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, 2005
                                      --------------

[ ]    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          (I.R.S. Employer
                  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
                                 -----        -----

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12-b-2 of the Exchange Act).

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


The number of shares of registrant's common stock, $0.01 par value,  outstanding
as of April 30, 2005 was 13,144,040.

<PAGE>

                                CADUS 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, 2005
               (unaudited) and December 31, 2004                            4

               Condensed Consolidated Statements of Operations -
               Three Months Ended March 31, 2005 and 2004 (unaudited)       5

               Condensed Consolidated Statements of Cash Flows -
               Three Months Ended March 31, 2005 and 2004 (unaudited)       6

               Notes to Condensed Consolidated Financial Statements
               (unaudited)                                                7 - 10

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                       11 - 12

Item 3.  Quantitative and Qualitative Disclosures About Market Risk        12

Item 4.  Controls and Procedures                                           12

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                 12

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds       12

Item 3.  Defaults Upon Senior Securities                                   13

Item 4.  Submission of Matters to a Vote of Security Holders               13

Item 5.  Other Information                                                 13

Item 6.  Exhibits and Reports on Form 8K                                   13

SIGNATURES

EXHIBIT INDEX

                                       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 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 stated  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  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,
technological  uncertainties  regarding  the Company's  technologies,  risks and
uncertainties  relating to the Company's  ability to license its technologies to
third parties, the Company's ability to acquire and operate other companies, 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  other filings with the Securities and
Exchange  Commission.  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
<PAGE>


ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                CADUS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                                              March 31,               December 31,
                                                                                2005                      2004
                                                                           -------------             -------------
                                                                            (Unaudited)
<S>                                                                         <C>                       <C>
Current assets:

      Cash and cash equivalents                                             $ 24,166,471              $ 24,045,800
      Prepaid and other current assets                                            15,550                    15,550
      Investment in marketable securities                                        427,115                   580,232
                                                                           -------------             -------------
                                                                              24,609,136                24,641,582
           Total current assets

Investment in other ventures                                                     158,736                   157,637
Other assets, net                                                                726,803                   747,029
                                                                           -------------             -------------
           Total assets                                                     $ 25,494,675              $ 25,546,248
                                                                           =============             =============
</TABLE>



                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
<S>                                                                        <C>                       <C>
Current liabilities:
        Accrued expenses and other current liabilities                      $     75,182              $     14,327
                                                                           -------------             -------------

                   Total current liabilities                                      75,182                    14,327
                                                                           -------------             -------------
Commitments

Stockholders' equity:

          Common stock                                                           132,857                   132,857
          Additional paid-in capital                                          59,844,355                59,844,355
          Accumulated deficit                                              (  33,548,381)            (  33,589,070)
          Accumulated other comprehensive (loss) income                    (     709,263)            (     556,146)
          Treasury stock                                                   (     300,075)            (     300,075)
                                                                           -------------             -------------
                 Total stockholders' equity                                   25,419,493                25,531,921
                                                                           -------------             -------------
                 Total liabilities and stockholder's equity                 $ 25,494,675              $ 25,546,248
                                                                           =============             =============
</TABLE>



     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>


                                CADUS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                        Three Months Ended
                                                                             March 31,
                                                                  2005                    2004
                                                              -------------           -------------
                                                               (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                           202,844                 224,555

      (Gain) loss from equity in other ventures               (       1,099)                  3,298
                                                              -------------           -------------
           Total costs and expenses                                 201,745                 227,853
                                                              -------------           -------------
Operating loss                                                (     101,745)          (     127,853)


Other income:

      Interest income                                               142,434                  34,377
                                                              -------------           -------------
Income (loss) before income taxes                                    40,689           (      93,476)

Income taxes                                                             --                     --
                                                              -------------           -------------
           Net income (loss)                                   $     40,689           ($     93,476)
                                                              =============           =============
Basic and diluted net income (loss) per weighted average
share of common stock outstanding                              $       0.00           ($       0.01)
                                                              =============           =============

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 CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                             Three Months Ended
                                                                                  March 31,
                                                                        2005                    2004
                                                                    -------------           -------------
                                                                     (Unaudited)             (Unaudited)

<S>                                                                 <C>                     <C>
Cash flows from operating activities

      Net income (loss)                                              $     40,689           ($     93,476)

      Adjustments to reconcile net income (loss) to net cash
      provided by (used in) operating activities:

           Amortization of patent costs                                    20,226                  20,226

           (Income) loss of equity in other ventures                (       1,099)                  3,298

      Changes in assets and liabilities:

           (Increase) in license fee receivable                                --           (     100,000)

           (Increase) in prepaid and other current assets                      --           (       3,413)

           Increase in accrued expenses and other current
           liabilities                                                     60,855                  11,447
                                                                    -------------           -------------
Net cash provided by (used in) operating activities                       120,671           (     161,918)
                                                                    -------------           -------------
Net increase (decrease) in cash and cash equivalents                      120,671           (     161,918)

Cash and cash equivalents - beginning of period                        24,045,800              24,369,223
                                                                    -------------           -------------
Cash and cash equivalents - end of period                            $ 24,166,471            $ 24,207,305
                                                                    =============           =============
</TABLE>



     See accompanying notes to condensed consolidated financial statements.

                                       6
<PAGE>


                                CADUS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Note - 1      ORGANIZATION AND BASIS OF PREPARATION

              The  information  presented  as of  March  31,  2005  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,  2004
              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, 2004.

              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-month  period ended March
              31,  2005 are not  necessarily  indicative  of the  results  to be
              expected for the year ending December 31, 2005.

Note - 2      NET INCOME (LOSS) PER SHARE

              For the  three-month  periods  ended March 31, 2005 and 2004 basic
              net income (loss) per share is computed by dividing the net income
              (loss)  by  the   weighted   average   number  of  common   shares
              outstanding. Diluted earnings per share for the three months ended
              March 31, 2005 was the same as basic  earnings per share as all of
              the Company's  outstanding  options' and warrants' exercise prices
              were greater than the average  market price of the common  shares.
              For this reason, for the three months ended March 31, 2005, 79,236
              options and warrants were excluded from the calculation of diluted
              earnings  per  share.   The  Company   incurred  a  loss  for  the
              three-month  period ended March 31, 2004;  the inclusion of common
              stock  equivalents  in the  calculation  of diluted loss per share
              would have been anti-dilutive and was therefore excluded.

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 received an additional  licensing fee
              in 2002 of  $1,000,000  upon the  licensee  achieving  a  research
              milestone.  The licensee is entitled to use the  technologies  for
              five years from the date of 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 September 2003,
              the parties entered into an addendum to the agreement

                                       7
<PAGE>


                                CADUS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



              pursuant to which the Company extended the license to an affiliate
              of the licensee in consideration  for the licensee agreeing to pay
              $120,000 to the Company.

              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 and
              in December 2000 a  supplemental  license fee of $250,000.  OSI is
              also obligated to pay an annual  maintenance fee of $100,000 until
              the earlier of 2010 or the  termination  of the  license.  OSI may
              terminate the license at any time on 30 days prior written notice.
              During the  three-month  period ended March 31, 2005 and 2004, the
              Company  recognized  $100,000 of license  revenue  related to this
              agreement.

Note - 4      INVESTMENT IN MARKETABLE SECURITIES

              The Company had an equity interest in Axiom Biotechnologies,  Inc.
              ("Axiom").   Due  to  Axiom's  operating  losses,   the  Company's
              investment  was written down to $0 at December 31, 2001. On August
              30, 2002,  Axiom  entered into a merger  agreement  with a wholly-
              owned  subsidiary of Sequenom,  Inc.,  which is publicly traded on
              the Nasdaq National  Market.  In connection  with the merger,  the
              Company  received  441,446 common shares of Sequenom,  Inc. with a
              fair market value of $2.43 per share in exchange for its shares in
              Axiom.  Pursuant to the merger,  102,685 of the Company's  441,446
              common  shares of Sequenom,  Inc. were held in escrow (the "Escrow
              Shares")  for a one-year  period that  expired on August 30, 2003.
              The Escrow Shares were held to secure  rights to  indemnification,
              compensation and  reimbursement of Sequenom and other  indemnitees
              as  provided  in the  merger  agreement.  Upon the  closing of the
              transaction, Cadus recorded a realized gain of $823,189 related to
              the 338,761 common shares received in the  consolidated  statement
              of operations  for the year ended  December 31, 2002.  The Company
              was advised that the Escrow Shares had been released on August 30,
              2003 and,  accordingly,  the Company  recorded a realized  gain on
              marketable  securities related to the Escrow Shares of $313,189 in
              the  consolidated  statement  of  operations  for the  year  ended
              December  31,  2003.  In May 2004,  the Company  became aware that
              38,507 shares of the 102,685 Escrow Shares were forfeited pursuant
              to the  indemnification  provisions  of the merger  agreement  and
              therefore not issued to the Company.  Accordingly, to reflect this
              reduction  of the  Escrow  Shares  received  by the  Company,  the
              investment in marketable securities was reduced by $123,222 on the
              March 31, 2004 consolidated balance sheet.

              Pursuant to the  provisions  of Statement of Financial  Accounting
              Standards  No.  115,  "Accounting  for  Certain  Debt  and  Equity
              Securities"  management deems its investment in Sequenom,  Inc. to
              be  available  for sale and reports its  investment  at fair value
              with net unrealized gains or losses reported in accumulated  other
              comprehensive income within stockholders' equity.

Note - 5      ACCOUNTING FOR IMPAIRMENT OF LONG-LIVED ASSETS

              Statement of Financial  Accounting  Standards No. 144, "ACCOUNTING
              FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS" ("SFAS 144"),
              addresses financial accounting and reporting

                                       8
<PAGE>


                                CADUS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



              for the impairment or disposal of long-lived assets. The Company's
              long-lived  assets  (principally  capitalized  patent  costs)  are
              required to be  measured  at the lower of carrying  amount of fair
              value,   less  cost  to  sell,   whether  reported  in  continuing
              operations   or   discontinued   operations.    Intangibles   with
              determinable  lives and other  long-lived  assets are reviewed for
              impairment  whenever events or changes in  circumstances  indicate
              that the carrying  value of an asset may not be  recoverable.  The
              Company's   judgments   regarding   the  existence  of  impairment
              indicators are based on historical and projected  future operating
              results,  changes in the Company's overall business strategy,  and
              market and economic trends. In the future,  events could cause the
              Company to  conclude  that  impairment  indicators  exist and that
              certain  intangibles with determinable  lives and other long-lived
              assets are impaired  which may result in an adverse  impact on the
              Company's  financial  condition  and  results of  operations.  The
              provisions of SFAS No. 144 did not have an impact on the Company's
              financial  statements  as of and for the three  months ended March
              31, 2005.

Note - 6      RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

              In  December  2004,  the  Financial   Accounting  Standards  Board
              ("FASB")  issued  Statement  of  Financial   Accounting  Standards
              ("SFAS")  No. 123R "SHARE  BASED  PAYMENT."  This  statement  is a
              revision to SFAS No. 123, supersedes  Accounting  Principles Board
              ("APB") No. 25,  "ACCOUNTING  FOR STOCK ISSUED TO EMPLOYEES,"  and
              amends SFAS No. 95, "STATEMENT OF CASH FLOWS." This statement will
              require  the  Company to  expense  the cost of  employee  services
              received  in  exchange  for an award of equity  instruments.  This
              statement  also provides  guidance on valuing and expensing  these
              awards, as well as disclosure requirements. On April 14, 2005, the
              Securities and Exchange  Commission  adopted a rule amendment that
              delayed  the  compliance  dates  for SFAS No.  123R  such that the
              Company is now allowed to adopt the standard no later than January
              1, 2006.

              SFAS No.  123R  permits  public  companies  to choose  between the
              following two adoption methods:

                  1. A "modified  prospective" method in which compensation cost
                  is recognized  beginning  with the effective date (a) based on
                  the requirements of SFAS No. 123R for all share-based payments
                  granted  after  the  effective  date  and  (b)  based  on  the
                  requirements  of  SFAS  No.  123  for all  awards  granted  to
                  employees  prior to the  effective  date of SFAS No. 123R that
                  remain unvested on the effective date, or

                  2.  A  "modified  retrospective"  method  which  includes  the
                  requirements  of the  modified  prospective  method  described
                  above,  but also  permits  entities  to  restate  based on the
                  amounts previously  recognized under SFAS No. 123 for purposes
                  of  pro  forma  disclosures   either  (a)  all  prior  periods
                  presented  or  (b)  prior  interim  periods  of  the  year  of
                  adoption.

              As permitted by SFAS No. 123, the Company  currently  accounts for
              share-based  payments to employees  using the APB No. 25 intrinsic
              value  method and  recognizes  no  compensation  cost for employee
              stock options.  The impact of the adoption of SFAS No. 123R cannot
              be  predicted  at this time  because  it will  depend on levels of
              share-based payments granted in the

                                       9
<PAGE>


                                CADUS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



              future.  However,  valuation of employee  stock options under SFAS
              No. 123R is similar to SFAS No. 123,  with minor  exceptions.  The
              adoption of SFAS No.  123R's fair value  method may have an impact
              on the Company's  results of operations,  although it will have no
              impact on its  overall  financial  position.  Due to timing of the
              release of SFAS No. 123R,  the Company has not yet  completed  the
              analysis of the ultimate impact that this new  pronouncement  will
              have on the results of operations,  nor the method of adoption for
              this new standard.

              In December  2004,  the FASB issued  SFAS No.  153,  EXCHANGES  OF
              NONMONETARY  ASSETS,  AN AMENDMENT OF APB No. 29,  ACCOUNTING  FOR
              NONMONETARY  TRANSACTIONS.  SFAS No.  153  requires  exchanges  of
              productive  assets to be accounted for at fair value,  rather than
              at carryover basis,  unless (1) neither the asset received nor the
              asset  surrendered  has a fair value that is  determinable  within
              reasonable   limits  or  (2)  the  transactions   lack  commercial
              substance.  SFAS  No.  153  is  effective  for  nonmonetary  asset
              exchanges  occurring in fiscal  periods  beginning  after June 15,
              2005. The Company does not expect the adoption of this standard to
              have a  material  effect on its  financial  position,  results  of
              operations or cash flows.

              In March  2004,  the FASB  Emerging  Issues  Task  Force  ("EITF")
              released  Issue No.  03-1,  "THE  MEANING OF  OTHER-THAN-TEMPORARY
              IMPAIRMENT AND ITS APPLICATION TO CERTAIN  INVESTMENTS." EITF 03-1
              provides guidance for determining  whether  impairment for certain
              debt  and  equity  investments  is  other-than-temporary  and  the
              measurement of an impaired loss. The  recognition  and measurement
              requirements  of EITF 03-1 were initially  effective for reporting
              periods beginning after June 15, 2004. In September 2004, the FASB
              Staff issued FASB Staff Position  ("FSP") EITF 03-1-1 that delayed
              the  effective  date  for  certain   measurement  and  recognition
              guidance  contained in EITF 03-1.  The FSP requires  that entities
              continue  to  apply  previously  existing   "other-than-temporary"
              guidance until a final  consensus is reached.  Management does not
              anticipate  that  issuance of a final  consensus  will  materially
              impact the Company's financial condition or results of operations.

Note - 7      COMPREHENSIVE INCOME

              The Company classifies its investment in marketable  securities as
              available-for-sale.

              Unrealized gains and losses on  available-for-sale  securities are
              reported in accumulated other comprehensive income, a component of
              stockholders' equity.

              Other comprehensive income for the three months ended March 31,

<TABLE>
<CAPTION>
                                                                   2005            2004
                                                                 --------        --------

<S>                                                             <C>             <C>
                      Net income (loss)                          $ 40,689       ($ 93,476)

                      Accumulated other comprehensive (loss)    ( 153,117)      ( 256,192)
                                                                 --------        --------

                           Comprehensive (loss)                 ($112,428)      ($349,668)
                                                                 ========        =========
</TABLE>

                                       10
<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.

At March 31, 2005, the Company had an accumulated deficit of approximately $33.5
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, 2005 AND MARCH 31, 2004

REVENUES

Revenues for the three months ended March 31, 2005 and 2004 were $100,000, which
is the annual maintenance fee from OSI.

COSTS AND EXPENSES

General and  administrative  expenses decreased to $202,844 for the three months
ended March 31, 2005 from $224,555 for the same period in 2004. Patent costs and
professional fees increased by $10,201;  insurance expense decreased by $13,338;
there was a  decrease  of  $12,960  due to a sales tax audit  payment in 2004 in
connection  with the sale of  assets to OSI in 1999 and net  decreases  in other
expenses of $5,614.

For the three  months  ended  March 31, 2005 the  Company  recognized  income of
$1,099 in its investment in Laurel Partners  Limited  Partnership.  The loss for
the same period in 2004 was $3,298.

INTEREST INCOME

Interest income for the three months ended March 31, 2005 was $142,434  compared
to  interest  income of $34,377 for the same  period in 2004.  This  increase is
attributable primarily to higher interest rates earned on invested funds.

NET INCOME (LOSS)

Net income for the three months  ended March 31, 2005 was $40,689  compared to a
net loss of $93,476 for the same period in 2004. This increase can be attributed
primarily to a decrease in general and  administrative  expenses and an increase
in interest income.

                                       11
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2005 the Company held cash and cash  equivalents  of $24.2 million.
The Company's working capital at March 31, 2005 was $24.5 million.

The Company believes that its existing capital resources, together with interest
income,  will be sufficient to support its  operations  through the end of 2006.
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.  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.

Item 4.    CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Based on the  evaluation of the  Company's  disclosure  controls and  procedures
conducted as 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.

CHANGES IN INTERNAL CONTROLS

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their  evaluation,  nor were any  corrective  actions  required  with  regard to
significant  deficiencies and material  weaknesses.  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 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

           None.

                                       12
<PAGE>


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 and Reports on Form 8-K.

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

           (b)    Reports on Form 8-K.

                  None.

                                       13
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                                   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: May 16, 2005        By: /s/ David Blitz
                              --------------------------------------------------
                               David Blitz
                               President and Chief Executive Officer (Authorized
                               Officer and Principal Financial Officer)

<PAGE>


                                  EXHIBIT INDEX


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

Exhibit No.                Description
----------                 -----------

31                         Certifications

32                         Certification  Pursuant to 18 U.S.C. Section 1350, as
                           Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                           Act of 2002