, require the
Company to maintain a closing bid price of at least $1.00 per share for a longer
period before determining that the Company has demonstrated the ability to
maintain long-term compliance. There can be no assurance that we will be able to
satisfy the criteria for continued listing on the NASDAQ Global Market. 
        The notice further indicates that if compliance with the minimum bid
price rule is not regained by October 14, 2008, NASDAQ will provide written
notification that our common stock will be delisted. At that time we may appeal
the NASDAQ's determination to a Listing Qualifications Panel. Alternatively, we
may apply to transfer the listing of our common stock to The NASDAQ Capital
Market if we satisfy the requirements for initial inclusion set forth in
Marketplace Rule 4310(c), other than the minimum bid price requirement of
Marketplace Rule 4310(c)(4). If the application is approved, we will be afforded
the remainder of a second additional 180-day compliance period to regain
compliance with the minimum bid price rule while on the NASDAQ Capital Market.

        We will continue to monitor the bid price for our common stock and
consider various options available to us if our common stock does not trade at a
level that is likely to regain compliance. To maintain our listing on the NASDAQ
Global Market, we are also required, among other things, to either maintain
stockholders' equity of at least $10 million or a market value of at least $50
million. While we currently satisfy the stockholders' equity requirement, we may
not continue to do so.

Our estimate 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 and on acceptable terms, would require us to reduce our operating
expenses and would limit our ability to respond to competitive pressures or
unanticipated requirements, to develop our product candidates, and to continue
operations, any of which would 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 about14the 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 recognized over 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 March 31, 2008,
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.

15

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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 had not been rendered that were
outstanding as of  July 1, 2005 has been expensed as the requisite service was
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-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 March 31, 2008
would have declined by approximately $27,000.

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
third 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 control over financial reporting.

PART	II.	OTHER INFORMATION

Item	1.	Legal Proceedings

Not Applicable.

Item	1A.	   Risk Factors

16

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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.



We will need substantial additional financing and we may have
difficulty raising needed capital in the future.

We have expended and will continue to expend substantial funds to
complete the research, development and clinical testing of our products. We are
unable to entirely fund these efforts with our current financial resources.
Currently, we are actively seeking partnership collaborations to help fund the
development of our product candidates.  If we are unsuccessful in obtaining a
partnership for one or more of our product candidates, we will be required to
raise additional funds through the public or private sale of securities, bank
debt or otherwise.

Based upon our recent reduction in headcount and related expenses and the
current status of our product development plans, we believe that our cash, cash
equivalents and marketable securities will be adequate to satisfy our capital
needs through at least the next twelve months. We may, however, choose to raise
additional funds before then. Our actual capital requirements will depend on
many factors, including:

- our ability to establish new partnership collaboration
arrangements;

- continued progress of our research and development programs;

- our ability to establish and maintain collaborative arrangements with third
parties;

- progress with preclinical studies and clinical trials;

- the time and costs involved in obtaining regulatory approval;

- the costs involved in preparing, filing, prosecuting, maintaining and
enforcing patent claims;

- the amount and timing of capital equipment purchases; and

- competing technological and market developments.

In addition, our ability to raise additional capital may be dependent upon
our stock being quoted on the NASDAQ Global Market. On April 17, 2008, we
received a notice from the Listing Qualifications Department of The NASDAQ Stock
Market indicating that the Company does not comply with the $1.00 minimum bid
price requirement for continued listing set forth in NASDAQ Marketplace Rule
4450(a)(5). The notice further stated that pursuant to Marketplace Rule
4450(e)(2), we will be provided 180 calendar days, or until October 14,
2008 to regain compliance. If, at any time before October 14, 2008, the bid
price of our common stock closes at $1.00 per share or more for a minimum of 10
consecutive business days, and if we remain in compliance with other listing
requirements, NASDAQ will notify the Company that we have regained compliance
with NASDAQ's Marketplace Rules. NASDAQ may, in its sole discretion, require the
Company to maintain a closing bid price of at least $1.00 per share for a longer
period before determining that the Company has demonstrated the ability to
maintain long-term compliance. There can be no assurance that we will be able to
satisfy the criteria for continued listing on the NASDAQ Global Market. 
       The notice further indicates that if compliance with the minimum bid
price rule is not regained by October 14, 2008, NASDAQ will provide written
notification that our common stock will be delisted. At that time we may appeal
the NASDAQ's determination to a Listing Qualifications Panel. Alternatively, we
may apply to transfer the listing of our common stock to The NASDAQ Capital
Market if we satisfy the requirements for initial inclusion set forth in
Marketplace Rule 4310(c), other than the minimum bid price requirement of
Marketplace Rule 4310(c)(4). If the application is approved, we will be afforded
the remainder of a second additional 180-day compliance period to regain
compliance with the minimum bid price rule while on the NASDAQ Capital Market.

17

---

We will continue to monitor the bid price for our common stock and
consider various options available to us if our common stock does not trade at a
level that is likely to regain compliance. To maintain our listing on the NASDAQ
Global Market, we are also required, among other things, to either maintain
stockholders' equity of at least $10 million or a market value of at least $50
million. While we currently satisfy the stockholders' equity requirement, we may
not continue to do so.

We will need to raise any necessary additional funds through the public or
private sale or securities, bank debt financings, collaborative arrangements
with corporate partners or other sources that may be dilutive to existing
stockholders or subject us to restrictive covenants. In addition, in the event
that additional funds are obtained through arrangements with collaborative
partners or other sources, such arrangements may require us to relinquish rights
to some of our technologies, product candidates or products under development
that we would otherwise seek to develop or commercialize ourselves. Additional
funds may not be available on acceptable terms, if at all. Our failure to raise
capital when needed and on acceptable terms would require us to reduce our
operating expenses, delay or reduce the scope of or eliminate one or more of our
research or development programs and would limit our ability to respond to
competitive pressures or unanticipated requirements and to continue operations.
Any one of the foregoing would have a material adverse effect on our business,
financial condition and results of operations.

All of our product candidates are in development, and we cannot be certain
that any of our products under development will be commercialized.

To be profitable, we must successfully research, develop, obtain regulatory
approval for, manufacture, introduce, market and distribute our products under
development. The time frame necessary to achieve these goals for any individual
product is long and uncertain. Before we can sell any of our products under
development, we must demonstrate to the satisfaction of the FDA and regulatory
authorities in foreign markets through the submission of preclinical (animal)
studies and clinical (human) trials that each product is safe and effective for
human use for each targeted disease. We have conducted and plan to continue to
conduct extensive and costly clinical trials to assess the safety and
effectiveness of our potential products. We cannot be certain that we will be
permitted to begin or continue our planned clinical trials for our potential
products, or if permitted, that our potential products will prove to be safe and
produce their intended effects.

The completion rate of our clinical trials depends upon, among other factors,
the rate of patient enrollment, the adequacy of patient follow-up and the
completion of required clinical evaluations. Many factors affect patient
enrollment, including the size of the patient population, the proximity of
patients to clinical sites, the eligibility criteria for the trial, competing
clinical trials and new drugs or procedures used for the conditions we are
investigating. Other companies are conducting clinical trials and have announced
plans for future trials that are seeking or are likely to seek patients with the
same diseases that we are studying. We may fail to obtain adequate levels of
patient enrollment in our clinical trials. Delays in planned patient enrollment
may result in increased costs, delays or termination of clinical trials, which
could have a material adverse effect on us. Many factors can affect the adequacy
of patient follow-up and completion of required clinical evaluations, including
failure of patients to return for scheduled visits or failure of clinical sites
to complete necessary documentation. Delays in or failure to obtain required
clinical follow-up and completion of clinical evaluations could also have a
material adverse effect on the timing and outcome of our clinical trials and
product approvals.

Additionally, clinical trials require substantial administration and
monitoring. We may fail to effectively oversee and monitor the various trials we
have underway at any particular time which would result in increased costs or
delays of our clinical trials.

Data already obtained from preclinical studies and clinical trials of our
products under development do not necessarily predict the results that will be
obtained from later preclinical studies and clinical trials. Moreover, data from
clinical trials we are conducting are susceptible to varying interpretations
that could delay, limit or prevent regulatory approval. A number of companies in
the pharmaceutical industry have suffered significant setbacks in advanced
clinical trials, even after promising results in earlier trials. The failure to
adequately demonstrate the safety and effectiveness of a product under
development could limit or prevent regulatory approval of the potential product
and would materially harm our business. Our clinical trials may not demonstrate
the sufficient levels of safety and efficacy necessary to obtain the requisite
regulatory approval or may not result in marketable products.

In December 2005, we announced the top line results of our pivotal
Phase 3 clinical study of MGd for the potential treatment of non-small cell lung
cancer (NSCLC) patients with brain metastases.  Although patients receiving MGd
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.

18

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In April 2007, we announced that the FDA had filed our
NDA over protest.  In December 2007, we announced that the FDA determined that
our NDA was non-approvable which will require us, among other things, to conduct
additional studies and submit that data before the FDA will approve MGd for
marketing.  Performance and completion of additional clinical studies will
require years of testing and, even if positive results are achieved, may not
result in MGd's approval.

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 March 31, 2008, had an accumulated deficit of approximately $334.8
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.  All of our product candidates are in
the early stages of development and the commercialization of those products will
not occur, if at all, for at least the next several years.  Our achieving
profitability depends upon our ability, alone or with others, to successfully
complete the development of our product candidates, and to obtain required
regulatory approvals and to successfully manufacture and market our proposed
product.  To date, we have not generated revenue from the commercial sale of our
products.

Failure to obtain product approvals or comply with ongoing governmental
regulations could adversely affect our business.

The manufacture and marketing of our products and our research and
development activities are subject to extensive regulation for safety, efficacy
and quality by numerous government authorities in the United States and abroad.
Before receiving FDA approval to market a product, we will have to demonstrate
to the satisfaction of the FDA that the product is safe and effective for the
patient population and for the diseases that will be treated. Clinical trials,
and the manufacturing and marketing of products, are subject to the rigorous
testing and approval process of the FDA and equivalent foreign regulatory
authorities. The Federal Food, Drug and Cosmetic Act and other federal, state
and foreign statutes and regulations govern and influence the testing,
manufacture, labeling, advertising, distribution and promotion of drugs and
medical devices. As a result, clinical trials and regulatory approval can take a
number of years to accomplish and require the expenditure of substantial
resources.

Data obtained from clinical trials are susceptible to varying
interpretations that could delay, limit or prevent regulatory approvals.

In addition, we may encounter delays or rejections based upon additional
government regulation from future legislation or administrative action or
changes in FDA policy during the period of product development, clinical trials
and FDA regulatory review.  We may encounter similar delays in foreign
countries.  We may be unable to obtain requisite approvals from the FDA and
foreign regulatory authorities and even if obtained, such approvals may not be
received on a timely basis, or they may not cover the clinical uses that we
specify.

Furthermore, regulatory approval may entail ongoing requirements for
post-marketing studies.  The manufacture and marketing of drugs are subject to
continuing FDA and foreign regulatory review and later discovery of previously
unknown problems with a product, manufacturer or facility may result in
restrictions, including withdrawal of the product from the market. Any of the
following events, if they were to occur, could delay or preclude us from further
developing, marketing or realizing full commercial use of our products, which in
turn would have a material adverse effect on our business, financial condition
and results of operations:

- failure to obtain and thereafter maintain requisite governmental
approvals;

- failure to obtain approvals for specific indications of our products under
development; or

- identification of serious and unanticipated adverse side effects in our
products under development.

Any regulatory approval that we receive for a product candidate may be
subject to limitations on the indicated uses for which the product may be
marketed.  In addition, if the FDA and/or foreign regulatory agencies approve
any of our product candidates, the labeling, packaging, adverse event reporting,
storage, advertising and promotion of the product will be subject to extensive
regulatory requirements. We and the manufacturers of our product candidates must
also comply with the applicable FDA Good Manufacturing Practice
("GMP") regulations, which include quality control and quality
assurance requirements as well as the corresponding maintenance of records and
documentation.  Manufacturing facilities are subject to ongoing periodic
inspection by the FDA and corresponding state agencies, including unannounced
inspections, and must be licensed before they

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can be used to commerical manufacturing of our products.  We or our present or
 future suppliers may be unable to comply with the applicable GMP regulations and
other FDA regulatory requirements.  Failure of our suppliers to follow current GMP
Practice or other regulatory requirements may lead to significant delays in the
 availability of products for commercial or clinical use and could subject us to fines,
injunctions and civil penalties.

We rely heavily on third parties for product and clinical development
of our products.

We currently depend heavily and will depend heavily in the future on third
parties for support in product development and clinical development of our
products.  The termination of a significant number of our existing collaborative
arrangements, or our inability to establish and maintain collaborative
arrangements could have a material adverse effect on our ability to complete
clinical development of our products.  Given our limited resources, it may be
necessary to establish partnerships with other pharmaceutical companies that
have greater financial and technical resources in order to successfully develop
and commercialize our products.  There is no assurance that such partnerships
can be obtained, and if obtained, may require us to relinquish product rights
that could affect the financial success of these products.

We rely on contract clinical research organizations, or CROs, for various
aspects of our clinical development activities including clinical trial
monitoring, data collection, safety monitoring and data management. As a result,
we have had and continue to have less control over the conduct of clinical
trials, the timing and completion of the trials, the required reporting of
adverse events and the management of data developed through the trial than would
be the case if we were relying entirely upon our own staff.  Although we rely on
CROs to conduct some of our clinical trials, we are responsible for confirming
that each of our clinical trials is conducted in accordance with the
investigational plan and protocol.  Moreover, the FDA and foreign regulatory
agencies require us to comply with regulations and standards, commonly referred
to as good clinical practices, for conducting, recording and reporting the
results of clinical trials to assure that the data and results are credible and
accurate and that the trial participants are adequately protected. Our reliance
on third parties does not relieve us of these responsibilities and
requirements.

Outside parties may have staffing difficulties, may undergo changes in
priorities or may become financially distressed, adversely affecting their
willingness or ability to conduct our trials. We may experience unexpected cost
increases that are beyond our control.  Any failure of such CROs to successfully
accomplish clinical trial monitoring, data collection, safety monitoring and
data management and the other services they provide for us in a timely manner
and in compliance with regulatory requirements could have a material adverse
effect on our ability to complete clinical development of our products and
obtain regulatory approval. Problems with the timeliness or quality of the work
of a CRO may lead us to seek to terminate the relationship and use an alternate
service provider.  However, making such changes may be costly and may delay our
trials, and contractual restrictions may make such a change difficult or
impossible.  Additionally, it may be difficult to find a replacement
organization that can conduct our trials in an acceptable manner and at an
acceptable cost.

If we lose or are unable to hire and retain qualified personnel, then
we may not be able to develop our products or processes and obtain the required
regulatory approvals.

We are highly dependent on qualified scientific and
management personnel.  We will need to expand and effectively manage our
managerial, operational, financial, development and other resources in order to
successfully pursue our research, development and commercialization efforts for
our existing and future product candidates.  Our success depends on our
continued ability to attract, retain and motivate highly qualified management
and personnel with pre-clinical and clinical experience.  We will need to hire
additional personnel as we continue to expand our research and development and
partnering activities.



We face intense competition from other companies and research
and academic institutions for qualified personnel.  We may not be able to
attract or retain qualified management and scientific personnel in the future
due to the intense competition for qualified personnel among biotechnology,
pharmaceutical and other businesses, particularly in the San Francisco,
California area.  If we lose an executive officer, a manager of one of our
programs, or a significant number of any of our staff or are unable to hire and
retain qualified personnel, then our ability to develop and commercialize our
products and processes, raise additional capital or implement our business
strategy may be adversely affected or prevented.  In particular, if we lose
additional members of our senior management team, we may not be able to find
suitable replacements in a timely fashion or at all and our business may be
harmed as a result.

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The price of our common stock may be volatile.

The market prices for securities of biotechnology companies, including ours,
have historically been highly volatile.  Our stock, like that of many other
companies, has from time to time experienced significant price and volume
fluctuations sometimes unrelated to operating performance.  For example, during
the period beginning July 1, 2004 and ending April 25, 2008, the sales price for
one share of our common stock reached a high of $12.86 per share and a low of
$0.55 per share.  The market price of our common stock may fluctuate
significantly due to a variety of factors, including:

- the progress and results of our preclinical testing, clinical trials,
product development and partnering activities;

- quarterly fluctuations in our financial results;

- the development of technological innovations or new therapeutic products by
us, our competitors or others;

- changes in governmental regulation;

- developments in patent or other proprietary rights by us, our competitors or
others;

- developments and/or announcements by us, our competitors or
others;

- litigation;

- public concern as to the safety of products developed by us, our competitors
or others;

- departure of key personnel;

- ability to manufacture our products to commercial standards;

- changes in the structure of healthcare payment systems and the coverage and
reimbursement policies of governmental and other third-party payors;

- our ability to successfully commercialize our products if they are
approved;

- comments by securities analysts; and

- general market conditions in our industry.

In addition, if any of the risks described in this section entitled
"Risk Factors" actually occur, there could be a dramatic and material
adverse impact on the market price of our common stock.

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.

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Item	6.	Exhibits



| |  | 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.   

22

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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:  April 29, 2008 | By:                                   | /s/ RICHARD A. MILLER, M.D.
|                       |                                      
|                       | Richard A. Miller, M.D.              
|                       | President and Chief Executive Officer

|                       |                                                                                      |             
|---------------------- | ------------------------------------------------------------------------------------ | ------------
|Dated:  April 29, 2008 | By:                                                                                  | /s/ LEIV LEA
|                       |                                                                                     
|                       | Leiv Lea                                                                            
|                       | Vice President, Finance and Administration and
Chief Financial Officer and Secretary

23

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EXHIBITS INDEX


ExhibitNumber
Description31.1
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