SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


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

         For the quarterly period ended      MARCH 31, 2002
                                             ---------------

|_|      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
         OF THE SECURITIES EXCHANGE ACT OF 1934

         For the transition period from                   to
                                        -----------------    -------------------

                         Commission File Number 0-28674

                        CADUS PHARMACEUTICAL CORPORATION
             ------------------------------------------------------
             (Exact Name of Registrant as Specified on its Charter)

             Delaware                                        13-3660391
   -------------------------------                      --------------------
   (State of Other Jurisdiction of                      (I.R.S. Employer
   Incorporation or Organization)                       Identification No.)

   767 Fifth Avenue, New York, New York                        10153
 ----------------------------------------               --------------------
 (Address of Principal Executive Offices)                    (Zip Code)

Registrant's Telephone Number, Including Area Code            (212) 702-4315
                                                              --------------

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

                  Yes    X             No
                      -------             -------

The number of shares of registrant's common stock, $0.01 par value,  outstanding
as of April 30, 2002 was 13,144,040.

<PAGE>

                        CADUS PHARMACEUTICAL CORPORATION

                                      INDEX

                                                                        PAGE NO.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS                             3

              PART I - CONDENSED CONSOLIDATED FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements

         Condensed Consolidated Balance Sheets -- March 31, 2002
         (unaudited) and December 31, 2001 (audited)                          4

         Condensed Consolidated Statements of Operations --
         Three Months Ended March 31, 2002 and 2001 (unaudited)               5

         Condensed Consolidated Statements of Cash Flows --
         Three Months Ended March 31, 2002 and 2001 (unaudited)               6

         Notes to Condensed Consolidated Financial Statements
        (unaudited)                                                       7 - 8

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                              9 - 10

Item 3.  Quantitative and Qualitative Disclosures About Market Risk           10


                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                    10

Item 2.  Changes in Securities and Use of Proceeds                            10

Item 3.  Defaults Upon Senior Securities                                      10

Item 4.  Submission of Matters to a Vote of Security Holders                  10

Item 5.  Other Information                                                    10

Item 6.  Exhibits and Reports on Form 8K                                      11

SIGNATURES                                                                    12

EXHIBIT INDEX                                                                 13


                                        2
<PAGE>

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

Certain   statements  in  this   Quarterly   Report  on  Form  10-Q   constitute
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. Such forward-looking  statements involve known
and unknown risks,  uncertainties,  and other factors which may cause the actual
results,  performance, or achievements of the Company to be materially different
from any future  results,  performance or  achievements  expressed or implied by
such forward-looking statements.  Factors that could cause or contribute to such
differences  include,  but  are  not  limited  to,  technological  uncertainties
regarding  the  Company's  technologies,  uncertainties  regarding the Company's
future acquisition and in-licensing of technologies, the Company's capital needs
and uncertainty of future funding,  the Company's  history of operating  losses,
the Company's  dependence on proprietary  technology and the unpredictability of
patent protection,  intense  competition in the pharmaceutical and biotechnology
industries,  rapid  technological  development  that may result in the Company's
technologies  becoming  obsolete,  as  well as  other  risks  and  uncertainties
discussed in the Company's prospectus dated July 17, 1996.


                                        3
<PAGE>

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                        CADUS PHARMACEUTICAL CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                          MARCH 31,      DECEMBER 31,
                                                            2002             2001
                                                        ------------     ------------
                                                         (Unaudited)       (Audited)
<S>                                                     <C>              <C>
Current assets
  Cash and cash equivalents ........................    $ 24,877,869     $ 24,469,357
  License fee receivable ...........................         100,000          500,000
  Prepaid and other current assets .................          61,523           75,000
                                                        ------------     ------------
    Total current assets ...........................      25,039,392       25,044,357

Investment in other ventures .......................         166,296          165,614
Other assets, net ..................................         970,396          990,622
                                                        ------------     ------------
    Total assets ...................................    $ 26,176,084     $ 26,200,593
                                                        ============     ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities
  Accrued expenses and other current liabilities ...    $    138,983     $     95,032
  Arbitration settlement ...........................         750,000          750,000
                                                        ------------     ------------
    Total liabilities ..............................         888,983          845,032
                                                        ------------     ------------

Stockholders' equity
  Common stock .....................................         132,857          132,857
  Additional paid-in capital .......................      59,844,355       59,844,355
  Accumulated deficit ..............................     (34,390,036)     (34,321,576)
  Treasury stock ...................................        (300,075)        (300,075)
                                                        ------------     ------------
    Total stockholders' equity .....................      25,287,101       25,355,561
                                                        ------------     ------------
    Total liabilities and stockholders' equity .....    $ 26,176,084     $ 26,200,593
                                                        ============     ============
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                        4
<PAGE>

                        CADUS PHARMACEUTICAL CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                                  March 31,
                                                        -----------------------------
                                                            2002              2001
                                                        ------------     ------------
                                                         (Unaudited)      (Unaudited)
<S>                                                     <C>              <C>
License and maintenance fees .......................    $    100,000     $    100,000
                                                        ------------     ------------
    Total revenues .................................         100,000          100,000
                                                        ------------     ------------
Costs and expenses:
  General and administrative expenses ..............         263,710          241,266
  (Gain) loss of equity in other ventures ..........            (682)             186
                                                        ------------     ------------
    Total costs and expenses .......................         263,028          241,452
                                                        ------------     ------------
Operating loss .....................................        (163,028)        (141,452)
                                                        ------------     ------------

Other income:
  Interest income ..................................          94,568          294,700
  Net reimbursement of SIBIA litigation costs ......            --            125,616
                                                        ------------     ------------
    Total other income .............................          94,568          420,316
                                                        ------------     ------------

(Loss) income before income taxes ..................         (68,460)         278,864
Income taxes .......................................            --              6,000
                                                        ------------     ------------
    Net (loss) income ..............................    ($    68,460)    $    272,864
                                                        ============     ============
Basic and diluted (loss) income per share ..........    ($      0.01)    $       0.02
                                                        ============     ============

Weighted average shares of common stock
  outstanding -- basic and diluted .................      13,144,040       13,144,040
                                                        ============     ============
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                        5
<PAGE>

                        CADUS PHARMACEUTICAL CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                                            March 31,
                                                                  -----------------------------
                                                                      2001             2000
                                                                  ------------     ------------
                                                                   (Unaudited)      (Unaudited)
<S>                                                              <C>               <C>
Cash flows from operating activities
  Net (loss) income ..........................................    ($    68,460)    $    272,864
  Adjustments to reconcile net (loss) income
    to net cash provided by operating activities:
    Amortization of patent costs .............................          20,226           20,226
    (Gain) loss of equity in other ventures ..................            (682)             186
  Changes in assets and liabilities
    Decrease in license fees receivable ......................         400,000             --
    Decrease in prepaid and other current assets .............          13,477           35,334
    Increase in accrued expenses and other current liabilities          43,951           51,106
                                                                  ------------     ------------
Net cash provided by operating activities ....................         408,512          379,716
                                                                  ------------     ------------
Net increase in cash and cash equivalents ....................         408,512          379,716
Cash and cash equivalents -- beginning of period .............      24,469,357       24,383,352
                                                                  ------------     ------------
Cash and cash equivalents -- end of period ...................    $ 24,877,869     $ 24,763,068
                                                                  ============     ============
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                        6
<PAGE>

                        CADUS PHARMACEUTICAL CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note -- 1   ORGANIZATION AND BASIS OF PREPARATION

            The  information  presented  as of March 31,  2002 and for the three
            month period then ended, is unaudited,  but includes all adjustments
            (consisting  only of normal  recurring  accruals) that the Company's
            management  believes to be necessary  for the fair  presentation  of
            results for the periods presented.  Certain information and footnote
            disclosures  normally included in financial  statements  prepared in
            accordance  with  accounting  principles  generally  accepted in the
            United  States  of  America  have  been  omitted   pursuant  to  the
            requirements of the Securities and Exchange Commission, although the
            Company  believes that the  disclosures  included in these financial
            statements are adequate to make the information not misleading.  The
            December 31, 2001 balance  sheet was derived from audited  financial
            statements. These financial statements should be read in conjunction
            with the  Company's  annual  report on Form 10-K for the year  ended
            December 31, 2001.

            The consolidated  financial  statements  include the accounts of the
            Company and its wholly owned  subsidiary  Cadus  Technologies,  Inc.
            organized  in  December  2001.  All  inter-  company   balances  and
            transactions have been eliminated in consolidation.

            The results of operations for the three month period ended March 31,
            2002 are not  necessarily  indicative  of the results to be expected
            for the year ending December 31, 2002.

Note -- 2   NET (LOSS) INCOME PER SHARE

            For the three month  periods ended March 31, 2002 and 2001 basic net
            (loss)  income  per share is  computed  by  dividing  the net (loss)
            income by the weighted average number of common shares  outstanding.
            Diluted net (loss)  income per share is the same as basic net (loss)
            income per share since the inclusion of 609,309  shares of potential
            common  stock  equivalents  (stock  options  and  warrants)  in  the
            computation at March 31, 2002 would be anti-dilutive.

Note -- 3   LICENSING AGREEMENTS

            In  December  2001,  the  Company   licensed  its  yeast-based  drug
            discovery   technologies  on  a  non-exclusive   basis  to  a  major
            pharmaceutical  company. Under the licensing agreement,  the Company
            received  an  up-front  non-refundable  fee  of  $500,000  that  was
            recorded as revenue in the December 31, 2001 consolidated  statement
            of  operations  as the Company has no further  involvement  with the
            development of the product.  The Company received payment in January
            2002.  The  Company  will  receive an  additional  licensing  fee of
            $1,000,000  if the  licensee  achieves  a  research  milestone.  The
            licensee is entitled to use the technologies for five years from the
            date of the agreement if it makes such $1,000,000


                                        7
<PAGE>

                        CADUS PHARMACEUTICAL CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


            payment. If the $1,000,000 payment is not made by February 2003, the
            Company has the right to terminate the agreement. Following the
            initial five year term, the licensee may renew the license annually
            upon payment of an annual licensing fee of $250,000.

            In  February  2000,  Cadus  licensed  to OSI  Pharmaceuticals,  Inc.
            ("OSI"),  on a non-exclusive  basis,  its yeast-based drug discovery
            technologies,  including  various  reagents  and its library of over
            30,000 yeast strains, and its bioinformatics  software.  OSI paid to
            Cadus a license fee of $100,000 and an access fee of  $600,000.  OSI
            is also obligated to pay an annual maintenance fee of $100,000 until
            the  earlier  of  2010  or  the  termination  of the  license  and a
            supplemental license fee of $250,000 which was paid in December 2000
            after the lifting of the injunction obtained by SIBIA Neurosciences,
            Inc.  ("SIBIA")  and  recorded  as  license  fee  revenue.  OSI  may
            terminate the license at any time on 30 days prior  written  notice.
            During each of the  quarters  ended  March 31, 2002 and 2001,  Cadus
            recognized $100,000 of license revenue related to this agreement.

Note -- 4   ARBITRATION SETTLEMENT

            In  March  2002,  the  arbitrator  in  the  arbitration   proceeding
            commenced against Cadus by Philip N. Sussman, the former Senior Vice
            President,  Finance and Corporate  Development,  and Chief Financial
            Officer of Cadus,  ruled in favor of Mr.  Sussman  and  awarded  him
            approximately  $750,000 in severance pay, interest and attorneys and
            other  costs and fees.  A charge of  $750,000  was  recorded  in the
            consolidated statement of operations for the year ended December 31,
            2001.  The Company  expects to make a payment to Mr.  Sussman during
            the quarter ending June 30, 2002.

Note -- 5   ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT

            Statement of Financial Accounting Standards No. 144, "Accounting for
            the  Impairment  or Disposal of  Long-Lived  Assets"  ("SFAS  144"),
            addresses  financial  accounting and reporting for the impairment or
            disposal of long-lived  assets.  SFAS 144  supercedes  SFAS No. 121,
            "Accounting  for  the  Impairment  of  Long-Lived   Assets  and  for
            Long-Lived  Assets to Be Disposed Of" and is effective for financial
            statements  issued for fiscal  years  beginning  after  December 15,
            2001. There was no impact on the Company  financial  statements from
            the adoption of this statement on January 1, 2002.


                                        8
<PAGE>

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS

OVERVIEW

The  Company  was  incorporated  in  1992  and  until  July  30,  1999,  devoted
substantially  all of its resources to the  development and application of novel
yeast-based and other drug discovery technologies. On July 30, 1999, the Company
sold its drug discovery assets and ceased its internal drug discovery operations
and research efforts for collaborative partners.

The Company has incurred  operating losses in each year since its inception.  At
March 31, 2002, the Company had an accumulated  deficit of  approximately  $34.4
million.  The Company's losses have resulted  principally from costs incurred in
connection  with its research and  development  activities  and from general and
administrative costs associated with the Company's operations.  These costs have
exceeded the Company's  revenues and interest income. As a result of the sale of
its drug  discovery  assets and the  cessation  of its internal  drug  discovery
operations and research efforts for collaborative  partners,  the Company ceased
to have  research  funding  revenues  and  substantially  reduced its  operating
expenses.  The Company expects to generate  revenues in the future only if it is
able to license its technologies.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2002 AND MARCH 31, 2001

REVENUES

Revenues for the three months ended March 31, 2002 and 2001 were $100,000  which
is the annual maintenance fee from OSI.

COSTS AND EXPENSES

General and  administrative  expense  increased to $263,710 for the three months
ended March 31, 2002 from $241,266 for the same period in 2001. Patent costs and
professional  fees  increased by  approximately  $36,000 offset by a decrease in
insurance of approximately $8,000 and minor decreases in other expenses.

For the three months ended March 31, 2002 the Company  recognized a gain of $682
in its investment in Laurel Partners Limited Partnership.  The loss for the same
period in 2001 was $186.

OTHER INCOME

Interest  income for the three months ended March 31, 2002 was $94,568  compared
to interest  income of $294,700  in the same  period in 2001.  This  decrease is
attributable primarily to lower interest rates earned on invested funds.

Pursuant to a court order in the patent infringement  litigation with SIBIA, the
Company  received in February 2001 a $155,402  reimbursement of litigation costs
offset by legal costs incurred of $29,786.




                                        9
<PAGE>

NET (LOSS) INCOME

Net loss for the three months  ended March 31, 2002 was $68,460  compared to net
income of $272,864 for the same period in 2001.  This decrease can be attributed
primarily  to  decrease in interest  income and the net  reimbursement  of SIBIA
litigation costs received in 2001.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2002 the Company held cash and cash  equivalents  of $24.9 million.
The Company's working capital at March 31, 2002 was $24.2 million.

The Company believes that its existing capital resources, together with interest
income,  will be sufficient to support its  operations  through the end of 2003.
This  forecast  of the  period of time  through  which the  Company's  financial
resources  will be  adequate  to support  its  operations  is a  forward-looking
statement that may not prove accurate and, as such, actual results may vary. The
Company's  capital  requirements  may vary as a result of a number  of  factors,
including  the  transactions,  if any,  arising  from the  Company's  efforts to
acquire  technologies  or products or to acquire or invest in companies  and the
expenses of pursuing such transactions.

Item 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's earnings and cash flows are subject to fluctuations due to changes
in interest  rates  primarily  from its investment of available cash balances in
money  market funds with  portfolios  of  investment  grade  corporate  and U.S.
government securities.  The Company does not believe it is materially exposed to
changes in interest rates.  Under its current  policies the Company does not use
interest  rate  derivative  instruments  to manage  exposure  to  interest  rate
changes.

PART II --  OTHER INFORMATION

Item 1.     Legal Proceedings

            Nothing to report.

Item 2.     Changes in Securities and Use of Proceeds

            Nothing to report.

Item 3.     Defaults Upon Senior Securities

            Nothing to report

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

            Nothing to report

Item 5.     Other Information

            Nothing to report


                                       10
<PAGE>

Item 6.     Exhibits and Reports on Form 8-K.

            (a) Exhibits.

                None

            (b) Reports on Form 8-K.

                 None


                                       11
<PAGE>

                                   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.

                                       CADUS PHARMACEUTICAL CORPORATION
                                       (REGISTRANT)


Date: May 14, 2002                     By: /s/ Russell D. Glass
                                           -------------------------------------
                                           Russell D. Glass
                                           President and Chief Executive Officer
                                           (Authorized Officer and Principal
                                           Financial Officer)


                                       12
<PAGE>

                                  EXHIBIT INDEX


         There are no exhibits being filed as part of this  Quarterly  Report on
Form 10-Q.


                                       13