**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      DC 20549**

**FORM      10-Q**

**ZIOPHARM      Oncology, Inc.**

| **Delaware**                                                                                     | **84-1475642**                                   |
|--------------------------------------------------------------------------------------------------|--------------------------------------------------|
| (State                or Other Jurisdiction of Incorporation or Organization)                    | (IRS                Employer Identification No.) |
|                                                                                             |                                             |
| **1180                Avenue of the Americas, 19th** **Floor,                New York, NY** | **10036**                                        |
| (Address                of Principal Executive Offices)                                          | (Zip                Code)                        |

**(646)      214-0700**

| Large                accelerated filer o  |   | Accelerated                filer x  |   | Non-accelerated                filer   o(Do                not check if a smaller reporting company) |   | Smaller                reporting company o  |
|------------------------------------------------|--------|------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|

----

**Index**

|                                         |                                                                                                                                                                                                                                     | Page   |
|----------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **PART                I**                    | **FINANCIAL                INFORMATION**                                                                                                                                                                                                 |   |
|                                         |                                                                                                                                                                                                                                     |   |
| Item                1.                       | Financial                Statements                                                                                                                                                                                                      |   |
|                                         |                                                                                                                                                                                                                                     |   |
|                                         | Balance                Sheets as of March 31, 2008 (unaudited) and December 31,                2007                                                                                                                                      | 3      |
|                                         |                                                                                                                                                                                                                                     |   |
|                                         | Statement                of Operations for the three months ended March 31, 2008 and 2007                (unaudited) and for the period from inception (September 9, 2003)                to March                31, 2008 (unaudited)   | 4      |
|                                         |                                                                                                                                                                                                                                     |   |
|                                         | Statement                of Cash Flows for the three months ended March 31, 2008 and 2007                (unaudited) and for the period from inception (September 9, 2003)                to March                31, 2008 (unaudited)   | 5      |
|                                         |                                                                                                                                                                                                                                     |   |
|                                         | Statement                of Changes in Convertible Preferred Stock and Stockholders’                Equity/(Deficit) for the period from inception (September 9, 2003)                to                March 31, 2008 (unaudited) | 6      |
|                                         |                                                                                                                                                                                                                                     |   |
|                                         | Notes                to Unaudited Financial Statements                                                                                                                                                                                   | 7      |
|                                         |                                                                                                                                                                                                                                     |   |
| Item                2.                       | Management’s                Discussion and Analysis                                                                                                                                                                                | 12     |
|                                         |                                                                                                                                                                                                                                     |   |
| Item                3.                       | Quantitative                and Qualitative Disclosure About Market Risk                                                                                                                                                                 | 18     |
|                                         |                                                                                                                                                                                                                                     |   |
| Item                4.                       | Controls                and Procedures                                                                                                                                                                                                   | 18     |
|                                         |                                                                                                                                                                                                                                     |   |
| **PART                II   ** | **OTHER                INFORMATION**                                                                                                                                                                                                     |   |
| Item                1.                       | Legal                Proceedings                                                                                                                                                                                                         | 18     |
|                                         |                                                                                                                                                                                                                                     |   |
| Item                2.                       | Unregistered                Sales of Equity Securities and Use of Proceeds                                                                                                                                                               | 18     |
|                                         |                                                                                                                                                                                                                                     |   |
| Item                3.                       | Defaults                Under Senior Securities                                                                                                                                                                                          | 18     |
|                                         |                                                                                                                                                                                                                                     |   |
| Item                4.                       | Submission                of Matters to a Vote of Security Holders                                                                                                                                                                       | 18     |
|                                         |                                                                                                                                                                                                                                     |   |
| Item                5.                       | Other                Information                                                                                                                                                                                                         | 18     |
|                                         |                                                                                                                                                                                                                                     |   |
| Item                6.                       | Exhibits                                                                                                                                                                                                                                 | 19     |
|                                         | Signatures                                                                                                                                                                                                                               | 20     |
|                                         | Exhibit                Index                                                                                                                                                                                                             | 21     |

----

**PART      I - FINANCIAL INFORMATION**

***ZIOPHARM      Oncology, Inc.***

***(A      Development Stage Enterprise)***

|                                                                                                                                                                                                                                    |   | **March 31,** |           | **December 31,** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|----------------|-----------------------|--------|
|                                                                                                                                                                                                                                    |   | **2008**           |           | **2007**              |   |
|                                                                                                                                                                                                                                    |   | **(Unaudited)**    |           |                  |   |
| **ASSETS**                                                                                                                                                                                                                              |   |               |           |                  |   |   |   |
| Current                assets:                                                                                                                                                                                                          |   |               |           |                  |   |   |   |
| Cash                and cash equivalents                                                                                                                                                                                                |   | $                  | 27,487,427     |                  | $      | 35,028,798 |   |
| Prepaid                expenses and other current assets                                                                                                                                                                                |   |               | 335,720        |                  |   | 498,864 |   |
| Total                current assets                                                                                                                                                                                                     |   |               | **27,823,147** |                  |   | **35,527,662** |   |
|                                                                                                                                                                                                                                    |   |               |           |                  |   |   |   |
| Property                and equipment, net                                                                                                                                                                                              |   |               | 727,129        |                  |   | 746,421 |   |
|                                                                                                                                                                                                                                    |   |               |           |                  |   |   |   |
| Deposits                                                                                                                                                                                                                                |   |               | 95,497         |                  |   | 95,497 |   |
| Other                non-current assets                                                                                                                                                                                                 |   |               | 358,373        |                  |   | 356,881 |   |
| Total                assets                                                                                                                                                                                                             |   | **$**              | **29,004,146** |                  | **$**  | **36,726,461** |   |
|                                                                                                                                                                                                                                    |   |               |           |                  |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                 |   |               |           |                  |   |   |   |
| Current                liabilities:                                                                                                                                                                                                     |   |               |           |                  |   |   |   |
| Accounts                payable                                                                                                                                                                                                         |   | $                  | 2,648,178      |                  | $      | 2,909,170 |   |
| Accrued                expenses                                                                                                                                                                                                         |   |               | 4,082,723      |                  |   | 3,396,480 |   |
| Total                current liabilities                                                                                                                                                                                                |   |               | **6,730,901**  |                  |   | **6,305,650** |   |
|                                                                                                                                                                                                                                    |   |               |           |                  |   |   |   |
| Deferred                rent                                                                                                                                                                                                            |   |               | **58,960**     |                  |   | **50,988** |   |
| Total                liabilities                                                                                                                                                                                                        |   |               | **6,789,861**  |                  |   | **6,356,638** |   |
|                                                                                                                                                                                                                                    |   |               |           |                  |   |   |   |
| Commitments                and contingencies                                                                                                                                                                                            |   |               |           |                  |   |   |   |
|                                                                                                                                                                                                                                    |   |               |           |                  |   |   |   |
| Stockholders'                equity:                                                                                                                                                                                                    |   |               |           |                  |   |   |   |
|                                                                                                                                                                                                                                    |   |               |           |                  |   |   |   |
| Common                stock, $.001 par value; 280,000,000 shares authorized; 21,398,964                and                21,298,964 shares issued and outstanding at March 31, 2008 and December                31, 2007, respectively |   |               | 21,399         |                  |   | 21,299 |   |
|                                                                                                                                                                                                                                    |   |               |           |                  |   |   |   |
| Preferred                stock, $0.01 par value; 30,000,000 shares authorized and no shares                issued                and outstanding                                                                                        |   |               | -              |                  |   | - |   |
| Additional                paid-in capital                                                                                                                                                                                               |   |               | 70,141,607     |                  |   | 69,674,151 |   |
| Warrants                issued                                                                                                                                                                                                          |   |               | 20,503,894     |                  |   | 20,503,894 |   |
| Deficit                accumulated during the development stage                                                                                                                                                                         |   |               | (68,452,615    | )                     |   | (59,829,521 | ) |
| Total                stockholders' equity                                                                                                                                                                                               |   |               | **22,214,285** |                  |   | **30,369,823** |   |
|                                                                                                                                                                                                                                    |   |               |           |                  |   |   |   |
| Total                liabilities and stockholders' equity                                                                                                                                                                               |   | **$**              | **29,004,146** |                  | **$**  | **36,726,461** |   |

----

***ZIOPHARM      Oncology, Inc.***

***(A      Development Stage Enterprise)***

|                                                                                                                                         |   | For the three  |       | For the three  |   | From inception           |    |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|--------------------------|--------|-------------------------------|---------|
|                                                                                                                                         |   | months              |       | months              |   | (September 9, 2003) |    |
|                                                                                                                                         |   | ended                    |       | ended                    |   | through                  |    |
|                                                                                                                                         |   | March 31, 2008 |       | March 31, 2007 |   | March 31, 2008      |    |
|                                                                                                                                         |   | (unaudited)              |       | (unaudited)              |   | (unaudited)                   |    |
| Research                contract revenue                                                                                                     |   | $                        | -          |                     | $      | -                             |    | $ | - |   |
|                                                                                                                                         |   |                     |       |                     |   |                          |    |   |   |   |
| Operating                expenses and other income:                                                                                          |   |                     |       |                     |   |                          |    |   |   |   |
| Research                and development, including costs of research contracts                                                               |   |                     | 6,074,577  |                     |   | 3,426,513                     |    |   | 43,178,971 |   |
| General                and administrative                                                                                                    |   |                     | 2,744,701  |                     |   | 1,990,018                     |    |   | 28,978,995 |   |
| Total                operating expenses                                                                                                      |   |                     | 8,819,278  |                     |   | 5,416,531                     |    |   | 72,157,966 |   |
|                                                                                                                                         |   |                     |       |                     |   |                          |    |   |   |   |
| Loss                from operations                                                                                                          |   |                     | (8,819,278 | )                        |   | (5,416,531                    | )       |   | (72,157,966 | ) |
|                                                                                                                                         |   |                     |       |                     |   |                          |    |   |   |   |
| Interest                income                                                                                                               |   |                     | 196,184    |                     |   | 375,845                       |    |   | 3,705,351 |   |
| Net                loss                                                                                                                      |   | $                        | (8,623,094 | )                   | $      | (5,040,686                    | )  | $ | (68,452,615 | ) |
|                                                                                                                                         |   |                     |       |                     |   |                          |    |   |   |   |
|                                                                                                                                         |   |                     |       |                     |   |                          |    |   |   |   |
| Basic                and diluted net loss per share                                                                                          |   | $                        | (0.41      | )                        | $      | (0.29                         | )       |   |   |   |
|                                                                                                                                         |   |                     |       |                     |   |                          |    |   |   |   |
|                                                                                                                                         |   |                     |       |                     |   |                          |    |   |   |   |
| Weighted                average common shares outstanding used to compute basic and diluted                net                loss per share |   |                     | 21,228,964 |                     |   | 17,636,919                    |    |   |   |   |

----

***ZIOPHARM      Oncology, Inc.***

***(A      Development Stage Enterprise)***

|                                                                                                                           |   |                     |       |                     |   | For the period      |    |
|--------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|--------------------------|--------|-------------------------------|---------|
|                                                                                                                           |   | For the        |       | For the        |   | from inception           |    |
|                                                                                                                           |   | three months        |       | three months        |   | (September 9, 2003) |    |
|                                                                                                                           |   | ended                    |       | ended                    |   | through                       |    |
|                                                                                                                           |   | March 31, 2008 |       | March 31, 2007 |   | March 31, 2008      |    |
|                                                                                                                           |   | (unaudited)              |       | (unaudited)              |   | (unaudtied)                   |    |
| Cash                flows from operating activities:                                                                           |   |                     |       |                     |   |                          |    |   |   |   |
| Net                loss                                                                                                        |   | $                        | (8,623,094 | )                   | $      | (5,040,686                    | )  | $ | (68,452,615 | ) |
| Adjustments                to reconcile net loss to net cash used in operating activities:                                     |   |                     |       |                     |   |                          |    |   |   |   |
| Depreciation                and amortization                                                                                   |   |                     | 88,693     |                     |   | 69,131                        |    |   | 831,151 |   |
| Non-cash                stock-based compensation                                                                               |   |                     | 467,556    |                     |   | 323,694                       |    |   | 5,590,673 |   |
| Loss                on disposal of fixed assets                                                                                |   |                     | -          |                     |   | -                             |    |   | 8,423 |   |
| Change                in operating assets and liabilities:                                                                     |   |                     |       |                     |   |                          |    |   |   |   |
| (Increase)                decrease in:                                                                                         |   |                     |       |                     |   |                          |    |   |   |   |
| Prepaid                expenses and other current assets                                                                       |   |                     | 163,144    |                     |   | (111,635                      | )       |   | (335,720 | ) |
| Other                noncurrent assets                                                                                         |   |                     | (1,492     | )                        |   | (121,241                      | )       |   | (358,373 | ) |
| Deposits                                                                                                                       |   |                     | -          |                     |   | -                             |    |   | (95,497 | ) |
| Increase                (decrease) in:                                                                                         |   |                     |       |                     |   |                          |    |   |   |   |
| Accounts                payable                                                                                                |   |                     | (260,992   | )                        |   | 179,541                       |    |   | 2,648,178 |   |
| Accrued                expenses                                                                                                |   |                     | 686,243    |                     |   | 239,904                       |    |   | 4,082,723 |   |
| Deferred                rent                                                                                                   |   |                     | 7,972      |                     |   | (150                          | )       |   | 58,960 |   |
| Net                cash used in operating activates                                                                            |   |                     | (7,471,970 | )                        |   | (4,461,442                    | )       |   | (56,022,097 | ) |
|                                                                                                                           |   |                     |       |                     |   |                          |    |   |   |   |
| Cash                flows from investing activities:                                                                           |   |                     |       |                     |   |                          |    |   |   |   |
| Purchases                of property and equipment                                                                             |   |                     | (69,401    | )                        |   | (219,363                      | )       |   | (1,566,703 | ) |
| Decrease                in short-term investments                                                                              |   |                     | -          |                     |   | 1,555,164                     |    |   | - |   |
| Net                cash provided by (used in) investing activities                                                             |   |                     | (69,401    | )                        |   | 1,335,801                     |    |   | (1,566,703 | ) |
|                                                                                                                           |   |                     |       |                     |   |                          |    |   |   |   |
| Cash                flows from financing activities:                                                                           |   |                     |       |                     |   |                          |    |   |   |   |
| Proceeds                from the exercise of stock options                                                                     |   |                     | -          |                     |   | -                             |    |   | 65,596 |   |
| Stockholders'                capital contribution                                                                              |   |                     | -          |                     |   | -                             |    |   | 500,000 |   |
| Proceeds                from issuance of common stock and warrants, net                                                        |   |                     | -          |                     |   | 28,970,915                    |    |   | 67,751,035 |   |
| Proceeds                from issuance of preferred stock, net                                                                  |   |                     | -          |                     |   | -                             |    |   | 16,759,596 |   |
| Net                cash provided by financing activities                                                                       |   |                     | -          |                     |   | 28,970,915                    |    |   | 85,076,227 |   |
|                                                                                                                           |   |                     |       |                     |   |                          |    |   |   |   |
| Net                increase (decrease) in cash and cash equivalents                                                            |   |                     | (7,541,371 | )                        |   | 25,845,274                    |    |   | 27,487,427 |   |
|                                                                                                                           |   |                     |       |                     |   |                          |    |   |   |   |
| Cash                and cash equivalents, beginning of period                                                                  |   |                     | 35,028,798 |                     |   | 26,855,450                    |    |   | - |   |
| Cash                and cash equivalents, end of period                                                                        |   | $                        | 27,487,427 |                     | $      | 52,700,724                    |    | $ | 27,487,427 |   |
|                                                                                                                           |   |                     |       |                     |   |                          |    |   |   |   |
| **Supplementary                disclosure of cash flow information:**                                                          |   |                     |       |                     |   |                          |    |   |   |   |
| Cash                paid for interest                                                                                          |   | $                        | -          |                     | $      | -                             |    | $ | - |   |
|                                                                                                                           |   |                     |       |                     |   |                          |    |   |   |   |
| Cash                paid for income taxes                                                                                      |   | $                        | -          |                     | $      | -                             |    | $ | - |   |
|                                                                                                                           |   |                     |       |                     |   |                          |    |   |   |   |
| **Supplementary                  disclosure of noncash investing and financing                  activities:**                  |   |                     |       |                     |   |                          |    |   |   |   |
|                                                                                                                           |   |                     |       |                     |   |                          |    |   |   |   |
| Warrants                  issued to placement agents and investors, in connection with with                  private placement |   | $                        | -          |                     | $      | 5,432,793                     |    | $ | 20,208,217 |   |
|                                                                                                                           |   |                     |       |                     |   |                          |    |   |   |   |
| Preferred                stock conversion to common stock                                                                      |   | $                        | -          |                     | $      | -                             |    | $ | 16,759,596 |   |
|                                                                                                                           |   |                     |       |                     |   |                          |    |   |   |   |
| Warrants                converted to common shares                                                                             |   | $                        | -          |                     | $      | -                             |    | $ | 17,844 |   |

----

***ZIOPHARM      Oncology, Inc.***

***(A      Development Stage Enterprise)***

|                                                                                                                                                                                                |   | **Convertible Preferred Stock and Warrants** |       | **Stockholder's Equity (Deficit)** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|------------|----------------------------------------------|--------|
|                                                                                                                                                                                                |   |                                                             |       |                                         |   | **Warrants to** |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                |   |                                                             |       |                                         |   | **Purchase ** |   |   |   |   |   |   |   |   |   | **Deficit** |   |   |   |
|                                                                                                                                                                                                |   |                                                             |       |                                         |   | **Series A** |   |   |   |   |   |   |   |   |   | **Accumulated** |   | **Total** |   |
|                                                                                                                                                                                                |   | **Series A**                                                |       | **Convertible**                              |   |   |   |   |   | **Additional** |   |   |   | **During The** |   | **Stockholders'** |   |
|                                                                                                                                                                                                |   | **Convertible Preferred Stock**                        |       | **Preferred Stock**                     |   | **Common Stock** |   | **Paid-in** |   |   |   | **Development** |   | **Equity/** |   |
|                                                                                                                                                                                                |   | **Shares**                                                       |       | **Amount**                                   |   | **Warrants** |   | **Shares** |   | **Amount** |   | **Capital** |   | **Warrants** |   | **Stage** |   | **(Deficit)** |   |
| Stockholders' contribution, September 9, 2003                                                                                                                                   |   |                                                             | -          |                                         | $      | - |   | $ | - |   |   | 250,487 |   | $ | 250 |   | $ | 499,750 |   | $ | - |   | **$** | **-** |   | $ | 500,000 |   |
| Net                    loss                                                                                                                                                                         |   |                                                             | -          |                                         |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (160,136 | ) |   | (160,136 | ) |
| Balance                    at December 31, 2003                                                                                                                                                     |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 250,487 |   |   | 250 |   |   | 499,750 |   |   | - |   |   | (160,136 | ) |   | 339,864 |   |
| Issuance                    of common stock                                                                                                                                                         |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 2,254,389 |   |   | 2,254 |   |   | 4,497,746 |   |   | - |   |   | - |   |   | 4,500,000 |   |
| Issuance                    of common stock for services                                                                                                                                            |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 256,749 |   |   | 257 |   |   | 438,582 |   |   | - |   |   | - |   |   | 438,839 |   |
| Fair                    value of options/warrants issued for nonemployee services                                                                                                                   |   |                                                             | -          |                                         |   | - |   |   | - |   |   | - |   |   | - |   |   | 13,240 |   |   | 251,037 |   |   | - |   |   | 264,277 |   |
| Net                    loss                                                                                                                                                                         |   |                                                             | -          |                                         |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (5,687,297 | ) |   | (5,687,297 | ) |
|                                                                                                                                                                                                |   |                                                             |       |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                    at December 31, 2004                                                                                                                                                     |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 2,761,625 |   |   | 2,761 |   |   | 5,449,318 |   |   | 251,037 |   |   | (5,847,433 | ) |   | (144,317 | ) |
|                                                                                                                                                                                                |   |                                                             |       |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                    of Series A convertible preferred stock (net of expenses of $1,340,263                    and                    warrant cost of $1,682,863)                            |   |                                                             | 4,197,946  |                                         |   | 15,076,733 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
|                                                                                                                                                                                                |   |                                                             |       |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair                    value of warrants to purchase Series A convertible preferred                    stock                                                                                       |   |                                                             | -          |                                         |   | - |   |   | 1,682,863 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Issuance                    of Common stock to EasyWeb Shareholders                                                                                                                                 |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 189,922 |   |   | 190 |   |   | (190 | ) |   | - |   |   | - |   |   | - |   |
| Conversion                    of Series A convertible preferred stock @ $0.001 into $0.001                    common stock                    on September 13, 2005 at an exchange ratio of .500974 |   |                                                             | (4,197,946 | )                                            |   | (15,076,733 | ) |   | (1,682,863 | ) |   | 4,197,823 |   |   | 4,198 |   |   | 15,072,535 |   |   | 1,682,863 |   |   | - |   |   | 16,759,596 |   |
| Issuance                    of common stock for options                                                                                                                                             |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 98,622 |   |   | 99 |   |   | 4,716 |   |   |   |   |   | - |   |   | 4,815 |   |
| Fair                    value of options/warrants issued for nonemployee services                                                                                                                   |   |                                                             | -          |                                         |   | - |   |   | - |   |   | - |   |   | - |   |   | 54,115 |   |   | 44,640 |   |   | - |   |   | 98,755 |   |
| Net                    loss                                                                                                                                                                         |   |                                                             | -          |                                         |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (9,516,923 | ) |   | (9,516,923 | ) |
|                                                                                                                                                                                                |   |                                                             |       |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                    at December 31, 2005                                                                                                                                                     |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 7,247,992 |   |   | 7,248 |   |   | 20,580,494 |   |   | 1,978,540 |   |   | (15,364,356 | ) |   | 7,201,926 |   |
|                                                                                                                                                                                                |   |                                                             |       |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                    of common stock in private placement, net of expenses                    $2,719,395                                                                                     |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 7,991,256 |   |   | 7,991 |   |   | 21,179,568 |   |   | - |   |   | - |   |   | 21,187,559 |   |
| Issuance                    of warrants                                                                                                                                                             |   |                                                             | -          |                                         |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 13,092,561 |   |   | - |   |   | 13,092,561 |   |
| Issuance                    of common stock for services rendered                                                                                                                                   |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 25,000 |   |   | 25 |   |   | 106,225 |   |   | - |   |   | - |   |   | 106,250 |   |
| Stock                    based compensation for employees                                                                                                                                           |   |                                                             | -          |                                         |   | - |   |   | - |   |   | - |   |   | - |   |   | 2,776,408 |   |   | - |   |   | - |   |   | 2,776,408 |   |
| Issuance                    of common stock due to exercise of stock options                                                                                                                        |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 5,845 |   |   | 6 |   |   | 25,186 |   |   | - |   |   | - |   |   | 25,192 |   |
| Issuance                    of common stock due to exercise of stock warrants                                                                                                                       |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 2,806 |   |   | 3 |   |   | (3 | ) |   | - |   |   | - |   |   | - |   |
| Net                    loss                                                                                                                                                                         |   |                                                             | -          |                                         |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (17,856,919 | ) |   | (17,856,919 | ) |
|                                                                                                                                                                                                |   |                                                             |       |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                    at December 31, 2006                                                                                                                                                     |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 15,272,899 |   |   | 15,273 |   |   | 44,667,878 |   |   | 15,071,101 |   |   | (33,221,275 | ) |   | 26,532,977 |   |
| Issuance                    of common stock in private placement, net of expenses                    $1,909,090                                                                                     |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 5,910,049 |   |   | 5,910 |   |   | 23,532,212 |   |   | - |   |   | - |   |   | 23,538,122 |   |
| Issuance                    of warrants                                                                                                                                                             |   |                                                             | -          |                                         |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 5,432,793 |   |   | - |   |   | 5,432,793 |   |
| Stock-based                    compensation for employees                                                                                                                                           |   |                                                             | -          |                                         |   | - |   |   | - |   |   | - |   |   | - |   |   | 1,318,096 |   |   | - |   |   | - |   |   | 1,318,096 |   |
| Stock-based                    compensation for non-employee                                                                                                                                        |   |                                                             | -          |                                         |   | - |   |   | - |   |   | - |   |   | - |   |   | 120,492 |   |   | - |   |   | - |   |   | 120,492 |   |
| Issuance                    of common stock due to exercise of stock options                                                                                                                        |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 46,016 |   |   | 46 |   |   | 35,543 |   |   | - |   |   | - |   |   | 35,589 |   |
| Issuance                    of restricted stock                                                                                                                                                     |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 70,000 |   |   | 70 |   |   | (70 | ) |   | - |   |   | - |   |   | - |   |
| Net                    loss                                                                                                                                                                         |   |                                                             | -          |                                         |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (26,608,246 | ) |   | (26,608,246 | ) |
|                                                                                                                                                                                                |   |                                                             |       |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                    at December 31, 2007                                                                                                                                                     |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 21,298,964 |   |   | 21,299 |   |   | 69,674,151 |   |   | 20,503,894 |   |   | (59,829,521 | ) |   | 30,369,823 |   |
| Stock-based                    compensation for employees                                                                                                                                           |   |                                                             | -          |                                         |   | - |   |   | - |   |   | - |   |   | - |   |   | 467,556 |   |   | - |   |   | - |   |   | 467,556 |   |
| Issuance                    of restricted stock                                                                                                                                                     |   |                                                             | -          |                                         |   | - |   |   | - |   |   | 100,000 |   |   | 100 |   |   | (100 | ) |   | - |   |   | - |   |   | - |   |
| Net                    loss                                                                                                                                                                         |   |                                                             | -          |                                         |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (8,623,094 | ) |   | (8,623,094 | ) |
| Balance                    at March 31, 2008                                                                                                                                                        |   |                                                             | -          |                                         | $      | - |   | $ | - |   |   | 21,398,964 |   | $ | 21,399 |   | $ | 70,141,607 |   | $ | 20,503,894 |   | $ | (68,452,615 | )  | $ | 22,214,285 |   |

----

| **Item 1.  ** | **UNAUDITED                FINANCIAL STATEMENTS** |
|------------------------------|---------------------------------------------------|

| **1.** | **BASIS                OF PRESENTATION AND                OPERATIONS** |
|--------|------------------------------------------------------------------------|

| **2.** | **RECENT                ACCOUNTING PRONOUNCEMENTS** |
|--------|-----------------------------------------------------|

*Fair      Value Measurements*

*The      Fair Value Option for Financial Assets and Liabilities, Including an amendment      of FASB Statement No. 115*

*Business      Combinations*
141(R)”).      SFAS 141(R)      expands the definition of a business combination and requires the fair value      of      the purchase price of an acquisition, including the issuance of equity      securities, to be determined on the acquisition date. SFAS141(R) also requires      that all assets, liabilities, contingent considerations, and contingencies      of an      acquired business be recorded at fair value at the acquisition date. In      addition, SFAS      141(R)      requires that acquisition costs generally be expensed as incurred, restructuring      costs generally be expensed in periods subsequent to the acquisition date,      changes in accounting for deferred tax asset valuation allowances be expensed      after the measurement period, and acquired income tax uncertainties be expensed      after the measurement period. SFAS 141(R)      is      effective for fiscal years beginning after December 15, 2008 with early      adoption prohibited. The Company expects that the adoption of this new standard      will not have a material impact on our financial position, results of operations      or cash flows.

----

| **2.** | **RECENT                ACCOUNTING                PRONOUNCEMENTS...CONTINUED** |
|--------|------------------------------------------------------------------------------------|

*Noncontrolling      Interests in Consolidated Financial Statements—an amendment of Accounting      Research Bulletin No. 51*

| **3.** | **STOCK-BASED                COMPENSATION AND STOCK OPTION                PLAN** |
|--------|----------------------------------------------------------------------------------|

** **

*Stock-based      Compensation Expense*

*Accounting      for Stock Issued to Employee*

|                                                                           |   | **Three months****ended March 31, ****2008** |    | **Three months****ended March 31, ****2007** |   | **For the period from**** ****inception ****(September 9, 2003) ****through ****March 31, 2008** |   |
|--------------------------------------------------------------------------------|--------|------------------------------------------------------------------|---------|------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                           |   |                                                             |    |                                                             |   |                                                                                                                                                    |   |
| Research                and development, including costs of research contracts |   | $                                                                | 180,111 |                                                             | $      | 143,210                                                                                                                                                 |   | $ | 1,100,477 |   |
| General                and administrative                                      |   |                                                             | 287,445 |                                                             |   | 180,484                                                                                                                                                 |   |   | 3,461,583 |   |
| Share-based                compensation expense before tax                     |   |                                                             | 467,556 |                                                             |   | 323,694                                                                                                                                                 |   |   | 4,562,060 |   |
| Income                tax benefit                                              |   |                                                             | — |                                                             |   | —                                                                                                                                                 |   |   | — |   |
| Net                compensation expense                                        |   | $                                                                | 467,556 |                                                             | $      | 323,694                                                                                                                                                 |   | $ | 4,562,060 |   |

----

| **3.** | **STOCK-BASED                COMPENSATION AND STOCK OPTION                PLAN...CONTINUED** |
|--------|--------------------------------------------------------------------------------------------------|

*Stock      Option Plan*

*Stock      Options*

|                                               |   | **Number                of****Shares** |      | **Weighted****Average****Exercise Price** |   | **Weighted****Average****Remaining                Contractual****Term                (Years)** |   | **Aggregate****Intrinsic**** Value** |         |
|----------------------------------------------------|--------|----------------------------------------|-----------|------------------------------------------------|--------|------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------------|
| Outstanding,                January 1, 2008        |   |                                   | 2,797,000 |                                           | $      | 3.81                                                                                           |   |                                      |              |   |   |  |   |
| Granted                                            |   |                                   | 101,000   |                                           |   | 3.06                                                                                           |   |                                      |              |   |   |  |   |
| Exercised                                          |   |                                   | —   |                                           |   | —                                                                                        |   |                                      |              |   |   |  |   |
| Canceled                                           |   |                                   | 63,334    |                                           |   | 4.73                                                                                           |   |                                      |    |   |   |   |   |
| Outstanding,                March 31, 2008         |   |                                   | 2,834,666 |                                           | $      | 3.77                                                                                           |   |                                      | 8.28         |   | $ | 1,083,632 |   |
| Options                exercisable, March 31, 2008 |   |                                   | 1,384,165 |                                           | $      | 3.56                                                                                           |   |                                      | 7.24         |   | $ | 956,417 |   |

----

| **3.** | **STOCK-BASED                COMPENSATION AND STOCK OPTION                PLAN...CONTINUED** |
|--------|--------------------------------------------------------------------------------------------------|

*Restricted      Stock*

|                                                  |   |   **Restricted** **Stock** |    | **Weighted-****Average ****Grant****Date Fair Value** |   |
|-------------------------------------------------------|--------|-------------------------------------------|---------|----------------------------------------------------------------------|--------|
| Non-vested                  at January 1, 2007        |   |                                      | — |                                                                 | $      | — |   |
| Granted                                               |   |                                      | 70,000  |                                                                 |   | 2.73 |   |
| Vested                                                |   |                                      | — |                                                                 |   | — |   |
| Canceled                                              |   |                                      | — |                                                                 |   | — |   |
| Non-vested                  at December 31, 2007 |   |                                      | 70,000  |                                                                 | $      | 2.73 |   |
| Granted                                               |   |                                      | 100,000 |                                                                 |   | 3.25 |   |
| Vested                                                |   |                                      | — |                                                                 |   | — |   |
| Canceled                                              |   |                                      | — |                                                                 |   | — |   |
| Non-vested                  at March  31, 2008   |   |                                      | 170,000 |                                                                 | $      | 3.04 |   |

----

| **4.** | **INCOME                TAXES** |
|--------|---------------------------------|

----

**Item      2.**
**MANAGEMENT’S      DISCUSSION AND ANALYSIS**

**Note      Regarding Forward-Looking Statements**

**Overview:**

|   | · | Darinaparsin                is an organic arsenic compound covered by issued patents and pending                patent applications in the U.S. and in foreign countries. A form                of                commercially available inorganic arsenic (arsenic trioxide [Trisenox                ®                ];                “ATO”) has been approved in the United States and the European Union for                the treatment of acute promyelocytic leukemia (“APL”), a precancerous                condition. ATO is on the compendia listing for the therapy of multiple                myeloma, and has been studied for the treatment of various other                cancers.                Nevertheless, ATO has been shown to be toxic to the heart, liver,                and                brain, which limits its use as an anti-cancer agent. Inorganic arsenic                has                also been shown to cause cancer of the skin and lung in humans. The                toxicity of arsenic is generally correlated to its accumulation in                organs                and tissues. Our preclinical and clinical studies to date have                demonstrated that darinaparsin is considerably less toxic than inorganic                arsenic, particularly with regard to heart toxicity. Similar results                have                been reported for other organic compounds. *In                vitro*                testing of darinaparsin using the National Cancer Institute’s human cancer                cell panel detected activity against lung, colon, brain, melanoma,                ovarian, and kidney cancer. Moderate activity was detected against                breast                and prostate cancer. In addition to solid tumors, *in                vitro*                testing in both the National Cancer Institute’s cancer cell panel and                *in                vivo*                testing in a leukemia animal model demonstrated substantial activity                against hematological cancers (cancers of the blood and blood-forming                tissues) such as leukemia, lymphoma, myelodysplastic syndromes, and                multiple myeloma. Preclinical studies have also established                anti-angiogenic properties of darinaparsin, provided support for                the                development of an oral form of the drug, and has established synergy                of                darinaparsin in combination with other approved anti-cancer                agents. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Overview...Continued**

|   |   | Phase                I testing of the intravenous form of darinaparsin in solid tumors                and                multiple myeloma and other hematological cancers has been completed.                The                Company has reported signs of clinical activity and a safety profile                in                these studies as predicted by preclinical results. The Company is                presently conducting phase II studies in advanced myeloma, in certain                other hematological cancers, and primary liver cancer, and has reported                preliminary results from the first two trials. The Company has recently                initiated a phase I program for an oral form of darinaparsin. Study                results from the oral phase I trial and the ongoing IV phase II trials                will guide the development plan for darinaparsin including an opportunity                for partnering.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | · | Several                proprietary forms of palifosfamide, or isophosphoramide mustard (“IPM”),                the active metabolite of ifosfamide that is also related to                cyclophosphamide, have been developed. Patent applications for                pharmaceutical composition and method of use have been filed in the                U.S.                and internationally. Like cyclophosphamide and ifosfamide, palifosfamide                is an alkylating agent. The Company believes that cyclophosphamide                is the                most widely used alkylating agent in cancer therapy, with significant                use                to treat breast cancer and non-Hodgkin’s lymphoma. Ifosfamide has been                shown to be effective in high dose by itself or in combination with                other                anticancer agents in treating sarcoma and lymphoma. Unlike                cyclophosphamide, ifosfamide is approved by the FDA only as a treatment                for testicular cancer. Although ifosfamide-based treatment generally                represents the standard of care for sarcoma, it is not licensed for                this                indication by the U.S. FDA. Our preclinical studies have shown that,                in                animal and laboratory models, palifosfamide exhibits activity against                leukemia and solid tumors. These studies also indicate that palifosfamide                may have a better safety profile than ifosfamide or cyclophosphamide                because it does not appear to produce several known toxic metabolites,                such as acrolein, which is toxic to the kidneys and bladder. The                presence                of acrolein can mandate the administration of a protective agent                called                mesna, which is inconvenient and expensive. Chloroacetaldehyde is                an                additional metabolite of ifosfamide that is toxic to the central                nervous                system, causing “fuzzy brain” syndrome for which there is currently no                protective measure. Similar toxicity concerns pertain to high-dose                cyclophosphamide, which is widely used in bone marrow and blood cell                transplantation. Because palifosfamide is independently active without                acrolein or chloroacetaldehyde metabolites, the Company believes                that the                administration of its proprietary form of palifosfamide (without                the need                for co-administration of mesna) may avoid many of the toxicities                of                ifosfamide and cyclophosphamide without compromising efficacy. In                certain                preclinical studies, palifosfamide appeared to show activity against                ifosfamide- and/or cyclophosphamide-resistant cancer cell lines.                Also,                encouraging results have been obtained when palifosfamide was combined                with doxorubicin, an agent approved to treat sarcoma, in                preclinical cancer models. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |   | Phase                II testing of the intravenous form of palifosfamide to treat advanced                sarcoma is completed. In both phase I and phase II testing, palifosfamide                has been administered without the “uroprotectant” mesna, and the                toxicities associated with acrolein and chloroacetaldehyde have not                been                observed. Kidney toxicity has been identified as the dose limiting                toxicity. The Company has reported signs of clinical activity in                the phase                II study, which is now nearing completion. Following review of the                preclinical combination studies, clinical sarcoma data, and discussion                with sarcoma experts, the Company has initiated a phase I/II study                of                palifosfamide and doxorubicin in sarcoma patients, primarily. The                Company                is planning a phase II randomized study designed to compare doxorubicin                plus palifosfamide to doxorubicin in patients with advanced sarcoma.                The                study is expected to be initiated in the fourth quarter of                2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

----

**Overview...Continued**

|   | · | Indibulin                is a novel, oral small molecular-weight inhibitor of tubulin                polymerization that was acquired from Baxter Healthcare. The microtubule                component tubulin is one of the most well-established drug targets                in                cancer. Microtubule inhibitors interfere with the dynamics of tubulin                polymerization resulting in inhibition of chromosome segregation                during                mitosis and consequently inhibition of cell division. A number of                IV                anticancer drugs that target tubulin, such as Taxol ®                (paclitaxel, Taxotere®                (docetaxel)                and vinca alkaloid family members, vincristine and vinorelbine, are                on the                market. This class of agents is typically the mainstay of therapy                in a                wide variety of indications. In spite of their effectiveness, the                use of                these drugs is also associated with significant toxicities, notably                peripheral neurotoxicity.  Indibulin                is an orally available compound. Preclinical studies demonstrate                significant and broad antitumor activity (including activity against                taxane-refractory and multi-drug resistant cell lines and xenografts).                The                cytotoxic activity of indibulin was demonstrated in several rodent                and                human tumor cell lines derived from prostate, brain, breast, pancreas,                lung, ovary, and cervical tumor tissues and in rodent tumor and xenograft                models. In addition, indibulin was effective against multidrug resistant                tumor cell lines (breast, lung leukemia) both *in                vitro*                and *in                vivo*.                Indibulin is potentially safer than other tubulin inhibitors and                there has                been no neurotoxicity at therapeutic doses in animals and in the                ongoing                phase I trials. Indibulin has also been successfully tested preclinically                for synergy with approved anti-cancer agents. The availability of                an oral                formulation of indibulin creates significant commercial opportunity                because no oral formulations of paclitaxel or related compounds are                currently on the market in the United States.  There                are three ongoing phase I studies in patients with advanced solid                tumors                which are nearing completion. The Company has reported signs of clinical                activity at well-tolerated doses and without clinically relevant                peripheral neuropathy. Following encouraging results obtained with                indibulin in combination with erlotinib, docetaxel or 5-FU in preclinical                models, the first of two phase I/II combination studies, has                been initiated with the second expected in the third quarter of this                year.                Based on the results obtained in the phase I/II drug-combination                studies,                a pahse II randomized study is expected to                be initiated. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Plan      of Operation**

| · | Fees                and milestone payments required under the license agreements relating                to                our existing product candidates;                                                                                                                              |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                     |
| · | Clinical                trial expenses, including the costs incurred with respect to the                conduct                of clinical trials for darinaparsin, palifosfamide and indibulin,                and                preclinical costs associated with back-up candidates; |
|   |                                                                                                                                                                                                                                                                                     |
| · | Costs                related to the scale-up and manufacture of darinaparsin, palifosfamide                and                indibulin;                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                     |
| · | Rent                for our facilities; and                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                     |
| · | General                corporate and working capital, including general and administrative                expenses.                                                                                                                                                                      |

***Product      Candidate Development and Clinical Trials***

*Darinaparsin*

*Palifosfamide*

*Indibulin*

----

**Results      of Operations for the three months ended March 31, 2008 versus March 31,      2007**

*Revenues.*

*Research      and development expenses.*

*General      and administrative expenses.*

*Other      income (expense*

*Net      income (loss).*

**Liquidity      and Capital Resources**

The      Company anticipates that losses will continue for the foreseeable future. At      March 31, 2008, the Company’s accumulated deficit was approximately $68.5      million. The Company has incurred significant losses from operations and has      an      accumulated deficit that raises substantial doubt about the Company’s ability to      continue as a going concern. The Company’s ability to continue operations after      its current cash resources are exhausted depends on its ability to obtain      additional financing and achieve profitable operations, as to which no      assurances can be given.      Our      actual cash requirements may vary materially from those planned because of      a      number of factors including:

|   | · | Changes                in the focus and direction of our research and development programs,                including the acquisition and pursuit of development of new product                candidates; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Competitive                and technical advances; |
|--------|--------|----------------------------------------------------|

|   | · | Costs                of commercializing any of the product candidates;                and |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | Costs                of filing, prosecuting, defending and enforcing any patent claims                and any                other intellectual property  rights, or other                developments. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                           |   | **Payments                due by Period**  |      |
|--------------------------------|--------|-------------------------------------------------|-----------|
|                           |   | **Total**                                  |      | **2009**  |   | **2010** |   | **2011** |   | **2012** |   | **2013 and                thereafter** |   |
| Operating                lease |   | $                                               | 1,422,648 |   | $ | 472,222 |   | $ | 456,872 |   | $ | 223,835 |   | $ | 189,563 |   |   | 80,156 |   |

**Critical      Accounting Policies and Significant Estimates**

**Research      and Development**

**Stock-based      compensation**

*Accounting      for Stock Issued to Employees*

**Off-Balance      Sheet Arrangements**

----

**Item      3.  **
**QUANTITATIVE      AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**

**Item      4.**
**CONTROLS      AND PROCEDURES**
** **

**PART      II - OTHER INFORMATION**

**tem      1. Legal Proceedings**

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

No      response required.

**Item      3. Defaults Upon Senior Securities.**

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

**Item      5. Other Information**

----

**Item      6. EXHIBITS**

| **Exhibit                  No.** |   | **Description**                                                                                                                                                                                                                                 |
|----------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1(1)(*)                       |   | Employment                  Agreement dated as of January 8, 2008                  between ZIOPHARM Oncology, Inc. and Jonathan J. Lewis, MD,                  PhD.                                                                             |
|                             |   |                                                                                                                                                                                                                                            |
| 31.1                             |   | Certification                  of Chief Executive Officer pursuant to Securities Exchange Act                  Rule                  13a-15(e)/15d-15(e) as adopted pursuant to Section 302 of the                  Sarbanes-Oxley Act of 2002. |
|                             |   |                                                                                                                                                                                                                                            |
| 31.2                             |   | Certification                  of Chief Financial Officer pursuant to Securities Exchange Act                  Rule                  13a-15(e)/15d-15(e) as adopted pursuant to Section 302 of the                  Sarbanes-Oxley Act of 2002. |
|                             |   |                                                                                                                                                                                                                                            |
| 32.1                             |   | 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.                          |
|                             |   |                                                                                                                                                                                                                                            |
| 32.2                             |   | 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.                          |

| (1) |   | Incorporated                by                reference to our Annual Report on Form 10-QSB, filed on February                21,                2008. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
| (*) |   | Compensatory                  plan or                  arrangement.                                                                                    |

----

**SIGNATURES**

|                                   |                                       |                                                                                                                         |
|----------------------------------------|--------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|
|                                   | **ZIOPHARM                ONCOLOGY, INC.** |
|                                   |                                       |                                                                                                                         |
| Date: May                12, 2008 | By:                              | /s/ Jonathan                Lewis                                                                                       |
|                                   |                                       | Jonathan                Lewis, M.D., Ph.D.Chief                Executive Officer(Principal                Executive Officer) |

| Date:                May 12, 2008 | By:   | /s/ Richard                Bagley                                                                                         |
|-----------------------------------|-----------------|--------------------------------------------------------------------------------------------------------------------------------|
|                              |            | Richard                BagleyChief                Financial Officer(Principal                Financial and Accounting Officer) |

----

**EXHIBIT      INDEX**

| **Exhibit                No.** |   | **Description**                                                                                                                                                                                                          |
|--------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1(1)(*)                     |   | Employment                Agreement dated as of January 8, 2008                between ZIOPHARM Oncology, Inc. and Jonathan J. Lewis, MD,                PhD.                                                            |
|                           |   |                                                                                                                                                                                                                     |
| 31.1                           |   | Certification                of Chief Executive Officer pursuant to Securities Exchange Act Rule                13a-15(e)/15d-15(e) as adopted pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002. |
|                           |   |                                                                                                                                                                                                                     |
| 31.2                           |   | Certification                of Chief Financial Officer pursuant to Securities Exchange Act Rule                13a-15(e)/15d-15(e) as adopted pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002. |
|                           |   |                                                                                                                                                                                                                     |
| 32.1                           |   | 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.           |
|                           |   |                                                                                                                                                                                                                     |
| 32.2                           |   | 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.           |

| (1) |   | Incorporated              by              reference to our Annual Report on Form 10-QSB, filed on February 21,              2008. |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------|
| (*) |   | Compensatory                plan or                arrangement.                                                                   |

----