**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 September
      30, 2008





o
            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
      CORPORATION


(Exact
      Name of Registrant as Specified on its Charter)




Delaware
            
            13-3660391(State
                of Other Jurisdiction of Incorporation or
Organization)
            
            (I.R.S.
                Employer 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)
                702-4351




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 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
      definition of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12-b-2 of the Exchange Act). (Check
      one):





Large
                accelerated filero
            Accelerated
                fileroNon-accelerated
                filero
            Smaller
                reporting companyx(Do
                not check if a smaller reporting company)


Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12-b-2 of the Exchange Act).


Yes o No x





The
      number of shares of registrant’s common stock, $0.01 par value, outstanding as
      of October 31, 2008 was 13,144,040.





**CADUS
      CORPORATION**





**INDEX**


Page
                No.SPECIAL
                NOTE REGARDING FORWARD LOOKING STATEMENTS
            3PART
                I - CONDENSED CONSOLIDATED FINANCIAL INFORMATIONItem
                1.Condensed
                Consolidated Financial StatementsCondensed
                Consolidated Balance Sheets – September 30, 2008 (unaudited) and December
                31, 2007 (audited)
            4Condensed
                Consolidated Statements of Operations – Three Months Ended September 30,
                2008 and 2007 (unaudited)
            5Condensed
                Consolidated Statements of Operations - Nine Months Ended September
                30,
                2008 and 2007 (unaudited)
            6Condensed
                Consolidated Statements of Cash Flows - Nine Months Ended September
                30,
                2008 and 2007 (unaudited)
            7Notes
                to Condensed Consolidated Financial Statements (unaudited)
            8
–
                10Item
                2.Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            11
                – 12Item
                3.Quantitative
                and Qualitative Disclosures About Market Risk
            12Item
                4.Controls
                and Procedures
            13PART
                II - OTHER INFORMATIONItem
                1.Legal
                Proceedings
            13Item
                1A. Risk Factors
            13Item
                2.Unregistered
                Sales of Equity Securities and Use of Proceeds
            13Item
                3.Defaults
                Upon Senior Securities
            13Item
                4.Submission
                of Matters to a Vote of Security Holders
            13Item
                5.Other
                Information
            13Item
                6.Exhibits
            13SIGNATURES
            14EXHIBIT
                INDEX
            15


2


**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 27A of the Securities Act of 1933 and
      Section 21E of the Securities Exchange Act of 1934, as amended. All statements
      other than statements of historical fact are “forward-looking statements” for
      purposes of federal and state securities laws, including any projections or
      expectations of earnings, revenue, financial performance, liquidity and capital
      resources or other financial items; any statement of our plans, strategies
      and
      objectives for our future operations; any statements regarding future economic
      conditions or performance; any statements of belief; and any statements of
      assumption underlying any of the foregoing. Forward-looking statements may
      include the words “may,” “will,” “should,” “could,” “would,” “predicts,”
“potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes,” “estimates” and other similar words. Although Cadus Corporation (the
“Company”) believes that the expectations reflected in our forward-looking
      statements are reasonable, 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, risks and uncertainties relating
      to
      the Company's ability to license its technologies to third parties, the
      Company's inability to acquire and operate other companies, the Company's
      capital needs and uncertainty of future funding, the Company's history of
      operating losses, the unpredictability of patent protection, risk of
      obsolescence of the Company's technologies, as well as other risks and
      uncertainties discussed in the Company’s annual report on Form 10-K for the year
      ended December 31, 2007. The forward-looking statements made in this Quarterly
      Report on Form 10-Q are made only as of the date hereof and the Company does
      not
      have or undertake any obligation to publicly update any forward-looking
      statements to reflect subsequent events or circumstances unless otherwise
      required by law.


3


ITEM
      1.  CONDENSED
      CONSOLIDATED FINANCIAL STATEMENTS





**CADUS
      CORPORATION**


**Condensed
      Consolidated Balance Sheets**





September 30,
              2008
            
            December 31,
              2007(Unaudited)
            
            (Audited)**ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            17,032,189
            
            $
            2,444,376Short
                term investments
            
            
            8,190,620
            
            
            22,960,545Interest
                receivable
            
            
            21,863
            
            
            102,518Prepaid
                and other current assets
            
            
            46,335
            
            
            1,150Total
                current assets
            
            
            25,291,007
            
            
            25,508,589Investment
                in other ventures
            
            
            192,621
            
            
            186,790Patents,
                net
            
            
            486,009
            
            
            550,834Total
                assets
            
            $
            25,969,637
            
            $
            26,246,213**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities:Accrued
                expenses and other current liabilities
            
            $
            11,921
            
            $
            22,352Total
                current liabilities
            
            
            11,921
            
            
            22,352CommitmentsStockholders’
                equity:Common
                stock
            
            
            132,857
            
            
            132,857Additional
                paid-in capital
            
            
            59,847,149
            
            
            59,847,149Accumulated
                deficit
            
            
            (33,722,215
            )
            
            (33,456,070
            )Treasury
                stock
            
            
            (300,075
            )
            
            (300,075
            )Total
                stockholders’ equity
            
            
            25,957,716
            
            
            26,223,861Total
                liabilities and stockholder’s equity
            
            $
            25,969,637
            
            $
            26,246,213





See
      accompanying notes to condensed consolidated financial
      statements.


4


**CADUS
      CORPORATION**


**Condensed
      Consolidated Statements of Operations**





Three
                Months Ended
              September
                30,2008
            
            2007(Unaudited)
            
            (Unaudited)License
                and maintenance fees
            
            $
            —
            
            $
            —Total
                revenues
            
            
            —
            
            
            —Costs
                and expenses:General
                and administrative expenses
            
            
            118,421
            
            
            82,208Amortization
                of patent costs
            
            
            21,608
            
            
            21,608(Income)
                from equity in other ventures
            
            
            (1,753
            )
            
            (3,919
            )Total
                costs and expenses
            
            
            138,276
            
            
            99,897Operating
                loss
            
            
            (138,276
            )
            
            (99,897
            )Other
                income:Interest
                income
            
            
            161,180
            
            
            340,124Loss
                on sale of securities
            
            
            (36,687
            )
            
            —Investment
                reduction to net asset value
            
            
            (97,161
            )
            
            —(Loss)
                income before provision for income taxes
            
            
            (110,944
            )
            
            240,227Provision
                for income taxes
            
            
            —
            
            
            —Net
                (loss) income
            
            $
            (110,944
            )
            $
            240,227Basic
                and diluted (loss) income per weighted average share of common stock
                outstanding
            
            $
            (0.01
            )
            $
            0.02Weighted
                average shares of common stock outstanding – basic and
                diluted
            
            
            13,144,040
            
            
            13,144,040





See
      accompanying notes to condensed consolidated financial
      statements.


5


**CADUS
      CORPORATION**


**Condensed
      Consolidated Statements of Operations**





Nine
                Months Ended
              September
                30,2008
            
            2007(Unaudited)
            
            (Unaudited)License
                and maintenance fees
            
            $
            100,000
            
            $
            100,000Total
                revenues
            
            
            100,000
            
            
            100,000Costs
                and expenses:General
                and administrative expenses
            
            
            464,574
            
            
            465,198Amortization
                of patent costs
            
            
            64,825
            
            
            64,825(Income)
                from equity in other ventures
            
            
            (5,831
            )
            
            (9,989
            )Total
                costs and expenses
            
            
            523,568
            
            
            520,034Operating
                loss
            
            
            (423,568
            )
            
            (420,034
            )Other
                income:Interest
                income
            
            
            569,710
            
            
            989,766Loss
                on sale of securities
            
            
            (33,562
            )
            
            (668,246
            )Investment
                reduction to net asset value
            
            
            (377,067
            )
            
            —Loss
                before provision for income taxes
            
            
            (264,487
            )
            
            (98,514
            )Provision
                for income taxes
            
            
            1,658
            
            
            768Net
                loss
            
            $
            (266,145
            )
            $
            (99,282
            )Basic
                and diluted (loss) per weighted average share of common stock
                outstanding
            
            $
            (0.02
            )
            $
            (0.01
            )Weighted
                average shares of common stock outstanding – basic and
                diluted
            
            
            13,144,040
            
            
            13,144,040





See
      accompanying notes to condensed consolidated financial
      statements.


6


**CADUS
      CORPORATION**


**Condensed
      Consolidated Statements of Cash Flows**


Nine
                  Months Ended
                September
                  30,2008
              
              2007(Unaudited)
              
              (Unaudited)Cash
                  flows from operating activities:Net
                  (loss)
              
              $
              (266,145
              )
              $
              (99,282
              )Adjustments
                  to reconcile net (loss) to net cash provided by operating
                  activities:Amortization
                  of patent costs
              
              
              64,825
              
              
              64,825(Income)
                  from equity in other ventures
              
              
              (5,831
              )
              
              (9,989
              )Loss
                  on sale of marketable securities
              
              
              33,562
              
              
              668,246Investment
                  reduction to net asset value
              
              
              377,067
              
              
              —Changes
                  in assets and liabilities:Decrease
                  (increase) in prepaid and other current assets
              
              
              35,470
              
              
              (41,249
              )(Decrease)
                  increase in accrued expenses and other current liabilities
              
              
              (10,431
              )
              
              33,304Net
                  cash provided by operating activities
              
              
              228,517
              
              
              615,855Cash
                  flows provided by investing activities:Proceeds
                  from redemption and sale of investments
              
              
              14,359,296
              
              
              468,132Net
                  cash provided by investing activities
              
              
              14,359,296
              
              
              468,132Net
                  increase in cash and cash equivalents
              
              
              14,587,813
              
              
              1,083,987Cash
                  and cash equivalents – beginning of period
              
              
              2,444,376
              
              
              24,602,202Cash
                  and cash equivalents – end of period
              
              $
              17,032,189
              
              $
              25,686,189





See
      accompanying notes to condensed consolidated financial
      statements.


7


**CADUS
      CORPORATION**


**Notes
      to Condensed Consolidated Financial Statements**


Note
              – 1
            **Basis
                of Preparation**





The
      information presented as of September 30, 2008 and for the three and nine month
      periods 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, 2007 condensed consolidated balance
      sheet was derived from audited consolidated 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, 2007.





The
      consolidated financial statements include the accounts of the Company and its
      wholly owned subsidiary, Cadus Technologies, Inc. All intercompany balances
      and
      transactions have been eliminated in consolidation.




The
      results of operations for the three and nine month periods ended September
      30,
      2008 are not necessarily indicative of the results to be expected for the year
      ending December 31, 2008.





Note
              - 2
            **Net
                (Loss) Per Share**




For
      the
      three and nine month periods ended September 30, 2008 and 2007 basic net (loss)
      per share is computed by dividing the net (loss) by the weighted average number
      of common shares outstanding. Diluted earnings per share for the three and
      nine
      month periods ended September 30, 2007 was the same as basic earnings per share
      as all of the Company’s outstanding options’ exercise prices were greater than
      the average market price of the common shares. For this reason, for the three
      and nine month periods ended September 30, 2007, 2,500 options were
      excluded from the calculation of diluted earnings per share. There were no
      outstanding options for the three and nine month periods ended
      September 30, 2008.





Note
              - 3
            **Licensing
                Agreements**





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 is obligated to pay an annual maintenance fee
      of
      $100,000 until the earlier of 2010 or the termination of the license. OSI may
      terminate the license at any time on 30 days prior written notice. During the
      nine month periods ended September 30, 2008 and 2007, the Company recognized
      $100,000 of license revenue related to this agreement.


8


**CADUS
      CORPORATION**


**Notes
      to Condensed Consolidated Financial Statements**





Note
              – 4
            **Short
                Term Investments**





The
      Company invested its excess cash with Bank of America in its Columbia Strategic
      Cash Portfolio (the “Fund”), which maintained a stable unit price of $1.00 per
      unit. The units were redeemable in cash on the same day requested and were
      classified by the Company as cash equivalents.





On
      December 10, 2007, the Fund notified the Company that conditions in the short
      term credit markets had created a broad based perception of risk in non-sub
      prime asset-backed securities causing illiquidity across the market which led
      to
      extreme pricing pressure in those securities. The Fund also notified the Company
      that it is primarily invested in such securities, that it will begin an orderly
      liquidation of such securities, that unit holders would no longer be able to
      redeem their units in the Fund and that the Fund would redeem its units as
      it
      liquidated its investments. The Fund also began to value its securities based
      on
      market value rather than amortized value for the purposes of determining net
      asset value per unit. The Fund has continued to pay interest monthly. From
      January 1, 2008 through September 30, 2008, the Fund redeemed 14,696,686 units
      in the Fund for $14,359,296, which redemption was $337,390 in the aggregate
      less
      than the original $14,696,686 cost of such units. At the close of business
      on
      September 30, 2008 the Company still owned 8,556,853 units in the Fund which
      had
      an aggregate value at such time of $8,190,620. The Fund has advised the Company
      that it anticipates that it will redeem an additional 16.5% of the original
      units by December 17, 2008 and that 90% of the original units will be redeemed
      by June 30, 2009. However, there can be no assurance as to when further
      redemptions will take place or as to the net asset value at which the balance
      of
      the Company’s investment in the Fund will be redeemed.





The
      Company has adopted SFAS No. 157, “ *Fair
      Value Measures* ”,
      for
      financial assets and liabilities. SFAS No. 157 defines fair value, provides
      guidance for measuring fair value and requires certain disclosures with respect
      to the processes used to measure the fair value of financial assets and
      liabilities.





Note
              – 5
            **Recently
                Issued Accounting
                Pronouncements**





In
      February 2007, the FASB issued SFAS No. 159, *“The
      Fair Value Option for Financial Assets and Financial Liabilities”* (“SFAS
      159”), which permits certain financial assets and financial liabilities to be
      measured at fair value, using an instrument-by-instrument election. The initial
      effect of adopting SFAS 159 must be accounted for as a cumulative-effect
      adjustment to opening retained earnings for the fiscal year in which we apply
      SFAS 159. Retrospective application of SFAS 159 to fiscal years preceding the
      effective date is not permitted. SFAS 159 has no effect on the Company’s
      financial statements.





In
      December 2007, the FASB issued SFAS No. 141(R), *“Business
      Combinations”* (“SFAS
      141(R)”). SFAS 141(R) expands the definition of transactions and events that
      qualify as business combinations; requires that the acquired assets and
      liabilities, including contingencies, be recorded at the fair value determined
      on the acquisition date and changes thereafter reflected in revenue, not
      goodwill; changes the recognition timing for restructuring costs; and requires
      acquisition costs to be expensed as incurred. Adoption of SFAS 141(R) is
      required for combinations after December 15, 2008. Early adoption and
      retroactive application of SFAS 141(R) to fiscal years preceding the effective
      date are not permitted. The adoption of SFAS 141(R) may have an effect on the
      Company's financial statements if an acquisition is completed.


9


**CADUS
      CORPORATION**


**Notes
      to Condensed Consolidated Financial Statements**


In
      December 2007, the FASB issued SFAS No. 160 *,
      “Noncontrolling Interest in Consolidated Financial Statements”* (“SFAS
      160”). SFAS 160 re-characterizes minority interests in consolidated subsidiaries
      as non-controlling interests and requires the classification of minority
      interests as a component of equity. Under SFAS 160, a change in control will
      be
      measured at fair value, with any gain or loss recognized in earnings. The
      effective date for SFAS 160 is for annual periods beginning on or after December
      15, 2008. Early adoption and retroactive application of SFAS 160 is for annual
      periods beginning on or after December 15, 2008. We are evaluating the impact
      of
      adoption on our consolidated financial statements.





In
      April
      2008, the FASB issued Staff Position No. FAS 142-3, “ *Determination
      of the Useful Life of Intangible Assets* ”
(“FSP
      FAS 142-3”). FSP FAS 142-3 amends the factors considered in developing renewal
      or extension assumptions used to determine the useful life of a recognized
      intangible asset under SFAS No. 142, “ *Goodwill
      and Other Intangible Assets* ,”
in
      order to improve the consistency between the useful life of the recognized
      intangible asset and the period of expected cash flows used to measure the
      fair
      value of the asset. FSP FAS 142-3 applies to: (l) intangible assets that are
      acquired individually or with a group of other assets, and (2) intangible assets
      acquired both in business combinations and asset acquisitions. FSP FAS 142-3
      is
      effective for financial statements issued for fiscal years beginning after
      December 15, 2008, and interim periods within those fiscal years. Early adoption
      is prohibited. As a result, the Company will apply the provisions of FSP FAS
      142-3 prospectively to intangible assets acquired on or after January 1, 2009.
      The Company is currently evaluating the potential impact, if any, the adoption
      of FSP FAS 142-3 may have on the Company’s condensed consolidated financial
      statements.


10


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.





At
      September 30, 2008, the Company had an accumulated deficit of approximately
      $33.7 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
      Month Ended September 30, 2008 and September 30, 2007*





*Revenues*





There
      were no revenues for the three months ended September 30, 2008 and 2007.





*Costs
      and Expenses*





General
      and administrative expenses increased to $118,421 for the three months ended
      September 30, 2008 from $82,208 for the same period in 2007. Patent costs
      increased by $9,953, accounting and legal expenses increased by $22,888, and
      shareholder relations increased by $1,520. There were other increases of
      $1,852.





For
      the
      three months ended September 30, 2008 the Company recognized income of $1,753
      in
      its investment in Laurel Partners Limited Partnership. Such income for the
      same
      period in 2007 was $3,919.





*Interest
      Income*





Interest
      income for the three months ended September 30, 2008 was $161,180 compared
      to
      interest income of $340,124 for the same period in 2007. This decrease is
      attributable primarily to lower interest rates earned on invested
      funds.





*Net
      (Loss) Income*





Net
      loss
      for the three months ended September 30, 2008 was $110,944 compared to a net
      income of $240,227 for the same period in 2007. The decrease in net income
      can
      be attributed to an increase in general and administrative expenses of $36,213,
      a decrease in both interest income and income from equity in other ventures
      of
      $178,944 and $2,166, respectively, and reduction in investment to net asset
      value and loss on sale of securities totaling $133,848.


11


*Nine
      Months Ended September 30, 2008 and September 30, 2007*





*Revenues*





Revenue
      for the nine months ended September 30, 2008 and 2007 were $100,000, which
      is
      the annual maintenance fee from OSI.





*Costs
      and Expenses*





General
      and administrative expenses decreased to $464,574 for the nine months ended
      September 30, 2008 from $465,198 for the same period in 2007. Patent costs
      decreased by $30,956, accounting and legal expenses increased by $17,655 and
      shareholder relations increased by $8,616. There were increases in other
      expenses of $4,061.





For
      the
      nine months ended September 30, 2008 the Company recognized income of $5,831
      in
      its investment in Laurel Partners Limited Partnership. The income for the same
      period in 2007 was $9,989.





*Interest
      Income*





Interest
      income for the nine months ended September 30, 2008 was $569,710 compared to
      interest income of $989,766 for the same period in 2007. This decrease is
      attributable primarily to lower interest rates earned on invested
      funds.





*Net
      (Loss)*





Net
      loss
      for the nine months ended September 30, 2008 was $266,145 compared to a net
      loss
      of $99,282 for the same period in 2007. The increase in the net loss can be
      attributed to a decrease in interest income of $420,056, investment reduction
      to
      net asset value of $377,067, decrease in equity in other ventures of $4,158
      and
      an increase in income taxes of $890, offset by a decrease in the loss on sale
      of
      securities of $634,684 and decrease of $624 in general and administrative
      expenses.





*Liquidity
      and Capital Resources*





At
      September 30, 2008 the Company held cash and cash equivalents of $17.0 million
      and short-term investments of $8.2 million. The Company's working capital at
      September 30, 2008 was $25.3 million.





The
      Company believes that its existing capital resources, together with interest
      income, will be sufficient to support its operations through the end of 2009.
      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 or invest in companies and income-producing assets 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. Under its current policies the Company does not use interest rate
      derivative instruments to manage exposure to interest rate
      changes.


12


Item
              4.
            **CONTROLS
                AND PROCEDURES**





Based
      on
      the evaluation of the Company’s disclosure controls and procedures conducted as
      of the end of the period covered by this report on Form 10-Q, the Company’s
      President and Chief Executive Officer, who also performs the functions of a
      principal financial officer, concluded that the Company’s disclosure controls
      and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under
      the Securities Exchange Act of 1934) are effective. In addition, there has
      been
      no change in the Company’s internal control over financial reporting (as defined
      in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934)
      that
      occurred during the period covered by this report on Form 10-Q that has
      materially affected, or is reasonably likely to materially affect, the Company’s
      internal control over financial reporting. It should be noted that any system
      of
      controls, however well designed and operated, can provide only reasonable
      assurance, and not absolute assurance, that the objectives of the system are
      met. In addition, the design of any control system is based in part upon certain
      assumptions about the likelihood of future events. Because of these and other
      inherent limitations of control systems, there can be no assurance that any
      design will succeed in achieving its stated goals under all potential future
      conditions, regardless of how remote.





**PART
      II - OTHER INFORMATION**





ITEM
      1.  LEGAL
      PROCEEDINGS .





None.





ITEM
      1A.
      RISK FACTORS .





There
      were no material changes from the risk factors previously disclosed in our
      Annual Report on Form 10-K for the period ended December 31, 2007 as filed
      with
      the Securities and Exchange Commission on March 31, 2008.





ITEM
      2.  UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.





None.





ITEM
      3.  DEFAULTS
      UPON SENIOR SECURITIES.





None.





ITEM
      4.  SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS.





None.





ITEM
      5.  OTHER
      INFORMATION .





None.





ITEM
      6.  EXHIBITS .





The
      Exhibits listed in the Exhibit Index are included in this quarterly report
      on
      Form 10-Q.


13


**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
                CORPORATION****(Registrant)**Dated:
                November 14, 2008
            By:
            /s/
                David BlitzDavid
                BlitzPresident
                and Chief Executive Officer (Authorized
              Officer
                and Principal Financial Officer)





14


**EXHIBIT
      INDEX**





The
      following exhibits are filed as part of this Quarterly Report on Form
      10-Q:





Exhibit No.
            
            Description31
            
            Certifications32
            
            Certification
                Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002


15