**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-Q**





(Mark
      One)


**x**
            **Quarterly
                report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934****For
                the quarterly period ended: March 31, 2008****o**
            **Transition
                report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934**




**Commission
      file number 000-49730**










**DOV
      PHARMACEUTICAL, INC.**


(Exact
      Name of Registrant as Specified in its Charter)




**Delaware**
            
            **22-3374365**(State
                or Other Jurisdiction
              of
                Incorporation or Organization)
            
            (I.R.S.
                Employer
              Identification
                No.)




**150
      Pierce Street**


**Somerset,
      New Jersey 08873**


(Address
      of principal executive office)




**(732) 907-3600**


(Registrant’s
      telephone number, including area code)










Indicate
      by check mark whether registrant (1) has filed all reports required to be filed
      by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
      preceding 12 months (or for such shorter period that registrant was required
      to
      file such reports), and (2) has been subject to such filing requirements for
      the
      past 90 days. Yes xNo o





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




Large accelerated filer o
            
            Accelerated
              filer oNon-accelerated filer o 
(Do
              not check if a smaller reporting
              company)
            Smaller reporting companyx






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





On
      May
      10, 2008, there were outstanding 110,753,889 shares
      of
      the registrant’s common stock, par value $0.0001 per share.







**DOV
      PHARMACEUTICAL, INC.**





**Form
      10-Q**





**For
      the Quarter Ended March 31, 2008**





**Table
      of Contents**




**PAGE NUMBER****PART
                I -**
            **FINANCIAL
                INFORMATION**ITEM
                1.
            Financial
                Statements (unaudited).
            4Condensed
                Balance Sheets as of March 31, 2008 and December 31, 2007
            4Condensed
                Statements of Operations for the three months ended March 31, 2008
                and
                2007
            5Condensed
                Statements of Cash Flows for the three months ended March 31, 2008
                and
                2007
            6Notes
                to Unaudited Condensed Financial Statements
            7ITEM
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of Operations.
            12ITEM
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk.
            17ITEM
                4T.
            Controls
                and Procedures.
            17**PART
                II -**
            **OTHER
                INFORMATION**ITEM
                1.
            Legal
                Proceedings
            18ITEM
                1A.
            Risk
                Factors
            18ITEM
                6.
            Exhibits
            18Signatures
            19




-
          2 -


**Special
      Note Regarding Forward-Looking Statements**





This
      Report on Form 10-Q includes forward-looking statements within the meaning
      of
      Section 27A of the Securities Act of 1933 and Section 21E of the Securities
      Exchange Act of 1934, each as amended, including statements regarding our
      expectations with respect to the progress of and level of expenses for our
      clinical trial programs.  You
      can
      also identify forward-looking statements by the following words: may, will,
      should, expect, intend, plan, anticipate, believe, estimate, predict, potential,
      continue or the negative of these terms or other comparable terminology. We
      caution you that forward-looking statements are inherently uncertain and are
      simply point-in-time estimates based on a combination of facts and factors
      about
      which we cannot be certain or even relatively confident. Actual results or
      events will surely differ and may differ materially from the forward-looking
      statements contained herein as a result of many factors, some of which we may
      not be able to predict or may not be within our control. Some of the most
      significant challenges we presently face include the following:





·
            our
                need to raise substantial additional capital in order to fund
                operations;·
            our
                need to seek and evaluate strategic alternatives, including with
                respect
                to collaborations and partnerships for certain of our development
                programs
                and product candidates;





·
            the
                need to obtain and maintain all necessary patents, licenses and other
                intellectual property rights;





·
            the
                need to demonstrate the safety and efficacy of product candidates
                at each
                stage of development;





·
            our
                need to meet our development schedule for our product candidates,
                including with respect to drug supply and clinical trial initiation,
                enrollment and completion;





·
            the
                need to meet applicable regulatory standards and receive required
                regulatory approvals on our strategic partners’ anticipated time schedules
                or at all;





·
            our
                need to meet our obligations to our strategic partners so we can
                receive
                payment of milestones and royalties, if any, under our agreements
                with
                them; and





·
            our
                need to seek and evaluate strategic alternatives, including with
                respect
                to collaborations and partnerships for certain of our development
                programs
                and product candidates.





If
      we are
      unable to successfully deal with these and other challenges, for example if
      we
      fail to identify additional sources of capital in the very near term, our
      business, results of operations and financial condition would be harmed and
      the
      market value of our common stock would likely decline even further. You should
      refer to “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year
      ended December 31, 2007, for
      a
      more detailed discussion of some of the factors that may cause our actual
      results to differ materially from our forward-looking statements. We qualify
      all
      our forward-looking statements by reference to these cautionary statements.
      As a
      result of the foregoing, you should not place undue reliance on our
      forward-looking statements.




We
      have a
      number of trademarks, including DOV, DOV Pharmaceutical, Inc. and the DOV
      Pharmaceutical logo. All other trademarks used or referred to in this Quarterly
      Report on Form 10-Q are the property of their respective
      owners.


-
          3 -


**PART
      I - FINANCIAL INFORMATION**





**ITEM
      I.**  **Financial
      Statements**





**DOV
      PHARMACEUTICAL, INC.**


**CONDENSED
      BALANCE SHEETS**





**March 31, 2008**
            
            **December 31,**
              **2007**(unaudited)
            
            (1)**Assets**Cash
                and cash equivalents
            
            $
            7,108,361
            
            $
            9,236,449Marketable
                securities—short-term
            
            
            *—*
            
            
            400,000Prepaid
                rent
            
            
            1,711,674
            
            
            237,404Prepaid
                expenses and other current assets
            
            
            157,615
            
            
            545,542Total
                current assets
            
            
            8,977,650
            
            
            10,419,395Restricted
                cash—long-term
            
            
            —
            
            
            4,211,109Property
                and equipment, net
            
            
            729,340
            
            
            899,960Total
                assets
            
            $
            9,706,990
            
            $
            15,530,464**Liabilities
                and Stockholders’ Equity**Current
                liabilities:Accounts
                payable
            
            $
            731,036
            
            $
            576,145Accrued
                expenses
            
            
            976,989
            
            
            1,171,805Deferred
                credit – current
            
            
            —
            
            
            257,313Total
                current liabilities
            
            
            1,708,025
            
            
            2,005,263Deferred
                credits – non-current
            
            
            —
            
            
            2,101,419Series
                D convertible preferred stock, $1.00 par value, 560,000 authorized
                shares,
                100,000 shares issued and outstanding at March 31, 2008 and December
                31,
                2007
            
            
            6,326,980
            
            
            6,326,980Commitments
                and contingenciesStockholders’
                equity:Preferred
                stock—undesignated
                preferred stock,$1.00
                par value, 6,550,357 shares authorized, 0 shares issued and outstanding
                at
                March 31, 2008 and December 31, 2007
            
            
            —
            
            
            —Common
                stock, $.0001 par value, 260,000,000 shares authorized, 110,753,889
                issued
                at March 31, 2008 and December 31, 2007
            
            
            11,075
            
            
            11,075Treasury
                stock, at cost; 31,450 common shares at March 31, 2008 and December
                31,
                2007
            
            
            (66,985
            )
            
            (66,985
            )Additional
                paid-in capital
            
            
            204,509,705
            
            
            204,367,735Accumulated
                deficit
            
            
            (202,781,810
            )
            
            (199,215,023
            )Total
                stockholders’ equity
            
            
            1,671,985
            
            
            5,096,802Total
                liabilities and stockholders’ equity
            
            $
            9,706,990
            
            $
            15,530,464





(1)
            Derived
                from the Company’s audited financial statements for the year ended
                December 31, 2007.





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


-
          4 -


**DOV
      PHARMACEUTICAL, INC.**


**CONDENSED
      STATEMENTS OF OPERATIONS**




**Three Months Ended**
                **March
                  31,****2008**
              
              **2007**(unaudited)Revenue
              
              $
              —
              
              $
              7,967,714Operating
                  expenses:Research
                  and development expense
              
              
              1,887,091
              
              
              6,859,144General
                  and administrative expense
              
              
              1,761,117
              
              
              4,513,626License
                  expense
              
              
              —
              
              
              5,500,000Loss
                  from operations
              
              
              (3,648,208
              )
              
              (8,905,056
              )Interest
                  income
              
              
              75,967
              
              
              512,964Interest
                  expense
              
              
              —
              
              
              (90,924
              )Gain
                  on extinguishment of convertible debentures
              
              
              —
              
              
              8,390,182Other
                  income, net
              
              
              5,454
              
              
              10,458Net
                  loss
              
              $
              (3,566,787
              )
              $
              (82,376
              )Basic
                  and diluted net loss per share
              
              $
              (0.03
              )
              
              —Weighted
                  average shares used in computing basic and diluted net loss per
                  share
              
              
              110,753,889
              
              
              26,687,472


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




-
          5 -


**DOV
      PHARMACEUTICAL, INC.**


**CONDENSED
      STATEMENTS OF CASH FLOWS**




**Three Months Ended March 31,****2008**
            
            **2007**(unaudited)**Cash
                flows from operating activities**Net
                loss
            
            $
            (3,566,787
            )
            $
            (82,376
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Gain
                on debt extinguishment
            
            
            —
            
            
            (8,390,182
            )Non-cash
                amortization of premium paid on marketable securities
            
            
            —
            
            
            (27,718
            )Depreciation
            
            
            170,620
            
            
            74,389Amortization
                of deferred credits
            
            
            —
            
            
            (29,236
            )Non-cash
                compensation charges
            
            
            141,970
            
            
            5,897,401Changes
                in operating assets and liabilities:Prepaid
                other expenses and other current assets
            
            
            387,927
            
            
            1,726,343Prepaid
                rent and deferred credits
            
            
            (3,833,002
            )
            
            —Accounts
                payable
            
            
            154,891
            
            
            (194,317
            )Accrued
                expenses
            
            
            (194,816
            )
            
            (2,106,003
            )Net
                cash used in operating activities
            
            
            (6,739,197
            )
            
            (3,131,699
            )**Cash
                flows from investing activities**Purchases
                of marketable securities
            
            
            —
            
            
            (33,389,695
            )Sales
                of marketable securities
            
            
            400,000
            
            
            25,475,910Release
                of restricted cash for property lease
            
            
            4,211,109
            
            
            —Net
                cash provided by (used in) investing activities
            
            
            4,611,109
            
            
            (7,913,785
            )**Cash
                flows from financing activities**Redemption
                of convertible debentures
            
            
            —
            
            
            (17,779,458
            )Net
                cash used in financing activities
            
            
            —
            
            
            (17,779,458
            )Net
                decrease in cash and cash equivalents
            
            
            (2,128,088
            )
            
            (28,824,942
            )Cash
                and cash equivalents, beginning of period
            
            
            9,236,449
            
            
            35,088,467Cash
                and cash equivalents, end of period
            
            $
            7,108,361
            
            $
            6,263,525





**NON-CASH
      FINANCING ACTIVITIES**





On
      March
      15, 2007 the Company exchanged $67.5 million in principal amount of its 2.5%
      convertible subordinated debentures for (i) 439,784 shares
      of
      its series C convertible preferred stock with an estimated value of $38.1
      million, (ii) 100,000 shares of series D convertible preferred stock with an
      estimated value of $7.5 million, and (iii) cash of $13.5 million. In addition,
      the Company issued warrants to purchase up to 30,000,000 shares of common stock
      at a price of $0.53 per share, having an estimated valued of $4.6 million,
      to
      the holders of its common stock. All
      shares of the series C convertible preferred stock issued in connection with
      the
      Exchange Offer were converted into a total of 84,010,232 shares of common stock
      on June 11, 2007.




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




-
          6 -


**DOV
      PHARMACEUTICAL, INC.**


**NOTES
      TO UNAUDITED CONDENSED FINANCIAL STATEMENTS**





**1.
      The Company**





**Organization**





DOV
      Pharmaceutical, Inc. (“DOV” or the “Company”) was incorporated in
      May 1995 in New Jersey and reincorporated in Delaware in November 2000.





DOV
      is a
      biopharmaceutical company focused on the discovery, in-licensing and development
      of novel drug candidates for central nervous system disorders. The Company
      has
      product candidates in various stages of clinical development. The Company has
      established strategic alliances with select partners to access their unique
      technologies and their commercialization capabilities. The Company operates
      principally in the United States but is currently conducting a clinical study
      outside of the United States.





**2.** **Liquidity/Going
      Concern**





The
      Company estimates that it has sufficient cash and cash equivalents to fund
      operations through the end of 2008 and perhaps as long as early 2009. There
      are
      a number of circumstances, however, which could result in the Company needing
      additional capital even sooner than anticipated, such as unexpected costs
      associated with a Phase II clinical trial that is currently being conducted
      in
      Eastern Europe. The Company intends to continue to actively seek additional
      capital in 2008 through public or private financing or collaborative agreements,
      however, there is no assurance that such financing will be obtained on
      acceptable terms, if at all. These matters raise substantial doubt over the
      Company’s ability to continue as a going concern.





**3.
      Significant Accounting Policies**





**Basis
      of Presentation**





The
      financial statements are presented on the basis of accounting principles that
      are generally accepted in the United States for interim financial information
      and in accordance with the instructions of the Securities and Exchange
      Commission (“SEC”) on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,
      they do not include all the information and footnotes required by accounting
      principles generally accepted in the United States for complete financial
      statements. In the opinion of management, these financial statements include
      all
      adjustments (consisting only of normal recurring adjustments) necessary for
      a
      fair statement of the financial position, results of operations and cash flows
      for the periods presented.





The
      results of operations for the interim periods shown in this report are not
      necessarily indicative of results expected for the full year or any future
      period. The financial statements should be read in conjunction with the audited
      financial statements and related notes for the year ended December 31, 2007,
      included in the Company’s Annual Report on Form 10-K as filed with the SEC on
      March 31, 2008.





Certain
      prior period amounts have been reclassified to conform to the current period
      presentation.





**Use
      of Estimates**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United
      States requires
      management to make certain estimates and assumptions that can affect the
      reported amounts of assets, liabilities, revenues, earnings, financial position
      and various disclosures. Significant estimates have included the value of
      convertible preferred stock and warrants issued in the Company’s Exchange Offer
      as described elsewhere herein, the value of investments, the valuation allowance
      recorded for deferred tax assets and the development period for the Company’s
      products. Actual results could differ from these estimates and the differences
      could be material.





**Prepaid
      Rent and Deferred Credit**





In
      February 2008, the Company renegotiated its lease on its operating facility
      by
      reducing the expiration of the term to January 2009. In exchange, the Company
      agreed to release to the landlord the $4.2 million restricted cash previously
      held as collateral for the lease. Deferred
      credits include the tenant allowance received from DOV’s landlord and the
      straight-lining of future rent escalations under the operating lease agreement.
      Both of these items were being amortized over the life of the lease. This
      transaction resulted in the offset of the deferred credits and the establishment
      of a net prepaid rent of $1.7 million which will be amortized through the
      remaining lease life, or January 2009. In addition, remaining balances of
      leasehold improvements will be amortized over the revised remaining lease life.


-
          7 -




**Net
      Loss Per Share**





Basic
      and
      diluted net loss per share has been computed using the weighted-average number
      of shares of common stock outstanding during the period. The Company has
      excluded the shares issuable on conversion of its series C and series D
      convertible preferred stock, outstanding options, warrants and restricted stock
      units to purchase common stock from the calculation of diluted net loss per
      share, as such securities are anti-dilutive as indicated in the table
      below.





**Three Months Ended March 31,****2008**
            
            **2007**(Unaudited)Net
                loss
            
            $
            (3,566,787
            )
            $
            (82,376
            )Basic
                and diluted:Weighted
                -average shares used in computing basic and diluted net loss per
                share
            
            
            110,753,889
            
            
            26,687,472Basic
                and diluted net loss per share
            
            $
            (0.03
            )
            
            —Anti-dilutive
                securities not included in basic and diluted net loss per share
                calculation:Series
                C convertible preferred stock
            
            
            —
            
            
            84,027,426Series
                D convertible preferred stock
            
            
            19,102,612
            
            
            19,102,612Options
            
            
            14,361,896
            
            
            4,210,686Warrants
            
            
            29,792,842
            
            
            375,296Restricted
                stock units
            
            
            737,500
            
            
            —63,994,850
            
            
            107,716,020




**Concentration
      of Credit Risk**





Cash
      and
      cash equivalents are invested in deposits with financial institutions. The
      Company has not experienced any losses on its deposits of cash and cash
      equivalents. Management believes that the financial institutions are financially
      sound and, accordingly, minimal credit risk exists. Approximately $6.9 million
      of the Company's cash balance was uninsured at March 31, 2008.





**Recent
      Accounting Pronouncements**





In
      February 2007, the FASB issued SFAS No. 159 which permits entities to choose
      to
      measure many financial instruments and certain other items at fair value. The
      objective is to improve financial reporting by providing entities with the
      opportunity to mitigate volatility in reported earnings caused by measuring
      related assets and liabilities differently without having to apply complex
      hedge
      accounting provisions. The Company adopted SFAS No. 159 on January 1, 2008.
      The
      adoption of this statement did not have a material impact on its financial
      position or results of operations.




In
      June
      2007, the FASB ratified EITF 07-03, " *Accounting
      for Nonrefundable Advance Payments for Goods or Services to Be Used in Future
      Research and Development Activities* ",
      which
      requires nonrefundable advance payments for future research and development
      activities to be capitalized and recognized as an expense as the goods are
      delivered or services are performed. The Company adopted EITF-07-03 on January
      1, 2008. The adoption of EITF 07-03 did not have a material impact on the
      Company’s financial position or results of operations.





Refer
      to
      Item 2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations for additional information regarding recent accounting
      pronouncements.


-
          8 -




**Income
      Taxes**





In
      July
      2006, the FASB issued FASB Interpretation No.48 “Accounting for Uncertainty in
      Income Taxes - an interpretation of FASB Statement No. 109” (“FIN 48”), which
      clarifies the accounting and disclosure for uncertainty in tax positions, as
      defined. FIN 48 seeks to reduce the diversity in practices associated with
      certain aspects of recognition and measurement related to accounting for income
      taxes. The Company adopted the provisions of FIN 48 as of January 1, 2007,
      and
      has analyzed its filing positions in all open tax years in jurisdictions where
      it may be obligated to file returns. The Company has identified its Federal
      tax
      return and its state tax return in New Jersey as “major” tax jurisdictions, as
      defined. The Company believes that its income tax filing position and deductions
      will be sustained on audit and does not anticipate any adjustments that will
      result in a material change to its financial position. Therefore, no reserves
      for uncertain income tax positions have been recorded pursuant to FIN 48. In
      addition, the Company did not record a cumulative effect adjustment related
      to
      the adoption of FIN 48. The
      Company’s policy is to recognize interest and/or penalties related to income tax
      matter in income tax expense. The Company had no accrual for interest or
      penalties at March 31, 2008. As of January 1, 2007 the Company had no
      unrecognized tax benefit and there was no significant change during the three
      months ended March 31, 2008. In addition, future changes in unrecognized tax
      benefit will have no impact on the effective tax rate due to the existence
      of
      the valuation allowance.





Since
      its
      inception, the Company has generated net operating losses (“NOLs”) for tax
      purposes and to date has not utilized its NOLs to offset income tax liabilities.
      Hence all prior tax return years of the Company remain open for audit
      purposes.




**4.
      Stock-Based Compensation**





**2000
      Stock Option and Grant Plan**




The
      Company’s 2000 Stock Option and Grant Plan (the “2000 Plan”) was adopted by the
      Company’s board of directors on November 18, 2000, was amended and restated
      several times through May 30, 2006. Under the 2000 Plan, the Company has granted
      options and restricted stock, or RSAs, to certain employees and non-employee
      advisors. The 2000 Plan provides the Company’s board of directors with the
      discretion to accelerate exercisability of any award. In May 2006, the Company
      amended the 2000 Plan providing for the full acceleration and vesting of all
      outstanding options and RSAs immediately prior to a change of control of the
      Company. This change did not impact the fair value of the options and did not
      impact expense recognized under SFAS 123(R). The Exchange Offer completed on
      March 15, 2007 discussed in Note 6 below constituted a change of control under
      the 2000 Plan and all outstanding options issued prior to January 2007 and
      restricted stock awards were immediately accelerated pursuant to the terms
      of
      the 2000 Plan. As a result, the Company recorded unrecognized compensation
      expense of $5.9 million for certain outstanding awards that were accelerated
      in
      the first quarter of 2007.




**2007
      Stock Award and Incentive Plan**




The
      Company’s board of directors adopted the Company’s 2007 Stock Award and
      Incentive Plan (“the 2007 Plan”) on June 15, 2007. The 2007 Plan was
      subsequently approved by the Company’s stockholders on July 30, 2007. The 2007
      Plan replaced the 2000 Plan and is administered by the compensation committee
      of
      the board of directors. The 2007 Plan authorizes a broad range of awards giving
      greater flexibility to implement equity awards. The remaining available shares
      under the 2000 Plan are available under the 2007 Plan as well as shares covered
      by any forfeited awards under the 2000 Plan. The 2007 Plan also includes an
      “evergreen” provision, which provides for automatic annual increases in the
      number of shares reserved under the 2007 plan equal to 3.5% of the total
      outstanding common stock of the Company at the end of each fiscal year, plus
      3.5% of any increase in the number of outstanding shares of common stock during
      the year, provided that these increases may not add shares to the extent that
      the aggregate added under the evergreen provision would exceed 20% of the then
      outstanding class of common stock. As of March 31, 2008, there were
      7.1 **** million
      shares available for issuance under the 2007 Plan.


-
          9 -




**Options**
            
            **Weighted Average**
              **Options Exercise**
              **Price**
            
            **Aggregate Intrinsic
                Value (millions)**Options
                Outstanding, December 31, 2007
            
            
            15,162,471
            
            $
            2.06Granted
            
            
            —Exercised
            
            
            —Forfeited
            
            
            800,575
            
            
            6.46Options
                Outstanding, March 31, 2008
            
            
            14,361,896
            
            
            1.82
            
            
            —Options
                Exercisable, March 31, 2008
            
            
            3,152,228
            
            
            7.12
            
            
            —





The
      total
      intrinsic value is calculated as the difference between the exercise price
      of
      the underlying awards and the quoted price of our common stock for the options
      that were in-the-money as of March 31, 2008. The following is a summary of
      outstanding stock options at March 31, 2008:




**Options
                Outstanding as of**
              **March
                31, 2008**
            
            **Options
                Exercisable as of**
              **March
                31, 2008****Weighted
                Average Remaining Contractual**
              **Life**
            
            **Number
                Outstanding**
            
            **Weighted
                Average Exercise**
              **Price**
            
            **Weighted
                Average Remaining Contractual Life**
            
            **Number
                Exercisable**
            
            **Weighted
                Average Exercise**
              **Price**Price
                range $0.26 - $0.39
            
            
            9.35
                years
            
            
            11,280,168
            
            $
            0.33
            
            
            9.35
                years
            
            
            70,500
            
            $
            0.39Price
                range$0.40
                - $10.80
            
            
            5.12
                years
            
            
            2,049,603
            
            
            3.01
            
            
            5.12
                years
            
            
            2,049,603
            
            
            3.01Price
                range $10.81 - $21.20
            
            
            6.56
                years
            
            
            1,032,125
            
            
            15.76
            
            
            6.56
                years
            
            
            1,032,125
            
            
            15.7614,361,896
            
            
            
            
            
            
            
            
            3,152,228





RSU
      activity was as follows:




**RSUs**
            
            **Weighted Average**
              **Grant Date Fair**
              **Value**Outstanding,
                December 31, 2007
            
            
            920,000
            
            $
            0.20Granted
            
            
            —
            
            
            —Exercised
            
            
            —
            
            
            —Forfeited
            
            
            182,500
            
            
            0.19RSUs
                Outstanding, March 31, 2008
            
            
            737,500
            
            
            0.20RSUs
                Exercisable, March 31, 2008
            
            
            —
            
            
            —





**5.
      Research and Development Expense**





Research
      and development costs are expensed when incurred and include allocations for
      payroll and related costs and other corporate overhead. The following represents
      amounts included in research and development expense for the periods
      indicated:





**Three Months Ended March 31,****2008**
            
            **2007**(Unaudited)Payroll
                related and associated overhead
            
            $
            790,852
            
            $
            5,110,889Clinical
                and preclinical development costs and manufacturing
                supplies
            
            
            886,437
            
            
            1,593,834Professional
                fees
            
            
            209,802
            
            
            154,421Total
                research and development expense
            
            $
            1,887,091
            
            $
            6,859,144




-
          10 -





**6.
      Convertible Subordinated Debentures and Equity Issuance**




In
      December 2004 and January 2005, the Company completed a private placement of
      $80.0 million in aggregate principal amount of 2.5% convertible subordinated
      debentures due January 15, 2025, of
      which
      $70.0 million in aggregate principal amount remained outstanding as of December
      31, 2006 and none remained outstanding as of December 31, 2007 and March 31,
      2008.





In
      March
      2007, the Company consummated the Exchange Offer pursuant to which $67.5 million
      in principal amount of its convertible subordinated debentures were exchanged
      for (i) 439,784 shares of series C, (ii) 100,000 shares of series D convertible
      preferred stock, and (iii) $14.3 million in cash, which included accrued
      interest of $843,000. Additionally, the $2.5 million in principal amount of
      debentures that remained outstanding after the consummation of the Exchange
      Offer was repaid for $2.6 million (an amount equal to unpaid principal plus
      accrued interest). On June 11, 2007, the 439,784 shares of series C convertible
      preferred stock issued in connection with the exchange offer were converted
      into
      84,010,232 shares of common stock. In addition, on May 24, 2007, the Company
      distributed to holders of its common stock additional warrants to purchase
      29,417,546 shares of its common stock at an exercise price of $0.523 per share.
      The warrants are exercisable until December 31, 2009, unless sooner
      redeemed.




The
      Exchange Offer has been recorded pursuant to SFAS No. 15, “Accounting by Debtors
      and Creditors for Troubled Debt Restructurings”. The difference between the
      amount of the face value of the debentures and the fair value of the assets
      given to the debenture holders in the Exchange Offer of $8.4 million was
      recorded as a gain on debt extinguishment in the first quarter of 2007. The
      fair
      value of the series C and the series D convertible preferred stock was estimated
      at $38.1 million and $7.5 million, respectively, with a significant amount
      of
      the value reflecting the value of the underlying common stock. The balance
      reflected for the series D convertible preferred stock is reduced by the
      attributable portion of the Exchange Offer expenses of $288,000 and the
      estimated value of the warrants to be issued to common shareholders of
      approximately $602,000. The Company estimated the fair value of the warrants
      using the Black-Scholes methodology. The liability was revalued at the date
      that
      the registration statement for the shares underlying the warrants was deemed
      effective, or June 25, 2007. The liability value was reduced by $1.4 million
      and
      was recorded as other income during the quarter ended June 30, 2007. The
      warrants were then reclassified from a liability to equity and, as such, the
      value is reflected in additional paid in capital.





*Terms
      of Series C Preferred Stock.* The
      439,784 shares of series C ** convertible
      preferred stock were entitled to vote with the common stock on an as-converted
      basis and had certain class voting rights. The series C had an initial
      liquidation preference of $100 per share and was convertible into 191.02612
      shares of common stock per share. All the series C convertible preferred stock
      was converted into 84,010,232 shares of common stock on June 11,
      2007.





*Terms
      of Series D Preferred Stock.* The
      100,000 shares of series D convertible preferred stock have no voting rights
      and
      no liquidation preference. The series D convertible preferred stock is
      convertible but may not convert into common stock if such conversion would
      result in beneficial ownership in excess of 9.9% of the Company’s voting capital
      stock for the converting holder. Accordingly, the Series D convertible preferred
      stock is classified as temporary equity on the balance sheet. The series D
      is
      convertible into 191.02612 shares of common stock per share, or a total of
      19,102,612 shares as of March 31, 2008.




**7.
      Significant Agreements**





**XTL
      Agreement**





In
      January 2007, the Company entered into an agreement with XTL Biopharmaceuticals,
      Ltd. relating to its proprietary compound bicifadine. Under the agreement,
      the
      Company granted XTL the exclusive right to develop products incorporating
      bicifadine for the treatment of all human diseases, disorders and
      conditions, except for the treatment of symptoms in certain areas of women’s
      health. The Company received an up-front payment of $6.5 million, of which
      $5.0
      million was paid to Wyeth as a result of the acceleration of a milestone
      payment.  XTL later made an additional $1.0 million payment to the Company
      in February 2007.


-
          11 -


**Milestone
      and Royalty Monetization**





In
      May
      2008, the Company sold to a private investor 24.62% of the next milestone due
      to
      the Company under the XTL Agreement in the amount of $6.5 million, as well
      as a
      fractional interest in future royalties otherwise payable to the Company, for
      $1.6 million. Under certain circumstances following the achievement of the
      $6.5
      million milestone, the investor has the right to “put” the fractional royalty
      interest back to the Company for $1.6 million.





**ITEM
      2.**  **Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations**





You
      should read the following discussion of our results of operations and financial
      condition together with our unaudited financial statements and related notes
      contained elsewhere in this report.





**Liquidity/Going
      Concern**





We
      estimate that we have cash and cash equivalents sufficient to fund our
      operations through the end of 2008 and perhaps as long as early 2009. There
      are
      a number of circumstances, however, which could result in our needing additional
      capital sooner than anticipated, such as unexpected costs associated with the
      Phase II clinical trial we are currently conducting in Eastern Europe. We intend
      to seek additional capital in 2008 through public or private financing or
      collaborative agreements but there is no assurance that financing will be
      obtained. These matters raise substantial doubt over our ability to continue
      as
      a going concern.





**Executive
      Overview**





We
      are a
      biopharmaceutical company focused on the development of novel drug candidates
      for disorders of the central nervous system. Since our inception, we have
      incurred significant operating losses and we expect to continue to incur
      significant operating losses for the foreseeable future. As of March 31, 2008,
      we had an accumulated deficit of $202.8 million. We have historically depended
      upon equity and debt financings and license fee and milestone payments from
      our
      collaborative partners and licensees to fund our research and product
      development programs.





We
      anticipate that our quarterly results of operations will fluctuate for several
      reasons, including the timing and extent of research and development efforts
      and, the timing of milestone payments, if any, under our sublicense agreements.
      In pursuing our strategy, we have entered into strategic collaboration and/or
      license agreements. We currently have such agreements with XTL, Blue Note,
      Wyeth
      and Neurocrine.





In
      January 2007, we granted XTL the exclusive right to develop products
      incorporating our proprietary compound bicifadine in return for the right to
      receive future milestone payments and royalties based on product development
      and
      future sales, if any. We received an up-front payment of $6.5 million, of which
      $5.0 million was due to Wyeth, from whom we licensed bicifadine.  In
      addition, we paid Elan $500,000 pursuant to a prior agreement with them. XTL
      later made an additional $1.0 million payment to us upon transfer to XTL of
      an
      existing IND and certain program documentation relating to bicifadine. As the
      up-front payment was not associated with continuing obligations from us, the
      payment was recorded as revenue in the first quarter of 2007.





Our
      revenue consists primarily of license fees and milestone payments from our
      collaborative partners. We record revenue on an accrual basis when amounts
      are
      realized or realizable and earned. In accordance with EITF 00-21, we evaluate
      all new agreements to determine if they are a single unit of accounting or
      separable. Revenue received in advance of performance obligations, or in cases
      where we have a continuing obligation to perform services, is deferred and
      amortized over the performance period. Revenue from milestone payments that
      represent the culmination of a separate earnings process is recorded when the
      milestone is achieved. Contract revenues are recorded as the services are
      performed. License and milestone revenues are typically not consistent or
      recurring in nature. Our revenue has fluctuated from year-to-year and
      quarter-to-quarter and this will likely continue.





Our
      operating expenses consist primarily of license expense, costs associated with
      research and development and general and administrative costs associated with
      our operations. Research and development expense consists primarily of
      compensation and other related costs of our personnel dedicated to research
      and
      development activities, clinical and preclinical trial expenses, including
      toxicology studies, costs of manufacturing clinical and preclinical trial
      materials and professional fees related to clinical trials and patent strategy
      and prosecution. General and administrative expense consists primarily of the
      costs of our senior management, finance and administrative staff, business
      insurance and professional fees.


-
          12 -




**Exchange
      Offer**





In
      March
      2007, we consummated an exchange offer, or the “Exchange Offer”, pursuant to
      which $67.5 million in principal amount of DOV’s outstanding convertible
      subordinated debentures were exchanged for 439,784 shares of series C and
      100,000 shares of series D convertible preferred stock and $14.3 million in
      cash, which included $843,000 of accrued interest. Additionally, the $2.5
      million in principal amount of debentures that remained outstanding after the
      consummation of the Exchange Offer was repaid for $2.6 million (an amount equal
      to par plus accrued interest). ** Please
      refer to Note 6 to our financial statements included under Part I, Item 1 of
      this Form 10-Q *.*





**Stock-based
      Compensation**





We
      account for stock options under the provisions of Financial Accounting Standards
      No. 123 (revised 2004), “Share-Based Payment,” or SFAS 123(R), which requires
      the recognition of the fair value of stock-based compensation. Under the fair
      value recognition provisions for SFAS 123(R), stock-based compensation cost
      is
      estimated at the grant date based on the fair value of the awards expected
      to
      vest and recognized as expense ratably over the requisite service period of
      the
      award. We have used the Black-Scholes valuation model, or BSM, to estimate
      fair
      value of our stock-based awards, which requires various judgmental assumptions
      including estimating stock price volatility, forfeiture rates, and expected
      life. Our computation of expected volatility is based on our historical
      volatility. In addition, we consider many factors when estimating expected
      forfeitures and expected life, including types of awards, employee class and
      historical experience. If any of the assumptions used in the BSM model change
      significantly, stock-based compensation expense may differ materially in the
      future from that recorded in the current period.





We
      adopted SFAS 123(R) using the modified prospective method which requires the
      application of the accounting standard as of January 1, 2006. The Exchange
      Offer
      effected a technical change of control and, as a result, pursuant to the 2000
      Plan all outstanding options issued prior to January 2007 and restricted stock
      awards were immediately accelerated. Thus the Company recognized a non-cash
      compensation charge in the first quarter of 2007 of approximately $5.9
      million.




**Results
      of Operations**





*Three
      Months Ended March 31, 2008 and 2007*





*Revenue.* We had
      no revenue for the three months ended March 31, 2008. Our revenue for the first
      quarter of 2007 was comprised of the $7.5 million received from XTL pursuant
      to
      the licensing of bicifadine on January 15, 2007 and from reimbursement of
      certain costs incurred by us for services provided during the transition period
      following the consummation of the licensing transaction.




*Research
      and Development Expense.* Research
      and development expense decreased $5.0 million to $1.9 million for the first
      quarter of 2008 from $6.9 million for the comparable period in 2007.
      Approximately $4.1 million of the decrease related to decreased payroll and
      associated overhead expense. The first quarter of 2007 included non-cash stock
      compensation of $3.1 million related to the acceleration of certain stock
      options as a result of the change of control effected by the consummation of
      the
      Exchange Offer and $1.0 million of the decrease related to an overall reduction
      in personnel primarily due to the restructuring announced in January 2008.
      The
      remaining decrease in research and development expense was associated with
      decreased clinical development costs of $529,000 for bicifadine as XTL is now
      responsible for these costs and $558,000 for our preclinical programs, offset
      by
      an increase in expenses of $441,000 for DOV 21,947.





*General
      and Administrative Expense.* General
      and administrative expense decreased $2.7 million to $1.8 million for the first
      quarter of 2008 from $4.5 million for the comparable period in 2007. The
      decrease was primarily attributable to a decrease in payroll and related
      benefits as the first quarter of 2007 included non-cash stock compensation
      of
      $2.4 million related to the acceleration of certain stock options as a result
      of
      the change of control effected by the consummation of the Exchange Offer and
      the
      remainder related to an overall reduction in personnel.


-
          13 -




*License
      Expense* . License
      expense for the first quarter of 2007 was comprised of the $5.0 million paid
      to
      Wyeth and $500,000 paid to Elan in connection with the licensing of certain
      rights to bicifadine to XTL in January 2007. ** As
      these
      milestone payments were prior to FDA approval, the entire amount was expensed
      in
      the first quarter of 2007.





*Interest
      Income.* Interest
      income decreased $437,000 to $76,000 in the first quarter of 2008 from $513,000
      in the comparable period in 2007 due to lower average cash balances and a lower
      effective interest rate yield.





*Interest
      Expense.* Interest
      expense decreased $91,000 to $0 from $91,000 in the comparable period in 2007
      primarily due to the completion of the Exchange Offer which reduced our
      outstanding debentures to zero .  Please
      refer to Note 6 of our financial statements included
      under Part I, Item 1of this
      Form
      10-Q.




*Gain
      on Extinguishment of Convertible Debentures.* In
      March
      2007, we consummated the Exchange Offer. The exchange transaction falls under
      the guidance of SFAS No. 15, Accounting by Debtors and Creditors for Troubled
      Debt Restructurings. The difference between the amount of the face value of
      the
      debentures and the fair value of the assets given up in the exchange of $8.4
      million was recorded as a gain on debt extinguishment in the first quarter
      of
      2007. Please refer to Note 6 to our financial statements included
      under Part I, Item 1 of this Form 10-Q .





**Liquidity
      and Capital Resources**




At
      March
      31, 2008, our cash and cash equivalents and marketable securities totaled $7.1
      million as compared with $9.2 million at December 31, 2007. Although
      we estimate that we have remaining capital to fund operations through 2008
      and
      perhaps as long as early 2009, we will continue to have capital needs. There
      are
      a number of circumstances, however, which could result in our needing additional
      capital sooner than anticipated, such as unexpected costs associated with the
      Phase II clinical trial we are currently conducting in Eastern Europe. We intend
      to seek additional capital in 2008 through public or private financing or
      collaborative agreements however there is no assurance that financing will
      be
      obtained. These matters raise substantial doubt over our ability to continue
      as
      a going concern.





Net
      cash
      used in operations during the quarter ended March 31, 2008 amounted to $6.7 million
      as compared to $3.1 million in the same period of 2007. The
      increase in cash used in operations is primarily related to the fact that the
      2007 period included revenue from our sublicense deal with XTL and the remainder
      is due to prepayment of rent expense. In
      February 2008, we renegotiated our facility lease by reducing the term to
      January 2009. In exchange, we agreed to release to the landlord the $4.2 million
      restricted cash previously held as collateral for the lease and utilized a
      portion of this amount to prepay rent. Net
      non-cash expense related to stock-based compensation and depreciation and
      amortization expenses was $313,000 in the three months ended March 31, 2008
      and
      $5.9 million in the comparable period in 2007.





Net
      cash
      provided by investing activities during the quarter ended March 31, 2008 was
      $4.6 million as compared to $7.9 million used in investing activities during
      the
      same period in 2007. This fluctuation resulted primarily from the timing
      differences in investment purchases, sales and maturities and the fluctuations
      in our portfolio mix between cash equivalents and short-term investment holdings
      and the release of the restricted cash in connection with our lease amendment. In
      February 2006, we committed to a ten-year operating lease for a 133,686 square
      foot facility in Somerset, New Jersey which has served as our corporate
      headquarters and principal place of business since June 2006. In connection
      with
      this lease, we restricted $4.2 million to serve as collateral for our
      performance under the lease. Effective February 25, 2008, we entered into an
      amendment to this lease and in connection with this amendment we released the
      $4.2 million restricted cash.





Net
      cash
      used in financing activities during the quarter ended March 31, 2008 was $0 as
      compared to $17.8 million in the comparable period in 2007. In
      March
      2007, we consummated the Exchange Offer pursuant to which $67.5 million in
      principal amount of our convertible subordinated debentures were exchanged
      for
      439,784 shares of series C and 100,000 shares of series D convertible preferred
      stock and $14.3 million in cash, which included $843,000 of accrued interest
      which is not classified as a financing activity. Additionally, the $2.5 million
      in principal amount of Debentures that remained outstanding after the
      consummation of the Exchange Offer was repaid for $2.6 million (an amount equal
      to par plus accrued interest). ** The
      Company incurred approximately $1.8 million for costs related to the Exchange
      Offer.


-
          14 -




**Factors
      That May Affect Future Financial Condition and Liquidity**





We
      believe that our existing cash and cash equivalents will be sufficient to fund
      our anticipated operating expenses and capital requirements through the end
      of
      2008 and perhaps as long as early 2009. Our future capital uses and requirements
      depend on numerous factors, including:




·
            our
                progress with research and development;·
            our
                ability to maintain and establish, and the scope of, collaborations
                that
                finance research and development on our clinical
                candidates;


·
            the
                progress and success of clinical trials and preclinical studies of
                our
                product candidates;·
            the
                costs and timing of obtaining, enforcing and defending our patent
                and
                intellectual rights; and


·
            the
                costs and timing of regulatory
                approvals.





In
      addition to the foregoing, our future capital uses and requirements are also
      dependent in part on the ability of our licensees and collaborative partners
      to
      meet their obligations to us, including the fulfillment of their development
      and
      commercialization responsibilities in respect of our product candidates. Our
      sublicensee partners, XTL, Blue Note and Neurocrine, may encounter conflicts
      of
      interest, changes in business or clinical strategy, or they may acquire or
      develop rights to competing products, all of which could adversely affect their
      ability or willingness to fulfill their obligations to us and, consequently,
      require us to satisfy, through the commitment of additional funds or personnel
      or both, any shortfalls in their performance.





To
      meet
      future capital requirements, we will need to raise additional funds through
      equity or debt financings, collaborative agreements with corporate partners
      or
      from other sources. If adequate funds are not available, or not available on
      an
      acceptable basis, we will be required to curtail or delay significantly our
      remaining product development programs. In addition, future milestone payments
      under some of our collaborative or license agreements are contingent upon our
      meeting particular research or development goals. The amount and timing of
      future milestone payments are contingent upon the terms of each collaborative
      or
      license agreement. Milestone performance criteria are specific to each agreement
      and based upon future performance. Therefore, we are subject to significant
      variation in the timing and amount of our revenues, milestone expenses and
      results of operations from period to period.





**Contractual
      Obligations**





Future
      minimum payments for all contractual obligations for years subsequent to March
      31, 2008, are as follows:





**Payments
                Due by Period****Less than**
              **1 Year**
            
            **1- 3 Years**
            
            **3- 5 Years**
            
            **More Than**
              **5 Years**
            
            **Total**Operating
                leases(1)
            
            $
            889,776
            
            $
            1,728
            
            $
            —
            
            $
            —
            
            $
            891,504Other
                contractual liabilities(2)
            
            
            112,912
            
            
            —
            
            
            —
            
            
            —
            
            
            112,912Total
            
            $
            1,002,688
            
            $
            1,728
            
            $
            —
            
            $
            —
            
            $
            1,004,416





(1)
      In
      February 2008, we renegotiated our facility lease included in the operating
      lease line by reducing the term to January 2009 as well as the monthly rent
      payments. In exchange, we agreed to release to the landlord the $4.2 million
      letter of credit previously held as collateral for the lease. Thus the remaining
      lease payments due under the amended lease as of March 31, 2008 total
      $867,000.





(2)
      The
      table excludes legal expenses to be reimbursed on behalf of a board member
      related to an inquiry by regulatory authorities into trading in our common
      stock
      in April 2006. While the board of directors has granted contractual
      indemnification, the amounts are neither certain nor quantifiable at this time.




The
      table
      also excludes any severance or termination payments that would be due to certain
      of our employees under their employment contracts should they be terminated
      without cause or terminate following a change of control, as these terms are
      defined in each such employee’s agreement, prior to the expiration of each
      employee’s contract term because the amounts are not determinable at this time.
      As of March 31, 2008, the maximum aggregate amount of severance or termination
      payments that may be payable under these employment agreements is $2.2 million.
      Our employment agreements with our current and former executive officers are
      on
      file with the SEC and available at www.sec.gov.


-
          15 -





The
      table
      above also excludes future milestones and royalties (as summarized in the table
      below) that may be owed to Wyeth, Elan and Biovail, under terms of existing
      agreements as payments are contingent upon future events. The table does not
      reflect the amounts that may be received from our collaborative partners with
      respect to these payments. We do not expect to pay any royalties or milestones
      under these agreements in 2008.




**Milestone
                  Payments****NDA Filing**
              
              **NDA Approval or**
                **Marketing**
                **Authorization**
              
              **Upon License or**
                **Introduction to**
                **Market**
              
              **Royalty/Payments**
                **on Net Sales, if**
                **Any**Bicifadine
              
              
              —
              
              $
              4,500,000
              
              $
              500,000
              
              
              10.0
              %DOV 21,947(1)
              
              
              —
              
              $
              2,250,000
              
              
              —
              
              
              —DOV
                  102,677(1)
              
              
              —
              
              $
              2,250,000
              
              
              —
              
              
              —DOV
                  216,303(1)
              
              
              —
              
              $
              4,500,000
              
              
              —
              
              
              3.5
              %DOV
                  Diltiazem
              
              
              —
              
              $
              3,000,000
              
              
              —
              
              
              Up
                  to $7.5 millionOcinaplon
              
              $
              2,500,000
              
              $
              4,500,000
              
              $
              2,000,000
              
              
              3.5
              %




(1)
      We
      are obligated to pay milestones upon NDA (or equivalent) approval in the U.S.,
      Europe or Japan, but only if such milestone becomes payable prior to payment
      of
      the $4.5 million milestone payable on an NDA (or equivalent) approval for DOV
      216,303. Any milestone payments made with respect to DOV 21,947 or DOV 102,677
      reduce, dollar-for-dollar, our $4.5 million milestone obligation for DOV
      216,303.





**Recent
      Accounting Pronouncements**


In
      February 2007, the FASB issued SFAS No. 159 which permits entities to choose
      to
      measure many financial instruments and certain other items at fair value. The
      objective is to improve financial reporting by providing entities with the
      opportunity to mitigate volatility in reported earnings caused by measuring
      related assets and liabilities differently without having to apply complex
      hedge
      accounting provisions. SFAS No. 159 is effective as of the beginning of an
      entity’s first fiscal year that begins after November 15, 2007, which
      for us was as of the beginning of fiscal 2008. The adoption of this
      Statement did not have a material impact on the company's financial position
      or
      results of operations.




In
      June 2007, the FASB ratified EITF 07-03, " *Accounting
      for Nonrefundable Advance Payments for Goods or Services to Be Used in Future
      Research and Development Activities* ",
      which
      requires nonrefundable advance payments for future research and development
      activities to be capitalized and recognized as an expense as the goods are
      delivered or services are performed. Earlier application is not permitted.
      EITF 07-03 is effective for fiscal years beginning after December 15,
      2007, and interim periods within those fiscal years. The adoption of
      EITF 07-1 did not have a material impact on our financial position or
      results of operations.




In
      September 2007, the FASB ratified Emerging Issues Task Force Issue No. 07-1
      " *Accounting
      for Collaborative Agreements* ",
      ("EITF 07-1"). EITF 07-1 defines collaborative agreements as
      contractual arrangements that involve a joint operating activity. These
      arrangements involve two (or more) parties who are both active participants
      in
      the activity and that are exposed to significant risks and rewards dependent
      on
      the commercial success of the activity. EITF 07-1 provides that a company
      should report the effects of adoption as a change in accounting principle
      through retrospective application to all periods and requires additional
      disclosures about a company's collaborative arrangements. EITF 07-1 is
      effective for us as of January 1, 2009. The adoption of EITF 07-1 is
      not expected to have a material impact on our financial position or results
      of
      operations.




In
      December 2007, the FASB issued SFAS No. 141(R) " *Business
      Combinations* "
      ("SFAS 141(R)"). SFAS 141(R) changes several underlying principles in
      applying the purchase method of accounting. Among the significant changes,
      SFAS 141(R) requires a redefining of the measurement date of a business
      combination, expensing direct transaction costs as incurred, capitalizing
      in-process research and development costs as an intangible asset and recording
      a
      liability for contingent consideration at the measurement date with subsequent
      re-measurements recorded in the results of operations. SFAS 141(R) also
      requires that costs for business restructuring and exit activities related
      to
      the acquired company will be included in the post-combination financial results
      of operations and also provides new guidance for the recognition and measurement
      of contingent assets and liabilities in a business combination. In addition,
      SFAS 141(R) requires several new disclosures, including the reasons for the
      business combination, the factors that contribute to the recognition of
      goodwill, the amount of acquisition related third-party expenses incurred,
      the
      nature and amount of contingent consideration, and a discussion of pre-existing
      relationships between the parties. SFAS 141(R) is effective for the Company
      as of January 1, 2009. SFAS 141(R) will only have an impact on our
      financial position or results of operations if we enter into a business
      combination.


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In
      December 2007, the FASB issued SFAS No. 160 " *Noncontrolling
      Interests in Consolidated Financial Statements, an Amendment of ARB
      No. 51* ",
      ("SFAS 160"). SFAS 160 establishes accounting and reporting standards
      for the noncontrolling interest in a subsidiary and for the deconsolidation
      of a
      subsidiary. SFAS 160 requires noncontrolling interests in subsidiaries
      initially to be measured at fair value and classified as a separate component
      of
      equity. SFAS 160 also requires a new presentation on the face of the
      consolidated financial statements to separately report the amounts attributable
      to controlling and non-controlling interests. SFAS 160 is effective for the
      Company as of January 1, 2009. Management is currently evaluating the
      impact of adopting this Statement, but we do not expect it to have a material
      impact on our financial position or results of operations.





In
      March
      2008, the Financial Accounting Standards Board (FASB) issued Statement of
      Financial Accounting Standards (SFAS) 161, *Disclosures
      about Derivative Instruments and Hedging Activities -an amendment of SFAS
      133* .
       SFAS 161 seeks to improve financial reporting for derivative instruments
      and hedging activities by requiring enhanced disclosures regarding the impact
      on
      financial position, financial performance, and cash flows.  To achieve this
      increased transparency, SFAS 161 requires: (1) the disclosure of the fair value
      of derivative instruments and gains and losses in a tabular format; (2) the
      disclosure of derivative features that are credit risk-related; and (3)
      cross-referencing within the footnotes.  SFAS 161 is effective for us on
      January 1, 2009.  We are in the process of evaluating the new disclosure
      requirements under SFAS 161.





**ITEM
      3.**  **Quantitative
      and Qualitative Disclosures About Market Risks**





To
      date,
      we have invested our cash balances with substantial financial institutions.
      In
      the future, the primary objective of our investment activities will be to
      maximize the income we receive from our investments consistent with preservation
      of principal and minimum risk. Some of the securities that we invest in may
      have
      market risk. This means that a change in prevailing interest rates may cause
      the
      principal amount of the investment to fluctuate. To minimize this risk in the
      future, we intend to maintain our portfolio of cash equivalents and investments
      in a variety of securities, including commercial paper, money market funds,
      government and non-government debt securities and corporate obligations. Due
      to
      the short holding period of these types of investments, we have concluded that
      at the present time we do not have a material financial market risk
      exposure.





**ITEM
      4** **T.**  **Controls
      and Procedures**





As
      required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation
      of the effectiveness of the design and operation of our disclosure controls
      and
      procedures as of the end of the period covered by this report. Management
      has used the framework set forth in Internal Control - Integrated Framework
      published by the Committee of Sponsoring Organizations of the Treadway
      Commission, known as COSO, to evaluate the effectiveness of the Company's
      internal control over financial reporting. This
      evaluation was carried out by management as of March 31, 2008, under the
      supervision and with the participation of our chief executive officer. Based
      upon that evaluation, our chief executive officer concluded that our disclosure
      controls and procedures are effective.





There
      was
      no significant change in our internal control over financial reporting that
      occurred during our most recently completed fiscal quarter that has materially
      affected, or is reasonably likely to materially affect, our internal control
      over financial reporting.


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**PART
      II — OTHER INFORMATION**





**ITEM
      1.**  **Legal
      Proceedings**





From
      time
      to time we may become involved in litigation incidental to the conduct of our
      business. We are not currently a party to any material legal
      proceedings.





**ITEM
      1A. Risk Factors**





The
      nature of our business, particularly when combined with our extremely limited
      financial resources, subjects us to a number of significant risks which affect
      our ability to execute our business strategy and build our business. Some of
      the
      most significant challenges we presently face include the following:





·
            our
                need to raise substantial additional capital in order to fund
                operations;·
            our
                need to seek and evaluate strategic alternatives, including with
                respect
                to collaborations and partnerships for certain of our development
                programs
                and product candidates;





·
            the
                need to obtain and maintain all necessary patents, licenses and other
                intellectual property rights;





·
            the
                need to demonstrate the safety and efficacy of product candidates
                at each
                stage of development;





·
            our
                need to meet our development schedule for our product candidates,
                including with respect to drug supply and clinical trial initiation,
                enrollment and completion;





·
            the
                need to meet applicable regulatory standards and receive required
                regulatory approvals on our strategic partners’ anticipated time schedules
                or at all;





·
            our
                need to meet our obligations to our strategic partners so we can
                receive
                payment of milestones and royalties, if any, under our agreements
                with
                them; and





·
            our
                need to seek and evaluate strategic alternatives, including with
                respect
                to collaborations and partnerships for certain of our development
                programs
                and product candidates.





If
      we are
      unable to successfully deal with these and other challenges, for example if
      we
      fail to identify additional sources of capital in the very near term, our
      business, results of operations and financial condition would be harmed and
      the
      market value of our common stock would likely decline even further. You should
      refer to “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year
      ended December 31, 2007, for a more detailed discussion of some of the
      challenges and the associated risks we face.




**ITEM
      6.**  **Exhibits**





(a)
            Exhibits.





The
      following is a complete list of exhibits filed or incorporated by reference
      as
      part of this report.





Exhibit
      No.


10.60
            2007
              Stock Award and Incentive Plan 31.1
            Certification
                of Chief Executive Officer and Principal Financial Officer of DOV
                Pharmaceutical, Inc., pursuant to Rules 13a-14(a) and 15d-14(a),
                as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.





32
            Certification
                of Chief Executive Officer and Principal Financial Officer of DOV
                Pharmaceutical, Inc., pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.




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          18 -


**SIGNATURES**





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





DOVPHARMACEUTICAL,
                INC.Date:
                May 15, 2008
            By:
            /s/Barbara
                DuncanName:Barbara
                Duncan
              Title:Chief Executive Officer and Principal Financial OfficerDOVPHARMACEUTICAL,
              INC.Date:
                May 15, 2008
            By:
            /s/
                WILLIAM C. KALTNECKERName:William
                C. Kaltnecker
              Title:Chief Accounting Officer and
                Controller




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