**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-QSB**





**(Mark
      One)**





**x**
            
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
                ACT
                OF 1934**





**For
                the quarterly period ended June 30,
                2007**





**or**





**o**
            
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
                ACT
                OF 1934**





**For
                the transition period from  ________     to
                ______________**





**Commission
      File Number: 000-32947**




**Lev
      Pharmaceuticals, Inc.**


(Exact
      name of small business issuer as specified in its charter)





**Delaware**
            **88-0211496**(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer Identification No.)





**675
                Third Avenue, Suite 2200**
              **New
                York, New York**
            **10017**(Address
                of principal executive offices)
            (Zip
                Code)




**Issuer’s
      telephone number: (212) 682-3096**





(Former
      Name, Former Address and Former Fiscal Year, if Changes


Since
      Last Report)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to the filing requirements
      for
      the past 90 days. Yes x No o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). o Yes x No





As
      of
      August 10, 2007, the issuer had 114,416,870 shares of common stock
      outstanding.





Transitional
      Small Business Disclosure Format (check one): o Yes x No










**Lev
      Pharmaceuticals, Inc.**




**Index
      to Form 10-QSB**




PagePart
                I.
            Financial
                InformationItem
                1.
            Condensed
                Consolidated Financial Statements
            3Condensed
                Consolidated Balance Sheets as of June 30, 2007 (Unaudited) and December
                31, 2006
            3Condensed
                Consolidated Statements of Operations (Unaudited) for the Three and
                Six
                Months Ended
              June
                30, 2007 and June 30, 2006 and for the Period from July 21, 2003
                (Inception) to June 30, 2007
            4Condensed
                Consolidated Statements of Cash Flows (Unaudited) for the Six Months
                Ended
              June
                30, 2007 and June 30, 2006 and for the Period from July 21, 2003
                (Inception) to June 30, 2007
            5Notes
                to Unaudited Condensed Consolidated Financial Statements
            6Item
                2.
            Management’s
                Discussion and Analysis or Plan of Operation
            12Item
                3.
            Controls
                and Procedures
            20Part
                II.
            Other
                Information
            21Item
                1.
            Legal
                Proceedings
            21Item
                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
            22




2




**LEV
      PHARMACEUTICALS , INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**




**Condensed
        Consolidated Balance Sheets**




June 30, 2007 (Unaudited)
            
            December
                31,
              2006ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            8,429,994
            
            $
            7,887,635Investments
                - held to maturity
            
            
            
            
            
            9,999,845Prepaid
                expenses
            
            
            272,900
            
            
            378,786Other
                assets
            
            
            163,433
            
            
            82,030Total
                current assets
            
            
            8,866,327
            
            
            18,348,296Fixed
                assets, net of accumulated depreciation
            
            
            187,975
            
            
            131,094Other
                assets
            
            
            93,335
            
            
            93,335Total
                assets
            
            $
            9,147,637
            
            $
            18,572,725LIABILITIESCurrent
                liabilities:Accounts
                payable
            
            $
            1,556,750
            
            $
            1,662,651Accrued
                expenses
            
            
            1,447,650
            
            
            1,494,548Total
                current liabilities
            
            
            3,004,400
            
            
            3,157,199Loan
                payable, net of debt discount
            
            
            3,373,465
            
            
            1,803,554Deferred
                lease liability
            
            
            15,951Total
                liabilities
            
            
            6,393,816
            
            
            4,960,753Commitments
                and contingenciesSTOCKHOLDERS'
                EQUITYPreferred
                stock - $0.01 par value, 20,000,000 authorized,no
                shares issued and outstandingCommon
                stock - $0.01 par value, 200,000,000 shares authorized,114,416,870 and 114,010,237 shares issued and outstanding at June
                30,
                2007and December 31, 2006, respectively
            
            
            1,144,169
            
            
            1,140,102Additional
                paid-in capital
            
            
            37,169,190
            
            
            35,660,209Deficit
                accumulated during the development stage
            
            
            (35,559,538
            )
            
            (23,188,339
            )Total
                stockholders' equity
            
            
            2,753,821
            
            
            13,611,972Total
                liabilities and stockholders’ equity
            
            $
            9,147,637
            
            $
            18,572,725




The
      accompanying notes are an integral part of the unaudited condensed consolidated
      financial statements




3




**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


(a
      development stage enterprise)




**Condensed
      Consolidated Statements of Operations (Unaudited)**





Three
                Months
              Ended
              June
                30,
            
            Six
                Months
              Ended
              June
                30,
            
            Period
                From
              July
                21, 2003
              (Inception)
                to
              June
                30,2007
            
            2006
            
            2007
            
            2006
            
            2007Costs
                and expenses:Research
                and development
            $
            4,089,972
            
            $
            840,306
            
            $
            7,313,369
            
            $
            1,936,493
            
            $
            17,983,595Merger
                costs
            
            
            
            
            
            
            
            
            
            
            
            
            
            283,732General
                and administrative
            
            2,897,186
            
            
            1,109,699
            
            
            5,318,879
            
            
            1,863,549
            
            
            17,639,960Loss
                before other income
            
            (6,987,158
            )
            
            (1,950,005
            )
            
            (12,632,248
            )
            
            (3,800,042
            )
            
            (35,907,287
            )Other
                income:Interest
                income
            
            138,940
            
            
            37,043
            
            
            336,731
            
            
            78,998
            
            
            851,390Interest
                expense
            
            (44,908
            )
            
            (9,933
            )
            
            (75,682
            )
            
            (15,376
            )
            
            (133,586
            )Net
                loss
            $
            (6,893,126
            )
            $
            (1,922,895
            )
            $
            (12,371,199
            )
            $
            (3,736,420
            )
            $
            (35,189,483
            )Net
                loss per share- basic and diluted
            $
            (0.06
            )
            $
            (0.02
            )
            $
            (0.11
            )
            $
            (0.05
            )Weighted
                average shares- basic and diluted
            
            114,157,528
            
            
            81,638,377
            
            
            114,102,444
            
            
            81,582,961




The
      accompanying notes are an integral part of the unaudited condensed consolidated
      financial statements




4




**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


(a
      development stage enterprise)





**Condensed
      Consolidated Statements of Cash Flows (Unaudited)**




Six
                Months
            
            Six
                Months
            
            July
                21, 2003Ended
            
            Ended
            
            (Inception)
                toJune
                30,
            
            June
                30,
            
            June
                30,**Cash
                flows from operating activities:**
            
            2007
            
            2006
            
            2007Net
                loss
            
            $
            (12,371,199
            )
            $
            (3,736,420
            )
            $
            (35,189,483
            )Adjustments
                        to reconcile net loss to net cash used in operating
                        activities:Compensation
                  to consultants from issuance of warrants
                  and common stock
            
            
            
            
            
            58,403
            
            
            2,209,177Repricing
                of options and warrants
            
            
            
            
            
            
            
            
            1,455,269Option
                and warrants modification resulting from merger
            
            
            
            
            
            
            
            
            75,201Stock
                issued for services
            
            
            
            
            
            78,750
            
            
            78,750Depreciation
                expense
            
            
            22,925
            
            
            8,605
            
            
            53,227Amortization
                of debt discount
            
            
            75,647
            
            
            15,368
            
            
            131,265Stock
                compensation to employees
            
            
            964,093
            
            
            106,831
            
            
            1,421,444Accretion
                of investment income
            
            
            
            
            
            (12,610
            )
            
            (12,610
            )Gain
                on sale of investments
            
            
            (155
            )
            
            
            
            
            (155
            )Supplier
                purchase funding
            
            
            1,494,264
            
            
            467,562
            
            
            3,242,200Changes
                in:Prepaid
                expenses and other assets
            
            
            24,483
            
            
            104,055
            
            
            (529,164
            )Accounts
                payable
            
            
            (105,901
            )
            
            (208,937
            )
            
            1,556,750Accrued
                expenses
            
            
            (46,898
            )
            
            74,270
            
            
            1,447,650Deferred
                lease liability
            
            
            15,951
            
            
            (1,759
            )
            
            15,951Income
                taxes liability
            
            
            
            
            
            
            
            
            (64,463
            )Net
                cash used in operating activities
            
            
            (9,926,790
            )
            
            (3,045,882
            )
            
            (24,108,991
            )**Cash
                flows from investing activities:**Purchase
                of fixed assets
            
            
            (79,806
            )
            
            (7,817
            )
            
            (241,202
            )Proceeds
                from the sale of investments
            
            
            10,000,000
            
            
            2,500,000
            
            
            12,500,000Purchase
                of investments
            
            
            
            
            
            
            
            
            (12,487,235
            )Net
                cash provided by (used in) investing activities
            
            
            9,920,194
            
            
            2,492,183
            
            
            (228,437)**Cash
                flows from financing activities:**Proceeds
                from stock subscription receivable
            
            
            
            
            
            
            
            
            130Proceeds
                from notes payable to stockholder
            
            
            
            
            
            
            
            
            18,000Repayment
                of notes payable to stockholder
            
            
            
            
            
            
            
            
            (18,000
            )Net
                proceeds from sale of common stock and warrants
            
            
            
            
            
            
            
            
            32,218,337Proceeds
                from exercise of warrants
            
            
            548,955
            
            
            
            
            
            548,955Net
                cash provided by financing activities
            
            
            548,955
            
            
            
            
            
            32,767,422**Net
                increase (decrease) in cash and cash equivalents**
            
            
            542,359
            
            
            (553,699
            )
            
            8,429,994Cash
                and cash equivalents - beginning of period
            
            
            7,887,635
            
            
            3,482,616**Cash
                and cash equivalents – end of period**
            $
            
            8,429,994
            
            $
            2,928,917
            
            $
            8,429,994





The
      accompanying notes are an integral part of the unaudited condensed consolidated
      financial statements




5




**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**





**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS**


**NOTE
      A - ORGANIZATION AND BUSINESS**





Fun
      City
      Popcorn, Inc., (the "Company" or "FCP"), a non-operating public company, was
      incorporated on September 18, 1985 in the state of Nevada.





On
      November 5, 2004, FCP entered into an agreement and plan of merger (the
      "Agreement") with Lev Development Corp., formerly known as Lev Pharmaceuticals,
      Inc. ("Lev"), which was incorporated on July 21, 2003 in the State of Delaware.
      Lev is a development stage company which is engaged in developing and
      commercializing therapeutic products for the treatment of inflammatory diseases.
      On December 29, 2004, the merger closed and pursuant to the Agreement, FCP
      acquired 100% of the outstanding capital stock of Lev through its subsidiary
      Lev
      Acquisition Corp. ("LAC"). In connection with the merger, FCP subsequently
      changed its name to Lev Pharmaceuticals, Inc. and increased its authorized
      common stock to 200,000,000 shares and its authorized preferred stock to
      20,000,000 shares. Under terms of the Agreement, the stockholders of Lev
      exchanged all of their issued and outstanding shares of common stock for
      5,029,795 shares of FCP common stock, and 4,789,433 shares of Series A voting
      convertible preferred stock (the "Exchange"). Each Series A voting convertible
      preferred share was converted automatically into 13.940668 shares of FCP common
      stock (an aggregate of 66,767,994 common shares). The 71,797,789 shares of
      common stock represented approximately 94.10% of the ownership interests in
      FCP
      following the merger. In addition, 4,505,530 shares of common stock of FCP
      were
      deemed issued and outstanding in connection with the Exchange. In addition,
      all
      of the outstanding Lev options and warrants immediately prior to the merger
      were
      exchanged for 2,854,900 FCP options and 301,668 FCP warrants. The Exchange,
      which resulted in the stockholders of Lev having control of FCP, represents
      a
      recapitalization of FCP, or a "reverse merger" rather than a business
      combination. In connection therewith, FCP's historic capital accounts were
      retroactively adjusted to reflect the equivalent number of shares issued by
      FCP
      in the Exchange while Lev's historical accumulated deficit was carried forward.
      The statement of operations reflects the activities of Lev from the commencement
      of its operations on July 21, 2003. In connection with the Agreement, Lev agreed
      to acquire FCP for $350,000. In December 2004, Lev paid certain FCP stockholders
      $283,732 which represents the acquisition price of $350,000 less the assumption
      of a tax liability of $66,268. In connection with the Exchange, the exercise
      price of the outstanding warrants and options remained the same. The Company
      recorded a charge of approximately $75,000 for the change in value of the
      Company’s outstanding options and warrants as of December 29, 2004 as a result
      of the increase in the number of common shares into which these equity
      instruments are exercisable based on the exchange ratio used in the merger,
      since the aggregate intrinsic value of the warrants and options after the
      Exchange is greater than before. The Black-Scholes option-pricing model was
      used
      to calculate the value of certain options and warrants and the related charge
      based upon the following weighted average assumptions to determine fair value;
      risk-free interest rate of 3.58%; expected life of 5 years; dividend yield
      of 0%
      and expected volatility of 70%.





In
      addition to the normal risks associated with a new business venture, there
      can
      be no assurance that the Company's research and development will be successfully
      completed or that any product will be approved or commercially viable. The
      Company is subject to risks common to companies in the biotechnology industry
      including, but not limited to, dependence on collaborative arrangements,
      development by the Company or its competitors of new technological innovations,
      dependence on key personnel, protection of proprietary technology, and
      compliance with the U.S. Food and Drug Administration (“FDA”) and other
      governmental regulations and approval requirements.





**NOTE
      B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





**[1]
      Basis of Presentation:**




The
      consolidated financial statements include the accounts of Lev Pharmaceuticals,
      Inc. and its wholly-owned subsidiary Lev Development Corp. All significant
      intercompany transactions and balances have been eliminated in consolidation.
      There has been no revenue generated from sales, license fees or royalties.
      The
      Company's financial statements are presented as statements of a development
      stage enterprise. The accompanying unaudited condensed consolidated financial
      statements have been prepared in accordance with accounting principles generally
      accepted in the United States of America for interim financial information.
      Accordingly, they do not include all of the information and footnotes required
      by accounting principles generally accepted in the United States of America
      for
      full year financial statements. In the opinion of management, all adjustments
      considered necessary for a fair presentation have been included and are of
      a
      normal, recurring nature. Operating results for the three and six months ended
      June 30, 2007 are not necessarily indicative of the results that may be expected
      for the year ended December 31, 2007. These consolidated financial statements
      should be read in conjunction with the consolidated financial statements and
      the
      notes thereto that are included in the Company's Annual Report on Form 10-KSB
      for the fiscal year ended December 31, 2006.




6




**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**





**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOTE
      B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





As
      a
      development stage enterprise, the Company's primary efforts are devoted to
      conducting research and development for the treatment of inflammatory diseases.
      As the Company has limited capital resources and has experienced net losses
      and
      negative cash flows from operations since inception and expects these conditions
      to continue for the foreseeable future the Company has needed to raise capital
      from the sales of its securities to sustain operations.  In October 2006,
      the Company raised net proceeds of $19,584,745 in a private placement.  As
      of June 30, 2007, the Company had approximately $8.4 million in cash and cash
      equivalents. However, we expect that our cash used in operations will increase
      significantly over the next several years and we will be required to raise
      additional capital to complete the development and commercialization of our
      current product candidates.  Management believes that cash and cash
      equivalents on hand as of June 30, 2007 are not sufficient to fund operations
      for the remainder of the year, which raises substantial doubt regarding the
      Company’s ability to continue through such period. We will pursue equity
      financing alternatives or other financing in order to raise needed funds,
      however, we do not have any commitments for such funds. There can be no
      assurance that such funds, if available at all, can be obtained on terms
      reasonable to the Company. If we are unsuccessful in raising additional capital
      we will need to reduce costs and operations substantially. The condensed
      consolidated financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.





**[2]
      Use of estimates:**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosures of contingent assets and liabilities at the date
      of
      the financial statements, and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those estimates.
      Equity instruments are valued using assumptions which may vary significantly
      between periods.





**[3]
      Stock-based compensation:**




During
      the three months ended June 30, 2007 and 2006, the Company recorded $537,455
      and
      $70,481 of stock-based employee compensation expense and during the six months
      ended June 30, 2007 and 2006, the Company recorded $964,093 and $106,831 of
      stock-based employee compensation expense, respectively.





For
      purposes of the disclosure in the foregoing table and for purposes of
      determining estimated fair value under SFAS No.123(R), the Company has computed
      the estimated fair values of all share-based compensation using the
      Black-Scholes option-pricing model and has applied the assumptions set forth
      in
      the following table. The Company calculated expected volatility based upon
      historical volatility of the Company’s common stock. The aggregate and per share
      fair value of options granted during the three and six months ended June 30,
      2007 was approximately $13,000 or $1.34 and $6,385,000 or $1.45, respectively.
      The aggregate and per share fair value of options granted during both the three
      and six months ended June 30, 2006 was approximately $188,700 or $0.31. The
      following table illustrates the assumptions used in the Company’s Black-Scholes
      option pricing model to determine the stock option expense for the three and
      six
      months ended June 30, 2007 and 2006.





**Risk
                Free**
              **Interest
                Rate**
            
            **Dividend**
              **Yield**
            
            **Volatility**
              **Factor**
            
            **Estimated
                Life (Years)**For
                the three months ended June 30, 2007
            
            
            4.57%
            
            
            0
            
            
            124.4%
            
            
            4.25For
                the six months ended June 30, 2007
            
            
            4.48%
                - 4.80%
            
            
            0
            
            
            124.4%-130.6%
            
            
            4.97For
                the three months ended June 30, 2006
            
            
            4.99%
            
            
            0
            
            
            70%
            
            
            5.00For
                the six months ended June 30, 2006
            
            
            4.99%
            
            
            0
            
            
            70%
            
            
            5.00




7




**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**





**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOTE
      B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





**[3]
      Stock-based compensation (continued):**





A
      summary
      of option activity under the Plan as of June 30, 2007 and changes during the
      six
      month period then ended is presented below.




**Number
                of**
              **Options**
            
            **Weighted**
              **Average**
              **Exercise
                Price**
            
            **Weighted
                Average**
              **Remaining**
              **Contractual**
              **Life
                (Years)**
            
            **Aggregate**
              **Intrinsic**
              **Value**Outstanding,
                December 31, 2006
            
            5,594,900
            
            $
                0.50Granted
            
            4,390,000
            
            1.62Outstanding,
                June 30, 2007
            
            9,984,900
            
            $
                0.99
            
            7.67
            
            $
                6,594,415Vested
                and expected to vest, June 30, 2007
            
            9,984,900
            
            $
                0.99
            
            7.67
            
            $
                6,594,415Exercisable
                shares as of June 30, 2007
            
            4,002,400
            
            $
                0.42
            
            8.67
            
            $
                4,934,190





As
      of
      June 30, 2007, there was $6,339,148 of total unrecognized compensation expense
      related to unvested share-based compensation arrangements granted under the
      Plan. This expense is expected to be recognized over a weighted-average period
      of 32 months.





**[4]
      Net loss per share:**





Basic
      net
      loss per share is computed on the basis of net loss for the period divided
      by
      the weighted average number of shares of common stock outstanding during the
      period. There were potentially dilutive common shares of 24,807,404 and
      7,769,672 as of June 30, 2007 and 2006, respectively related to stock options
      and warrants, which were excluded from the diluted loss per share calculation
      since their effect would have been anti-dilutive.




**[5]
      Investments:**





Investments
      with original maturities of 91 days to one year are considered short term
      investments and are carried at amortized cost.





**[6]
      Fixed assets:**




Fixed
      assets are stated at cost less accumulated depreciation. Depreciation is
      calculated using the straight-line method over the asset's estimated useful
      life, which is five years.





**[7]
      New Accounting Pronouncements:**





On
      September 15, 2006 the Financial Accounting Standards Board (“FASB”) issued
      Statement No. 157, *Fair
      Value Measurements.* The Statement provides guidance for using fair value to measure assets and
      liabilities.  This Statement references fair value as the price that would
      be received to sell an asset or paid to transfer a liability in an orderly
      transaction between market participants in the market in which the reporting
      entity transacts. The Statement applies whenever other standards require (or
      permit) assets or liabilities to be measured at fair value.  The Statement
      does not expand the use of fair value in any new circumstances.  It is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years.  The
      adoption of SFAS No. 157 is not expected to have a material impact on the
      Company’s financial statements.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities Including an Amendment of FASB
      Statement No. 115” (SFAS 159), which permits entities to measure many
      financial instruments and certain other items at fair value.  The objective
      is to improve financial reporting by providing entities with the opportunity
      to
      mitigate volatility in reported earnings caused by measuring related assets
      and
      liabilities differently without having to apply complex hedge accounting
      provisions.  SFAS 159 is effective for fiscal years beginning
      November 15, 2007.  We are currently evaluating the impact that SFAS
      159 will have on our consolidated financial position, results of operations,
      and
      cash flows as of its adoption in 2008.




8




**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**





**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOTE
      C - FIXED ASSETS**




Fixed
      assets, at cost, consist of the following:





June
                30,
              2007
              (Unaudited)
            
            December 31,
              2006Lab
                Equipment
            
            $
            11,645
            
            $
            11,645Office
                Equipment
            
            
            229,556
            
            
            149,750Total
            
            
            241,201
            
            
            161,395Accumulated
                Depreciation
            
            
            (53,226
            )
            
            (30,301
            )$
            187,975
            
            $
            131,094




The
      Company recorded depreciation expense of $11,419 and $4,426 for the three months
      ended June 30, 2007 and 2006, and $22,925 and $8,605 for the six months ended
      June 30, 2007 and 2006, respectively.





**NOTE
      D - ACCRUED EXPENSES**





Accrued
      expenses consisted of the following:





June
                30,
              2007
              (Unaudited)
            
            December
                31,
              2006Research
                and development - sponsored research
            $
            234,000
            
            $
            234,000Research
                and development – clinical trial
            
            224,000
            
            
            480,000Research
                and development - consulting
            
            62,500
            
            
            94,000Research
                and development – other
            
            202,890
            
            
            79,540Research
                and development - payroll
            
            16,374
            
            
            28,756General
                and administrative – professional fees
            
            230,653
            
            
            60,000General
                and administrative – payroll
            
            395,117
            
            
            487,380General
                and administrative – other
            
            82,116
            
            
            30,872$
            1,447,650
            
            $
            1,494,548




**NOTE
      E – SANQUIN BLOOD SUPPLY FOUNDATION**





**[1]
      Loan payable**





The
      Company purchases its C1-INH product from the Sanquin Blood Supply Foundation
      (“Sanquin”). Under the agreement with Sanquin, Sanquin provides a loan to the
      Company for the value of C1-INH purchased. The loans are subject to a purchase
      money security interest. Upon regulatory approval, Sanquin will forgive each
      loan and release all security interests. If regulatory approval is not obtained,
      then each loan is payable on the earlier of January 16, 2014 or the termination
      of the agreement. The principal loan balance outstanding as of June 30, 2007
      was
      $3,373,465 net of debt discount of $1,772,821. This debt discount relates to
      interest imputed on the original loan balance as it is non-interest bearing
      and
      was recorded as a reduction to product costs that were included as research
      and
      development expense. The loans are payable in Euros and any currency differences
      are recorded in our Unaudited Condensed Consolidated Statement of Operations.
      The Company has recorded interest expense using the effective interest rate
      method. Interest rates range from 4.31% to 7.66%. For the three months ended
      June 30, 2007 and 2006, interest expense was $44,908 and $9,933, and $75,647
      and
      $15,376 for the six months ended June 30, 2007 and 2006, respectively. The
      amount included in research and development expense for product cost for the
      three months ended June 30, 2007 and 2006 was $804,945 and $80,812, and
      $1,494,264 and $467,562 for the six months ended June 30, 2007 and 2006,
      respectively.





**[2]
      Distribution Agreement**





On
      June
      1, 2007 we exercised an option to extend the Sanquin distribution agreement.
      Our
      distribution agreement with Sanquin now terminates on December 31, 2010, unless
      extended by us for up to a three-year period or by mutual agreement of the
      parties prior to its expiration. Commencing with the receipt of FDA regulatory
      approval of C1-INH and thereafter, we must purchase from Sanquin a minimum
      amount of C1-INH valued in Euros equal to be approximately $10,100,000 (as
      of
      June 30, 2007) per calendar year.




9




**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**





**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOTE
      F - INCOME TAXES**





We
      adopted the provisions of Financial Standards Accounting Board Interpretation
      No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”) an interpretation
      of FASB Statement No. 109 (“SFAS 109”) on January 1, 2007. As a result of the
      implementation of FIN 48, we did not recognize any adjustment in the liability
      for unrecognized income tax benefits.





The
      tax
      years 2003-2006 remain open to examination by the major taxing jurisdictions
      to
      which we are subject.





**NOTE
      G - EMPLOYMENT AGREEMENTS**





On
      January 23, 2007, the Company entered into amended and restated employment
      agreements with each of its Chief Executive Officer, Mr. Joshua D. Schein,
      and
      its Executive Vice President and Chairman, Mr. Judson Cooper. Both employment
      agreements are effective as of January 17, 2007. The employment agreements
      are
      identical in all material respects and are summarized as follows. As used in
      the
      following summary, the term “Executive(s)” shall refer to Messrs. Schein and
      Cooper. The employment agreements are for an initial term of four years and
      at
      the end of the initial term renew automatically for additional one year terms
      unless sooner terminated or not renewed. Under the employment agreements, the
      Executives are entitled to a base salary of $425,000 beginning as of January
      1,
      2007. The base salary increases at the end of each year of service (commencing
      at the end of 2007) by the greater of (i) 4% or (ii) a percentage equal to
      the
      increase, if any, in the United States Department of Labor Consumer Price Index
      (or comparable index, if available) for the New York metropolitan area over
      the
      previous 12 months. In addition, the Executives are entitled to a bonus as
      defined in the employment agreements. On January 17, 2007, the Board of
      Directors granted each of the Executives options to purchase 1,600,000 shares
      of
      the Company common stock, which options expire ten years from the date of grant
      and which are exercisable at an exercise price of $1.60, which was equal to
      the
      closing price of its common stock on the date of grant. The options vest in
      equal annual installments of 25% of the total option amount until vested in
      full, subject to the terms and conditions of the Company’s 2004 Omnibus
      Incentive Compensation Plan. In the event of the termination of employment
      by
      the Company without “cause” or by an Executive for “good reason,” there is a
      lump sum settlement payable as defined in the employment agreements. There
      is a
      provision for change of control.





On
      March
      16, 2007, the Company entered into an employment relationship with Mr. Dov
      S.
      Elefant for Mr. Elefant to serve as its Corporate Controller. Pursuant to the
      terms of an offer letter executed by the Company and Mr. Elefant, Mr. Elefant
      will serve as Corporate Controller on an at-will basis and earn an annual salary
      at the rate of $195,000. Mr. Elefant will be eligible for an annual bonus of
      $20,000 in the discretion of the compensation committee of the Board. In the
      event Mr. Elefant’s employment is terminated by the Company without cause within
      three years of his start date, the Company will pay him a severance payment
      of
      six months of his then-current base salary. In addition, pursuant to the
      Company’s 2004 Omnibus Incentive Compensation Plan and subject to the terms and
      conditions therein, on March 19, 2007, the Company granted Mr. Elefant options
      to purchase 200,000 shares of the common stock, which options are exercisable
      for a period of seven years at a per share price of $1.75 and which options
      vest
      over a three year period, with 1/3 of the option award vesting on the one-year
      anniversary of the date of grant and the balance vesting in equal monthly
      installments of 1/24 of the remaining option award over the following 24
      months.





**NOTE
      H - PLASMA AGREEMENT**





On
      April
      12, 2007, the Company entered into a Plasma Purchase Agreement with a
      third-party supplier for the purchase of U.S. source plasma (the “Purchase
      Agreement”). The plasma will be utilized for the production of product by
      Sanquin under the Company’s Distribution and Manufacturing Services Agreement
      with Sanquin to supply our patients with product under the open-label clinical
      trial. The term of the Purchase Agreement expires December 31, 2011, unless
      sooner terminated in accordance with its terms. Under the Purchase Agreement,
      the supplier agreed to sell the Company specified annual quantities of plasma
      in
      accordance with applicable good manufacturing practices. The Company committed
      to purchase $7,360,000 worth of product during the 2007 calendar year and
      $8,320,000 worth of product during 2008. The parties agreed to negotiate the
      purchase commitments for future periods. Either party may terminate the Purchase
      Agreement upon written notice if the other party is in material breach of any
      provision thereof, subject to applicable thirty (30) day cure periods. Either
      party may also terminate the Purchase Agreement upon ninety (90) days’
prior written notice upon the occurrence of certain standard events involving
      the bankruptcy or insolvency of the other party and the Purchase Agreement
      shall
      automatically terminate upon the occurrence of additional certain events
      specified therein. Subsequently,
      on July 17, 2007, we signed a letter agreement with this supplier pursuant
      to
      which the supplier agreed to waive its right to supply us with additional
      quantities of plasma and to reduce its commitment under such agreement. We
      will
      be obligated to purchase approximately $353,000 of additional plasma under
      such
      agreement for the balance of 2007. Thereafter, the parties agreed to suspend
      further purchases




10





**LEV
      PHARMACEUTICALS, INC. AND SUBSIDIARY**


**(a
      development stage enterprise)**





**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOTE
      H - PLASMA AGREEMENT (continued)**





under
      this agreement until such time as a new definitive agreement is entered into
      between the parties. In consideration of the foregoing, we agreed to waive
      our
      right to have the supplier cover a percentage of the cost of replacement plasma
      we are acquiring from the new supplier.





**NOTE
      I - SUBSEQUENT EVENT**





On
      July
      19, 2007, the Company entered into an agreement, dated as of July 12, 2007,
      for
      the purchase and sale of plasma with DCI Management Group, LLC (the “DCI
      Agreement”) pursuant to which Lev will purchase quantities of U.S. Source Plasma
      to be utilized in the production of product under our Distribution and
      Manufacturing Services Agreement with Sanquin. Under the DCI Agreement, the
      supplier agreed to sell us specified annual quantities of plasma in accordance
      with applicable good manufacturing practices. We committed to purchase
      $9,300,000 worth of product during the remainder of 2007 and $13,950,000 worth
      of product during 2008. Thereafter we expect our annual purchase commitment
      to
      be $11,625,000 for the balance of the term of the DCI Agreement. Our contractual
      purchase commitments are subject to annual percentage increases based on market
      conditions. We anticipate our total commitment under this DCI Agreement to
      be
      approximately $61 million.





The
      DCI
      Agreement expires December 31, 2011, unless sooner terminated in accordance
      with
      its terms. Either party may terminate the DCI Agreement upon written notice
      if
      the other party is in material breach of any provision thereof, subject to
      applicable cure periods. Subject to the supplier’s ability to mitigate damages,
      in the event we are in default of our payment obligation under the contract,
      we
      will be liable to purchase the minimum quantities of plasma specified under
      the
      contract for the balance of the term. We have the right, however, to terminate
      the contract if by December 31, 2008 we do not obtain regulatory approval for
      the commercialization of our lead product candidate or are not able to secure
      adequate financial arrangements to cover our obligations with respect to the
      initial purchase commitments under the DCI Agreement. In either such event,
      we
      will be obligated to complete the purchase of 80% of the initial minimum
      purchase commitment, subject to the supplier’s ability to mitigate damages. Upon
      expiration of the DCI Agreement, or in the event the DCI Agreement is terminated
      for reasons other than as set forth above, we will be obligated to purchase
      a
      closing inventory of plasma in the quantity specified in the DCI Agreement.
      For
      the year ended December 31, 2007, Sanquin has agreed to purchase a maximum
      of
      $3,200,000 of plasma from the Company.




11


**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**




The
      following discussion should be read in conjunction with our condensed
      consolidated financial statements and notes to those statements. In addition
      to
      historical information, the following discussion and other parts of this
      quarterly report contain forward-looking information that involves risks and
      uncertainties.





**Forward
      Looking Statements**





This
      Report on Form 10-QSB for Lev Pharmaceuticals, Inc. may contain forward-looking
      statements. We are including the following cautionary statement in this
      Quarterly Report on Form 10-QSB to make applicable the safe harbor provisions
      of
      the Private Securities Litigation Reform Act of 1995 for any forward-looking
      statements made by us or on our behalf. Forward looking statements include
      statements concerning plans, objectives, goals, strategies, future events or
      performance and underlying assumptions and other statements which are other
      than
      statements of historical facts. You can identify these statements by
      forward-looking words such as “may,” “will,” “expect,” “intend,” “anticipate,”
“believe,” “estimate” and “continue” or similar words. You should read
      statements that contain these words carefully because they discuss future
      expectations and plans, which contain projections of future results of
      operations or financial condition or state other forward-looking information.
      We
      believe that it is important to communicate future expectations to investors.
      However, there may be events in the future that we are not able to accurately
      predict or control. Any forward-looking statement contained in this document
      speaks only as of the date on which the statement is made. We undertake no
      obligation to update any forward-looking statement or statements to reflect
      events or circumstances that occur after the date on which the statement is
      made
      or to reflect the occurrence of unanticipated events.





The
      forward-looking statements included herein are based on current expectations
      that involve a number of risks and uncertainties which could cause actual
      results or outcomes to differ materially from those expressed in good faith
      forward-looking statements. Certain of these risks are set forth under “Risk
      Factors” in our Annual Report on Form 10-KSB and our periodic reports filed with
      the SEC. These risks include, without limitation: the carrying-out of our
      research and development program for our product candidates, including
      demonstrating their safety and efficacy at each stage of testing; the timely
      obtaining of regulatory approvals; the commercialization of our product
      candidates, at reasonable costs; the ability to compete against products
      intended for similar use by recognized and well capitalized pharmaceutical
      companies; our ability to raise capital when needed, and without adverse and
      highly dilutive consequences to stockholders; and our ability to retain
      management and obtain additional employees as required. Our expectations,
      beliefs and projections are expressed in good faith and are believed by us
      to
      have a reasonable basis, including without limitation, management’s examination
      of historical operating trends, data contained in our records and other data
      available from third parties, but there can be no assurance that management’s
      expectations, beliefs or projections will result or be achieved or accomplished.
      Accordingly, to the extent that this Report contains forward-looking statements
      regarding the financial condition, operating results, business prospects or
      any
      other aspect of our company, please be advised that our actual financial
      condition, operating results and business performance may differ materially
      from
      that projected or estimated by us in forward-looking statements.





**Overview**





We
      are a
      development stage biopharmaceutical company that was formed in July 2003 to
      focus on developing and commercializing therapeutic products for the treatment
      of inflammatory diseases. Our product candidates are based on C1-INH, a human
      plasma protein that mediates inflammation and is potentially applicable as
      a
      treatment for a range of medical indications. We initiated a Phase III clinical
      trial of our lead product candidate, C1-INH for the acute treatment of
      hereditary angioedema (“HAE”), in March 2005. In November 2005, we initiated a
      Phase III clinical trial of C1-INH for the prophylactic treatment of HAE. In
      October 2005, we received fast track designation status by the FDA for the
      treatment of HAE.





On
      January 17, 2007, we announced that we have completed patient treatment in
      the
      acute portion of a pivotal Phase III clinical trial for our lead product
      candidate, C1-INH for the treatment of HAE and on March 14, 2007, we announced
      positive results from our Phase III clinical trial of C1-INH for the acute
      treatment of HAE. In the acute trial, the protocol-defined primary endpoint
      was
      reached, showing a clinically and statistically significant reduction in the
      time to sustained relief of acute HAE symptoms. The primary endpoint was met
      using the protocol-defined intent to treat analysis, with a median time to
      sustained symptom relief of 2.0 hours for patients receiving C1-INH compared
      to
      greater than 4.0 hours, the maximum evaluation period, for patients receiving
      placebo. In addition, 21 laryngeal attacks were treated in the study on an
      open
      label basis. All of the laryngeal attacks were successfully treated with C1-INH.
      Based on the positive results of this trial, we filed a biologics license
      application, or BLA, with the FDA on July 31, 2007. If approved, we intend
      to
      commercialize C1-INH ourselves through a specialty sales force in the United
      States and market this product under the name CinryzeTM. We are also developing
      C1-INH for the treatment of selective other diseases and disorders in which
      inflammation is known or believed to play an underlying role. We have certain
      rights to C1-INH technology through agreements with Sanquin, an Amsterdam-based
      not-for-profit organization that provides blood and plasma products and related
      services, carries out research and provides education, primarily in the
      Netherlands. On May 31, 2007, we announced that we have completed patient
      treatment in the second phase of the trial, examining the effectiveness of
      C1-INH in preventing inflammatory attacks in more severely affected HAE
      patients. We intend, if the prophylactic study results are positive and
      supportive, to amend the BLA for this indication.




12





From
      July
      21, 2003 (inception) through June 30, 2007, we have not generated any revenue
      from operations. We expect to incur additional losses to perform further
      research and development activities. We do not currently have any commercial
      biopharmaceutical products, and do not expect to have a commercially available
      product by the end of our 2007 fiscal year. Commercialization of our product
      candidates is subject to FDA approval.





As
      a
      company that expects to have neither product revenues nor profits over the
      next
      year, management of cash flow is extremely important. The most significant
      use
      of our cash is for research and development activities, which include clinical
      trials and regulatory clearance. During the three and six months ended June
      30,
      2007, our research and development expenses were $4,089,972 and $7,313,369,
      respectively.





**2006
      Financing**





On
      October 16, 2006 and October 20, 2006, we closed on the sale of an aggregate
      of 32,307,693 shares of our common stock and warrants to purchase up to an
      aggregate of 9,692,308 shares of common stock for aggregate proceeds of $21
      million to certain institutions and accredited investors. The warrants are
      exercisable at any time until five years from the initial closing date at a
      price of $0.84 per share. We have been using the net proceeds of the private
      placement of approximately $19.6 million for continued funding of our clinical
      trials, additional research and development efforts, and general working capital
      purposes. These securities were sold under Section 4(2) of the Securities Act
      of
      1933, as amended, and Rule 506 of Regulation D, promulgated thereunder, on
      a
      private placement basis, to institutional and accredited investors. We paid
      approximately $1.4 million in total commissions and expenses to broker-dealers
      engaged to assist us in the financing and also issued warrants to purchase
      up to
      1,897,057 shares of common stock as additional compensation to the
      broker-dealers, which warrants were issued on substantially similar terms as
      the
      investor warrants




**Merger
      Transaction**





On
      November 5, 2004, Fun City Popcorn (“FCP”), its wholly-owned subsidiary, Lev
      Acquisition Corp. (“Lev Sub”) and Lev Development Corp., previously known as Lev
      Pharmaceuticals, Inc. (“Old Lev” or “LDC”), entered into the Agreement and Plan
      of Merger (as amended on December 8, 2004, the “Agreement”). On December 29,
      2004, the merger closed and pursuant to the Agreement, Lev Sub merged into
      Old
      Lev and the combined entity became a wholly-owned subsidiary of FCP (the “Public
      Company Merger”). As a result of the Public Company Merger, FCP issued 5,029,795
      shares of common stock and 4,789,433 shares of Series A convertible preferred
      stock to holders of outstanding Old Lev common stock.





On
      December 29, 2004, the Board of Directors and stockholders of FCP approved
      a
      merger of FCP into a newly formed, wholly-owned subsidiary of FCP incorporated
      in Delaware (the “Recapitalization Merger”). This merger was undertaken to
      increase the authorized number of shares of common stock to permit the
      conversion of the Series A preferred stock, to reincorporate FCP in the State
      of
      Delaware and to change the name of the company. On February 17, 2005, the
      Recapitalization Merger closed and the issued and outstanding Series A preferred
      stock of FCP was automatically converted into an aggregate of 66,767,994 shares
      of common stock which, along with the 4,505,530 shares of FCP common stock
      outstanding prior to the Public Company Merger and the 5,029,795 shares of
      common stock issued to the Old Lev stockholders in the Public Company Merger,
      resulted in a total of 76,303,319 shares of common stock outstanding as of
      February 17, 2005. As part of the Recapitalization Merger, Old Lev changed
      its
      name to Lev Development Corp., FCP changed its name to Lev Pharmaceuticals,
      Inc.
      and we increased our authorized common stock to 200,000,000 shares and our
      preferred stock to 20,000,000 shares. As a result of these mergers, the
      stockholders of Old Lev acquired approximately 94% of our outstanding common
      stock.




13





The
      Public Company Merger, which resulted in the stockholders of Old Lev obtaining
      control of FCP, represents a recapitalization of FCP, or a “reverse merger”,
      rather than a business combination. In connection therewith, Old Lev's
      historical capital accounts were retroactively adjusted to reflect the
      equivalent number of shares issued by FCP while Old Lev's historical accumulated
      deficit was carried forward. The Consolidated Statement of Operations reflects
      the activities of Old Lev from the commencement of its operations on July 21,
      2003. In connection with the Agreement, Old Lev paid $350,000 for the
      acquisition of FCP including $283,732 to certain stockholders and assuming
      the
      outstanding tax liability of $66,268. In connection with these mergers, the
      exercise price of the outstanding warrants and options remained the same. We
      recorded a charge of approximately $75,000 for the change in value of our
      outstanding options and warrants as of December 29, 2004 as a result of the
      increase in the number of common shares into which these equity instruments
      are
      exercisable based on the exchange ratio used in the merger, since the aggregate
      intrinsic value of the warrants and options after the Exchange is greater than
      before. The Black-Scholes option-pricing model was used to calculate the value
      of certain options and warrants and the related charge based upon the following
      weighted average assumptions to determine fair value; risk-free interest rate
      of
      3.58%; expected life of 5 years; dividend yield of 0% and expected volatility
      of
      70%.





*New
      Employment Agreements/Arrangements*





During
      the six months ended June 30, 2007, we entered into amended and restated
      employment agreements with our Chairman, Judson Cooper and our Chief Executive
      Officer, Joshua Schein and we hired Dov Elefant as our Corporate Controller
      pursuant to the terms of an offer letter. The material terms and conditions
      of
      these employments arrangements are summarized in Note G to our Unaudited
      Condensed Consolidated Financial Statements.





**Plan
      of Operation**





Our
      plan
      of operation for the next twelve months is to focus primarily on our open-label
      Phase III clinical trials of our lead product candidate, C1-INH for the acute
      and prophylactic treatment of HAE, to complete the analysis of the data from
      the
      Phase III trial for prophylactic treatment of HAE and possibly amend our BLA
      requesting the FDA’s approval for commercialization of the prophylactic
      treatment. In addition, we intend to initiate a research program in 2007 for
      the
      development of a genetically engineered or recombinant version of C1-INH as
      part
      of a broader program examining the potential of C1-INH in treating
      cardiovascular disease, including acute myocardial infarction
      (“AMI”).





*Satisfaction
      of Cash Resources*





To
      date,
      we have relied solely upon selling equity securities in private placements
      to
      generate cash to implement our plan of operations. Based
      on
      our current levels of research and development and our business plan, we
      believe that our existing cash and cash equivalents of $8,429,994 as of June
      30,
      2007 will not be sufficient to meet our cash requirements for the remainder
      of
      the year .
      As we
      expect that our cash used in operations will increase significantly over the
      next several years, we will be required to raise additional capital to complete
      the development and commercialization of our current product candidates. We
      will
      pursue equity and/or debt financing alternatives or other financing in order
      to
      raise needed funds. To raise additional funds, we intend to either undertake
      private placements of our securities, either as a self-offering or with the
      assistance of registered broker-dealers, or negotiate a private sale of our
      securities to one or more institutional investors..





On
      May
      23, 2007 we filed with the SEC a Registration Statement on Form S-3 under the
      Securities Act, which was declared effective by the SEC on June 13, 2007. This
      registration statement allows us, from time to time, to offer and sell shares
      of
      common stock, preferred stock, warrants to purchase our securities and/or debt
      securities, up to a maximum aggregate amount of $70 million of such
      securities. To date, we have not issued any securities under this registration
      statement and we currently have no firm agreements with any third-parties for
      the sale of our securities pursuant to this registration statement, or
      otherwise. There can be no assurance that additional financing, if at all
      available, can be obtained on acceptable terms to us. If we raise additional
      funds by selling shares of common stock or convertible securities, the ownership
      of our existing shareholders will be diluted. Further, if additional funds
      are
      raised though the issuance of equity or debt securities, such additional
      securities may have powers, designations, preferences or rights senior to our
      currently outstanding securities. Any inability to obtain required financing
      on
      sufficiently favorable terms could have a material adverse effect on our
      business, results of operations and financial condition. If we are unsuccessful
      in raising additional capital we will need to reduce costs and operations
      substantially.  Further, if expenditures required to achieve our plans are
      greater than projected we will need to raise a greater amount of funds than
      currently expected.




14





As
      of
      June 30, 2007, we have cash commitments through December 31, 2007 of
      approximately $12,775,000 to primarily fund our clinical research programs,
      leases, executive
      employment contracts and plasma supply contracts. A significant expense for
      the
      Phase III clinical trials is the C1-INH product that we purchase from Sanquin
      and other suppliers. However, a portion of this expense does not affect our
      cash
      position because Sanquin has granted continuing loans to us in the amount of
      the
      aggregate purchase price of the C1-INH product. The loan balance as of June
      30,
      2007 was $3,373,465, net of debt discount. Each loan will be forgiven if
      regulatory approval of our C1-INH product is obtained. If regulatory approval
      is
      not received, then each loan is payable on the earlier of January 16, 2014
      or
      the termination of the Sanquin distribution agreement. We expect to increase
      our
      expenditures for our Phase III clinical trials and regulatory matters, including
      preparation and potential submission to the FDA of an amended BLA for
      prophylactic treatment. As described in greater detail in Note I to our
      Unaudited Condensed Consolidated Financial Statements, in July 2007 we entered
      into a plasma supply agreement with a third-party supplier pursuant to which
      we
      will purchase $9,300,000 worth of product during the 2007 calendar year and
      $13,950,000 worth of product during 2008. Thereafter we expect our annual
      purchase commitment to be approximately $11,625,000 for the balance of the
      term
      of the Agreement. Our contractual purchase commitments are subject to annual
      percentage increases based on market conditions. We anticipate our total
      commitment under this Agreement to be approximately $61 million.




*Research/Product
      Programs*





Hereditary
      Angioedema





In
      January 2004, we entered into a distribution and manufacturing services
      agreement with Sanquin relating to the treatment of HAE. Sanquin currently
      manufactures and markets a highly purified preparation of C1-INH in Europe
      and
      pursuant to the agreement, Sanquin agreed to provide us with C1-INH for use
      in
      our clinical trials and for commercial distribution upon regulatory licensure.
      Pursuant to the agreement, we have distribution rights in Israel and all
      countries in North, Central and South America, with the exception of the Dutch
      Overseas Territories, Argentina and Brazil.





Under
      the
      distribution agreement, it is our responsibility to conduct the Phase III
      clinical trials of C1-INH for the treatment of HAE and to prepare and file
      all
      regulatory applications necessary to register the product candidate. Sanquin
      agreed to provide us with the technical data and support necessary to assist
      us
      in preparing and filing all such regulatory applications.





Furthermore,
      Sanquin agreed to supply C1-INH for our Phase III clinical trials. Upon receipt
      of FDA approval for our product candidate for the treatment of HAE, upon
      commercial launch of this product and thereafter during the term of the
      agreement, Sanquin will supply us with our commercial requirements for C1-INH
      for the treatment of HAE in each country where we have received regulatory
      approval. Our purchase of C1-INH from Sanquin is subject to minimum annual
      purchase requirements upon receipt of FDA approval.





As
      described in greater detail above under the caption “Overview”, on March 14,
      2007, we announced positive results from our Phase III clinical trial of C1-INH
      for the acute treatment of HAE. Based on the positive results of this study,
      we
      filed a BLA with the FDA on July 31, 2007.





Acute
      Myocardial Infarction





We
      entered into a separate license agreement with Sanquin on January 27, 2004
      relating to the treatment of AMI. Under this agreement, we have an exclusive,
      worldwide, royalty-bearing license, with the right to sublicense, to the use
      of
      C1-INH for the treatment of AMI. In connection with the license agreement,
      we
      paid Sanquin certain fees and reimbursed Sanquin for certain expenses. In
      addition, we have an obligation to pay Sanquin royalties on sales of products
      incorporating the licensed technology.





This
      second development program is focused on the use of C1-INH in treating AMI.
      Current treatments for AMI, both surgical and pharmaceutical, are directed
      at
      restoring blood flow to heart tissue or preventing further obstruction. Despite
      a widespread appreciation for the role of inflammation in AMI in both the
      scientific and medical communities, no presently available treatments directly
      target the mechanisms of inflammation. Based on preliminary animal and clinical
      data, we believe that C1-INH may be useful as a treatment for AMI. Based on
      the
      rights obtained from Sanquin, we intend to initiate a research program for
      the
      development of a genetically engineered or recombinant version of C1-INH as
      part
      of a broader program examining the potential of C1-INH in treating
      cardiovascular disease during the second half of fiscal 2007, including
      AMI.




15




The
      following analysis of our financial condition and results of operations should
      be read in conjunction with our condensed consolidated financial statements
      and
      notes contained elsewhere in this Form 10-QSB.





**Results
      of Operations**





*Three
      Months Ended June 30, 2007 as compared to the Three Months Ended June 30,
      2006*  ******





We
      had no
      revenues during the three months ended June 30, 2007 and 2006 because we do
      not
      have any commercial biopharmaceutical products.





Research
      and development expenses for the three months ended June 30, 2007 and 2006
      were
      $4,089,972 and $840,306, respectively. The increase of $3,249,666 was
      primarily due to expenses relating to the progress of the Phase III clinical
      trials, purchases of plasma product that were purchased for the open-label
      clinical trial and regulatory consulting expense.





General
      and administrative expenses for the three months ended June 30, 2007 and 2006
      were $2,897,186 and $1,109,699, respectively. The increase of $1,787,487 was
      primarily due to increases in payroll and related benefits, share-based
      compensation for employee options, marketing, legal expense and
      travel.





Interest
      income for the three months ended June 30, 2007 and 2006 was $138,940 and
      $37,043, respectively. The increase of $101,897 was attributed to having more
      cash to invest.





Due
      to
      the factors mentioned above, the net loss for the three months ended June 30,
      2007 was $6,893,126 or a loss of $ 0.06 per common share, basic and diluted,
      as
      compared to a loss of $1,922,895 for the three months ended June 30, 2006 or
      a
      loss of $0.02 per common share, basic and diluted.





*Six
      Months Ended June 30, 2007 as compared to the Six Months Ended June 30,
      2006*  ******





We
      had no
      revenues during the six months ended June 30, 2007 and 2006 because we do not
      have any commercial biopharmaceutical products.





Research
      and development expenses for the six months ended June 30, 2007 and 2006 were
      $7,313,369 and $1,936,493, respectively. The increase of $5,376,876 was
      primarily due to expenses relating to the progress of the Phase III clinical
      trials, purchases of plasma product that were purchased for the open-label
      clinical trial, laboratory services and regulatory consulting
      expense.





General
      and administrative expenses for the six months ended June 30, 2007 and 2006
      were
      $5,318,879 and $1,863,549, respectively. The increase of $3,455,330 was
      primarily due to increases in payroll and related benefits, share-based
      compensation for employee options, marketing, legal expense and
      travel.





Interest
      income for the six months ended June 30, 2007 and 2006 was $336,731 and $78,998,
      respectively. The increase of $257,733 was attributed to having more cash to
      invest.





Due
      to
      the factors mentioned above, the net loss for the six months ended June 30,
      2007
      was $12,371,199 or a loss of $ 0.11 per common share, basic and diluted, as
      compared to a loss of $3,736,420 for the six months ended June 30, 2006 or
      a
      loss of $0.05 per common share, basic and diluted.




**Liquidity
      and Capital Resources**





As
      of
      June 30, 2007, we had cash and cash equivalents of $8,429,994 and working
      capital of $5,861,927. Net cash used in operations was $9,926,790 for the six
      months ended June 30, 2007 and was primarily due to our loss of $12,371,199.
      The
      operating loss was partially offset by non cash expenses of $2,556,774 primarily
      related to stock-based compensation related to employee stock options, purchases
      of C1-INH product and amortization of debt discount. Pursuant to the Sanquin
      loan agreement, purchases made during our Phase III clinical trials are added
      to
      our loan and we are not required to make any principal payments. The loan
      balance, net of debt discount as of June 30, 2007 was $3,373,465 and will be
      forgiven when regulatory approval from the FDA is received. If we do not receive
      regulatory approval, then the loan is repayable on the earlier of January 16,
      2014, or the termination of the Agreement. The loan does not bear interest
      and
      we impute interest using the effective interest rate method. For the six months
      ended June 30, 2007, net cash provided by investing activities was $9,920,194
      resulting from the sale of investments of $10,000,000 offset by the purchase
      of
      fixed assets for $79,806. Cash provided by financing activities for the six
      months ended June 30, 2007 was $548,955 resulting from proceeds from the
      exercise of warrants.




16





On
      June
      1, 2007 we exercised an option to extend the Sanquin distribution agreement.
      Our
      distribution agreement with Sanquin now terminates on December 31, 2010, unless
      extended by us for up to a three-year period or by mutual agreement of the
      parties prior to its expiration. Commencing with the receipt of FDA regulatory
      approval of C1-INH and thereafter, we must purchase from Sanquin a minimum
      amount of C1-INH valued in Euros equal to be approximately $10,100,000 (as
      of
      June 30, 2007) per calendar year.




In
      connection with the license agreement with Sanquin for the treatment of AMI
      we
      are required to create a comprehensive research plan for the commercial
      exploitation of the licensed technology. We continue to work with Sanquin on
      the
      design of the research plan. We agreed to commit a minimum of $125,000 per
      annum
      during the first three years following the execution of the license agreement
      toward research on the licensed technology conducted by Sanquin and by other
      parties. To date, we have funded approximately $141,000 to third parties engaged
      in this research. We also have an obligation to pay Sanquin royalties on sales
      of products incorporating the technology.





On
      March
      2, 2005, we entered into a CRO services agreement with INC Research which
      governs INC Research’s provision of services in connection with the support of
      clinical investigation and management and/or research of our Phase III clinical
      trial. We entered into a separate services agreement with INC Research in
      September 2006 which governs INC Research’s provision of additional services in
      connection with our Phase III clinical trials and activities related to the
      commercialization of our product candidates. The services provided by INC
      Research pursuant to both contractual arrangements are on a work-order basis
      and
      we are invoiced on a time and materials basis. We have the right to terminate
      both agreements, and any pending work-order, with prior notice and without
      cause. As of June 30, 2007, we have estimated that we will pay INC Research
      at
      least $1,124,000 for its services under both agreements in 2007. However,
      du e
      to the
      variability associated with the conduct of clinical trials, we are unable to
      estimate with certainty the future costs we will incur under our CRO agreement.
      We anticipate that these costs will increase significantly above our current
      estimates in future periods as a result of our initiation or expansion of the
      clinical trials.





In
      October 2006, we received net proceeds of $19,584,745 in a private placement,
      net of issuance costs of $1,415,255 from the sale of 32,307,693 shares of common
      stock at $0.61 per share and five year warrants to purchase 9,692,308 shares of
      common from stock at an exercise price of $0.84 per share. The Company issued
      1,698,538 and 198,519 warrants to purchase common stock to registered
      broker-dealers that assisted us in the financings (the “Agent Warrants”). The
      Agent Warrants are exercisable at $0.84 per share and $1.18 per share and expire
      five years from the date of issue. We paid $1,279,593 to the placement agent
      and
      to the registered broker dealer.





On
      July
      19, 2007, we entered into an agreement, dated as of July 12, 2007, for the
      purchase and sale of plasma with DCI Management Group, LLC (the “DCI Agreement”)
      pursuant to which we will purchase quantities of U.S. Source Plasma to be
      utilized in the production of product under our Distribution and Manufacturing
      Services Agreement with Sanquin. Under the DCI Agreement, the supplier agreed
      to
      sell us specified annual quantities of plasma in accordance with applicable
      good
      manufacturing practices. We committed to purchase $9,300,000 worth of product
      during the remainder of 2007 and $13,950,000 worth of product during 2008.
      Thereafter we expect our annual purchase commitment to be $11,625,000 for the
      balance of the term of the DCI Agreement. Our contractual purchase commitments
      are subject to annual percentage increases based on market conditions. We
      anticipate our total commitment under this DCI Agreement to be approximately
      $61
      million.





Our
      capital resources are focused on the clinical development and regulatory
      approval of C1-INH for the treatment of HAE .
      To
      date, we have relied solely upon selling equity securities in private placements
      to generate cash to implement our plan of operations. Based
      on
      our current levels of research and development and our business plan, we
      believe that our existing cash and cash equivalents of $8,429,994 as of June
      30,
      2007 will not be sufficient to meet our cash requirements for the remainder
      of
      the year .
      As we
      expect that our cash used in operations will increase significantly over the
      next several years, we will be required to raise additional capital to complete
      the development and commercialization of our current product candidates. We
      will
      pursue equity financing alternatives or other financing in order to raise needed
      funds. If we are unsuccessful in raising additional capital we will need to
      reduce costs and operations substantially.  Our capital resources are
      focused on the clinical development and regulatory approval of C1-INH for the
      treatment of HAE..




17





On
      May
      23, 2007, we filed with the SEC a Registration Statement on Form S-3 under
      the
      Securities Act, which was declared effective by the SEC on June 13, 2007.
      This registration statement allows us, from time to time, to offer and sell
      shares of common stock, preferred stock, warrants to purchase our securities
      and/or debt securities, up to a maximum aggregate amount of $70 million of
      such securities. To date, we have not issued any securities under this
      registration statement and we currently have no firm agreements with any
      third-parties for the sale of our securities pursuant to this registration
      statement, or otherwise. There can be no assurance that additional financing,
      if at all available, can be obtained on terms acceptable to us. If we raise
      additional funds by selling shares of common stock or convertible securities,
      the ownership of our existing shareholders will be diluted. Further, if
      additional funds are raised through the issuance of equity or debt securities,
      such additional securities may have powers, designations, preferences or rights
      senior to our currently outstanding securities. Any inability to obtain required
      financing on sufficiently favorable terms could have a material adverse effect
      on our business, results of operations and financial condition. If we are
      unsuccessful in raising additional capital we will need to reduce costs and
      operations substantially. Further, if expenditures required to achieve our
      plans
      are greater than projected we will need to raise a greater amount of funds
      than
      currently expected.





As
      a
      development stage enterprise, our primary efforts, to date, have been devoted
      to
      conducting research and development, raising capital, forming collaborations
      and
      recruiting staff. We have limited capital resources and have an accumulated
      deficit of $35,559,538 since inception and have had negative cash flows from
      operations since inception. These losses have resulted principally from costs
      incurred in research and development activities, including acquisition of
      technology rights and general and administrative expenses. We expect to incur
      additional operating losses until such time as we generate sufficient revenue
      to
      offset expenses, and we may never achieve profitable operations.





We
      expect
      our cash requirements for operating activities will increase due to the
      following future activities:





•
            Conduct
                commercialization activities in support of our product candidates,
                including development of market plans and regional sales and marketing
                capabilities;





•
            Conduct
                clinical programs, including clinical trials to support regulatory
                submissions of our product
                candidates;




•
            Maintain,
                protect and expand our intellectual
                property;




•
            Develop
                expanded internal infrastructure;
                and




•
            Hire
                additional personnel.




**COMMITMENTS
      AND CONTINGENCIES**




In
      our
      Annual Report on Form 10-KSB for the year ended December 31, 2006 under the
      heading “Contractual Obligations,” we outlined our commitments and
      contingencies. For the three and six months ended June 30, 2007, there have
      been
      no material changes in our commitments and contingencies except for the
      employment agreements that we entered into during such period and the plasma
      supply agreement we entered into in April 2007. See Notes G and H to our
      Unaudited Condensed Consolidated Financial Statements for additional information
      regarding these agreements. In addition, on July 19, 2007, we entered into
      an
      agreement, dated as of July 12, 2007, for the purchase and sale of plasma with
      a
      third-party supplier pursuant to which we will purchase quantities of U.S.
      Source Plasma to be utilized in the production of product under our Distribution
      and Manufacturing Services Agreement with Sanquin Blood Supply Foundation.
      We
      anticipate our total commitment under this agreement to be approximately $61
      million. See Note I to our Unaudited Condensed Consolidated Financial Statements
      for additional information.





**OFF
      -BALANCE SHEET ARRANGEMENTS**





We
      had no
      off-balance sheet arrangements as of June 30, 2007 with the exception of the
      leases of our office space and copiers.




18




**CRITICAL
      ACCOUNTING POLICIES**




There
      have been no material changes to our critical accounting policies and estimates
      from the information provided in Item 6, “Management’s Discussion and Analysis
      or Plan of Operation”, included in our 10-KSB for the fiscal year ended December
      31, 2006, except as follows:





FIN
      48 -
      We account for uncertain tax positions in accordance with FASB Interpretation
      No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”) an interpretation
      of FASB Statement No. 109 (“SFAS 109”). The application of income tax law is
      inherently complex. Laws and regulations in this area are voluminous and are
      often ambiguous. As such, we are required to make many subjective assumptions
      and judgments regarding our income tax exposures. Interpretations of and
      guidance surrounding income tax laws and regulations change over time. As such,
      changes in our subjective assumptions and judgments can materially affect
      amounts recognized in the consolidated balance sheets and statements of
      operations. See note F to the unaudited condensed consolidated financial
      statements.




19


**ITEM
      3. CONTROLS AND PROCEDURES**





*Evaluation
      of Disclosure Controls and Procedures*





Our
      Chief
      Executive Officer and Chief Financial Officer, after evaluating the
      effectiveness of our disclosure controls and procedures (as defined in Rule
      13a-15(e) or 15d-15(e) under the Exchange Act) as of the end of the period
      covered by this report, have concluded that, based on the evaluation of these
      controls and procedures, our disclosure controls and procedures were effective
      at the reasonable assurance level to
      ensure
      that information required to be disclosed by us in the reports that we file
      or
      submit under the Exchange Act is recorded, processed, summarized and reported,
      within the time periods specified in the SEC’s rules and forms and that such
      information is accumulated and communicated to our management, including our
      chief executive officer and chief financial officer, to allow timely decisions
      regarding required disclosure.





*Changes
      in Internal Controls*




As
      previously reported, on March 16, 2007 we appointed Dov S. Elefant as our
      Corporate Controller to augment our internal accounting department and improve
      our internal control over financial reporting. Management believes that the
      integration of our Corporate Controller has been successful. Other than as
      described above, there was no change in our system of internal control over
      financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange
      Act of 1934) during our fiscal quarter ended June 30, 2007 that has materially
      affected, or is reasonably likely to materially affect, our internal control
      over financial reporting.




We
      do not
      expect that internal controls over financial reporting will prevent all errors
      or all instances of fraud. A control system, no matter how well designed and
      operated, can provide only reasonable, not absolute, assurance that the control
      system’s objectives will be met. Further, the design of a control system must
      reflect the fact that there are resource constraints, and the benefits of
      controls must be considered relative to their costs. Because of the inherent
      limitations in all control systems, no evaluation of controls can provide
      absolute assurance that all control issues and instances of fraud, if any,
      within its company have been detected. These inherent limitations include the
      realities that judgments in decision-making can be faulty, and that breakdowns
      can occur because of simple error or mistake. Controls can also be circumvented
      by the individual acts of some persons, by collusion of two or more people,
      or
      by management override of the controls. The design of any system of controls
      is
      based in part upon certain assumptions about the likelihood of future events,
      and any design may not succeed in achieving its stated goals under all potential
      future conditions. Over time, controls may become inadequate because of changes
      in conditions or deterioration in the degree of compliance with policies or
      procedures. Because of the inherent limitation of a cost-effective control
      system, misstatements due to error or fraud may occur and not be detected.




20




**PART
      II - OTHER INFORMATION**


**ITEM
      1. LEGAL PROCEEDINGS**





We
      are
      not currently a party to, nor are any of our property currently the subject
      of,
      any pending legal proceeding.




**ITEM
      2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF
      PROCEEDS**





During
      the quarter ended June 30, 2007, we did not issue any securities that were
      not
      registered under the Securities Act of 1933, as amended (the “Securities Act”)
      except as disclosed herein.





During
      the three months ended June 30 2007, warrants for 328,468 shares of common
      stock
      were exercised and we issued an aggregate of 328,468 shares of common stock
      to
      the warrant holders. The exercises were effected in reliance on Section 4(2)
      of
      the Securities Act of 1933, as amended.





During
      the three months ended June 30, 2007, we issued additional options to purchase
      shares of our common stock to certain employees pursuant to our 2004 Omnibus
      Incentive Compensation Plan. The transactions were exempt from the registration
      requirements of Section 5 of the Securities Act under Sections 4(2) and 4(6)
      of
      the Securities Act. Each option holder agreed that, if the option is exercised,
      the option holder would purchase his common stock for investment and not for
      resale to the public. The foregoing option grant consisted of the grant of
      an
      aggregate number of 10,000 options to purchase shares of common stock. This
      award is exercisable for a seven year term at the fair market value on the
      date
      of grant. These options will vest over a period of forty eight
      months.


****


**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**





None.




21





**ITEM
      6. EXHIBITS**


The
      following exhibits are filed herewith or incorporated by reference.




**Incorporated
                by Reference****Exhibit**
              **Number**
            
            **Exhibit
                Description**
            
            **Form**
            
            **Dated**
            
            **Exhibit**
            
            **Filed**
              **Herewith**10.1*
            
            Agreement
                for Purchase and Sale of Plasma entered into on July 19,
                2007
            
            8-K
            
            7/25/07
            
            10.131.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002
            
            
            
            
            
            
            
            X31.2
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002
            
            
            
            
            
            
            
            X32.1
            
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
            
            
            
            
            
            
            
            X32.2
            
            Certification
                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
            
            
            
            
            
            
            
            X





*
      Confidential treatment has been requested with respect to portions of this
      document pursuant to Rule 24b-2 of the Securities Exchange Act. The redacted
      portions of this document were filed separately with the Securities and Exchange
      Commission.





**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





**Lev
                Pharmaceuticals, Inc.**August
                13, 2007
            By:
            /s/
                Joshua D. ScheinJoshua
                D. Schein, Ph.D.Chief
                Executive Officer





August
                13, 2007
            By:
            /s/
                Douglas J. BeckDouglas
                J. BeckChief
                Financial Officer




22