<PAGE>


                       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, 2000
                                         --------------

|_|      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, 2000 was 13,144,040.

<PAGE>


                        CADUS PHARMACEUTICAL CORPORATION

                                      INDEX

<TABLE>
<CAPTION>
                                                                                    Page No.

<S>                                                                                 <C>
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS                                       3

                    PART I - CONDENSED FINANCIAL INFORMATION

Item 1.  Condensed Financial Statements

                     Condensed Balance Sheets - March 31, 2000 (unaudited)
                     and December 31, 1999 (audited)                                    4

                     Condensed Statements of Operations - Three Months ended
                     March 31, 2000 and 1999 (unaudited)                                5

                     Condensed Statements of Cash Flows - Three Months Ended
                     March 31, 2000 and 1999 (unaudited)                                6

                     Notes to Condensed Financial Statements (unaudited)               7-9

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                                     9-11

Item 3.  Quantitative and Qualitive Disclosures About Market Risk                      11


                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                             11

Item 2.  Changes in Securities and Use of Proceeds                                     12

Item 3.  Defaults Upon Senior Securities                                               12

Item 4.  Submission of Matters to a Vote of Security Holders                           12

Item 5.  Other Information                                                             12

Item 6.  Exhibits and Reports on Form 8K                                               13

SIGNATURES                                                                             14

EXHIBIT INDEX                                                                          15
</TABLE>


                                        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
ability to license its technologies to third parties, uncertainties regarding
the Company's future acquisition and in-licensing of technologies, the Company's
capital needs and uncertainty of future funding, risks and uncertainties
relating to the Company's ongoing litigation with SIBIA Neurosciences, Inc.
("SIBIA")*, including uncertainties relating to the outcome of appeals and the
re-examination of SIBIA's patent at issue in the litigation, 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, uncertainties
regarding the Company's ability to attract and retain key officers, employees
and consultants, as well as other risks and uncertainties discussed in the
Company's prospectus dated July 17, 1996.

--------------
         *SIBIA was acquired by Merck & Co. in the fourth quarter of 1999 and,
accordingly, references to SIBIA herein are references to Merck & Co. after such
date.


                                        3
<PAGE>


                        CADUS PHARMACEUTICAL CORPORATION

                            Condensed Balance Sheets

<TABLE>
<CAPTION>
                                                                  March 31,      December 31,
                                                                    2000            1999
                                                                  ---------      ------------
                                                                 (Unaudited)
                                     ASSETS

<S>                                                             <C>               <C>
Current assets
  Cash and cash equivalents                                     $ 5,885,655       $ 5,082,212
  Restricted cash                                                         -            13,566
  Due from officer and director                                      10,140           294,636
  Due from sale of equipment                                        100,000                 -
  Prepaid and other current assets                                  106,960            69,783
                                                                -----------        ----------

         Total current assets                                     6,102,755         5,460,197

Restricted cash-noncurrent                                       19,310,220        19,065,431
Investments in other ventures                                       639,236           999,590
Other assets, net                                                 1,153,332         1,173,558
                                                                -----------       -----------

             Total assets                                       $27,205,543       $26,698,776
                                                                ===========       ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Accounts payable                                              $     -           $    17,644
  Accrued expenses and other current liabilities                    586,924           121,843
  Deferred revenue                                                   28,500            28,500
                                                                -----------       -----------

             Total current liabilities                              615,424           167,987

Reserve for litigation damages                                   19,310,220        19,065,431
                                                                -----------       -----------

             Total liabilities                                   19,925,644        19,233,418

Stockholders' equity
  Common stock                                                      132,857           132,106
  Additional paid-in capital                                     59,844,355        59,689,446
  Accumulated deficit                                          ( 52,397,238)     ( 52,056,119)
  Treasury stock                                               (    300,075)     (    300,075)
                                                                -----------       -----------

             Total stockholders' equity                           7,279,899         7,465,358
                                                                -----------       -----------

             Total liabilities and stockholders'  equity        $27,205,543       $26,698,776
                                                                ===========       ===========
</TABLE>


            See accompanying notes to condensed financial statements


                                        4
<PAGE>


                        CADUS PHARMACEUTICAL CORPORATION

                       Condensed Statements of Operations

                                                         Three Months Ended
                                                              March 31,

                                                       2000             1999
                                                    -----------      -----------
                                                    (Unaudited)      (Unaudited)

Revenues, principally from related                 $     -          $ 3,038,776
      parties

License fee                                            700,000            -
                                                   -----------      -----------

                       Total revenues                  700,000        3,038,776
                                                   -----------      -----------

Costs and expenses
    Research and development costs                       -            3,912,482
    General and administrative expenses                852,462        1,315,216
                                                   -----------      -----------

             Total costs and expenses                  852,462        5,227,698
                                                   -----------      -----------

Operating loss                                    (    152,462)    (  2,188,922)
                                                   -----------      -----------

Other (expense) income
    Net interest income                                 71,697          337,175
    Loss of equity in other ventures, net         (    360,354)    (    321,788)
    Gain on sale of equipment                          100,000           16,203
                                                   -----------      -----------

             Total (expense) income               (    188,657)          31,590
                                                   -----------      -----------

Loss before income taxes                          (    341,119)    (  2,157,332)

State and local taxes                                    -                5,772
                                                   -----------      -----------

             Net loss                             ($   341,119)    ($ 2,163,104)
                                                   ===========      ===========

Basic and diluted loss per share                  ($      0.03)    ($      0.17)
                                                   ===========      ===========

Weighted average shares of common
    stock outstanding                               13,102,340       13,068,940
                                                   ===========      ===========


            See accompanying notes to condensed financial statements


                                       -5-
<PAGE>


                        CADUS PHARMACEUTICAL CORPORATION

                       Condensed Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                     March 31,
                                                              2000               1999
                                                          ------------       ------------
                                                           (Unaudited)        (Unaudited)
<S>                                                       <C>               <C>
Cash flows from operating activities
    Net loss                                              ($  341,119)      ($ 2,163,104)
    Adjustments to reconcile net loss to net cash
        provided by (used in) operating activities:
        Depreciation and amortization                          20,226            274,404
        Loss of equity in other ventures                      360,354            321,788
        Gain on sale of equipment                          (  100,000)               -
        Other non-cash gain                                      -          (     16,203)
           Reserve for litigation damages                     244,789                -
  Changes in assets and liabilities
        Decrease in due from officer and director             284,496                -
        Increase in prepaid and other current assets       (   37,177)      (    257,043)
        Decrease in other assets                                 -                81,740
        Increase in deferred revenue                             -               579,691
        Decrease in accounts payable                       (   17,644)      (    163,217)
        Increase (decrease) in accrued expenses
           and other current liabilities                      465,081       (  1,129,593)
                                                          -----------        -----------

Net cash provided by (used in) operating activities           879,006       (  2,471,537)
                                                          -----------        -----------

Cash flows from investing activities
    Increase in restricted cash                             ( 231,223)                -
    Acquisition of fixed assets                                  -          (    141,822)
    Sales of fixed assets                                        -                10,850
    Patent costs                                                 -          (    167,500)
                                                          -----------        -----------

Net cash used in investing activities                       ( 231,223)      (    298,472)
                                                          -----------        -----------

Cash flows from financing activities
    Proceeds from issuance of common stock
        upon exercise of stock options                        155,660                 -
                                                          -----------        -----------

Net cash provided by financing activities                     155,660                 -
                                                          -----------        -----------

Net increase (decrease) in cash and cash equivalents          803,443        ( 2,770,009)

Cash and cash equivalents - beginning of period             5,082,212         10,975,528
                                                          -----------        -----------

Cash and cash equivalents - end of period                 $ 5,885,655        $ 8,205,519
                                                          ===========        ===========
</TABLE>


                                       -6-
<PAGE>


            See accompanying notes to condensed financial statements
                        CADUS PHARMACEUTICAL CORPORATION

                     Notes to Condensed Financial Statements

Note - 1   Organization and Basis of Preparation

       The information presented as of March 31, 2000 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 generally accepted
       accounting principles 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, 1999 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, 1999.

       The results of operations for the three month period ended March 31, 2000
       are not necessarily indicative of the results to be expected for the year
       ending December 31, 2000.

Note - 2   Net Loss Per Share

       For the three month periods ended March 31, 2000 and 1999 basic net loss
       per share is computed by dividing the net loss by the weighted average
       number of common shares outstanding. Diluted net loss per share is the
       same as basic net loss per share since the inclusion of potential common
       stock equivalents (stock options and warrants) in the computation would
       be anti-dilutive.

Note - 3   Patent Litigation

       In July 1996, SIBIA commenced a patent infringement action against the
       Company alleging infringement by the Company of a patent concerning the
       use of cells, engineered to express any type of cell surface receptor and
       a reporter gene, used to report results in the screening of compounds
       against target assays and seeking injunctive relief and monetary damages.
       After trial, on December 18, 1998, the jury issued a verdict in favor of
       SIBIA and awarded SIBIA $18.0 million in damages. On January 29, 1999 the
       United States District Court granted SIBIA's request for injunctive
       relief that precludes the Company from using the method claimed in
       SIBIA's patent. On February 26, 1999, the United States District Court
       denied the Company's motions to set aside the jury verdict, to grant a
       new trial and to reduce or set aside the $18.0 million judgment awarded
       by the jury. The Company has appealed the judgment. The appeal will be
       heard by the Court of Appeals for the Federal Circuit in Washington, D.C.
       All briefs have been filed and the Court of Appeals heard oral argument
       on March 9, 2000. In order to stay execution pending appeal of the $18.0
       million judgment obtained by SIBIA, in March 1999, the Company deposited
       $18.5 million in escrow to secure payment of the judgment in the event
       the Company were to lose the appeal. Such $18.5 million was classified
       as "restricted cash-noncurrent" and the Company's "cash and cash
       equivalents" was reduced by $18.5 million. The Company recorded a reserve
       for litigation damages of $18.5 million in the


                                       -7-
<PAGE>


       statement of operations for the year ended December 31, 1998. Interest
       earned on the restricted cash has been added to the reserve for
       litigation damages, which was $19.3 million at March 31, 2000.

       In January 1999, the U.S. Patent and Trademark Office granted the
       Company's request to re-examine the patent issued to SIBIA that was the
       subject of the litigation. In March 2000, the Patent Office issued an
       office action rejecting all claims of SIBIA's patent. This office action
       is an initial determination only to which SIBIA will have an opportunity
       to respond. The Patent Office is not expected to issue a final decision
       for several months. A final decision by the Patent Office that SIBIA's
       patent is invalid would take precedence over the outstanding jury verdict
       and judgment. There can be no assurance, however, that the Patent and
       Trademark Office will issue a final decision finding SIBIA's patent to be
       invalid.

Note - 4   Asset Sale

       On July 30, 1999 the Company sold to OSI Pharmaceuticals, Inc. ("OSI"),
       pursuant to an asset purchase agreement, various drug discovery assets
       and ceased its drug discovery operations and research efforts for
       collaborators as a result of this transaction. The Company terminated all
       employees that were not hired by OSI or who did not voluntarily resign,
       except for the Chief Executive Officer. The Company retained ownership of
       all its other assets including its core yeast technology for developing
       drug discovery assays, its collection of over 25,000 proprietary yeast
       strains, human and mammalian cell lines, and genetic engineering tools,
       its joint ownership of the human orphan G protein-coupled receptors
       identified pursuant to its collaboration with Genome Therapeutics
       Corporation, its proprietary software, its genomics databases related to
       G protein-coupled receptors, all assays and technologies reverting to it
       from its collaboration with Bristol -Myers Squibb Company, a 30% equity
       position in Axiom Biotechnologies, Inc., the Company's cash and cash
       equivalents, and the funds that were being held in escrow pending appeal
       of the verdict in favor of SIBIA.

Note - 5   Related Party Transaction

       In August 1998, the Company guaranteed the payment of a $286,000 loan
       made to a Board member and secured its guarantee obligation with cash
       collateral of $286,000. In August 1999, the lender called on the
       guarantee and foreclosed on the cash collateral. The director executed an
       interest bearing promissory note in the amount of $286,000 in favor of
       the Company, which was payable, together with accrued interest, on August
       31, 2000. The amount owed as of December 31, 1999 is included in due from
       officer and director. This note was repaid in its entirety in March 2000.

Note - 6   Non-Exclusive License of Yeast Technology

       In February 2000, the Company licensed to OSI, on a non-exclusive basis,
       its yeast technologies, including various reagents and its library of
       over 30,000 yeast strains, and its bioinformatics software. OSI paid to
       the Company a license fee of $100,000 and an access fee of $600,000,
       which has been recorded as license fee revenue in the quarter ended
       March 31, 2000. OSI is also obligated to pay an annual maintenance fee of
       $100,000 until 2010 and a supplemental license fee of $250,000 if the
       injunction obtained by SIBIA is lifted or dissolved.

Note - 7   New Accounting Pronouncements

       On December 3, 1999, the Securities and Exchange Commission ("SEC")
       issued Staff Accounting Bulletin No. 101 - "Revenue Recognition in
       Financial Statements" ("SAB No. 101"). SAB No. 101 provides the SEC
       staff's views on the recognition of revenue including nonrefundable
       technology access fees received by biotechnology companies in connection
       with research collaborations with third parties. SAB No. 101 states that
       in certain circumstances the SEC staff believes that up-front fees, even
       if nonrefundable, should be deferred and recognized systematically over
       the term of the research arrangement. SAB No. 101A, which amends the
       implementation date for SAB No. 101, requires registrants with a fiscal
       year that begins between December 16, 1999 and March 15, 2000 to adopt
       the accounting guidance contained therein by no later than the second
       fiscal quarter of the fiscal year beginning after December 15, 1999. The
       Company is currently assessing the financial impact of complying with SAB
       No. 101 and has not yet determined whether applying the accounting
       guidance of SAB No. 101 will have a material effect on its financial
       position or results of operations.



                                       -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 to OSI Pharmaceuticals, Inc. ("OSI") and ceased
its internal drug discovery operations and research efforts for collaborative
partners. The Company terminated all employees who were not hired by OSI or who
did not voluntarily resign, except for the Chief Executive Officer who resigned
in April 2000.

The Company has incurred operating losses in each year since its inception,
including net losses of approximately $341,000 during the three-month period
ended March 31, 2000. At March 31, 2000, the Company had an accumulated deficit
of approximately $52.4 million, which reflects an $18.5 million charge for
litigation damages with respect to the patent infringement litigation with
SIBIA. 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 to OSI 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, 2000 and March 31, 1999

Revenues

Revenues for the three months ended March 31, 2000 decreased to $700,000 from
$3.0 million for the same period in 1999. This decrease was attributable
primarily to the Company having ceased research efforts for collaborators and,
therefore, not receiving any research funding for the first quarter of 2000. The
Company's revenues for the first quarter of 2000 were derived solely from its
licensing of its yeast technology to OSI.

Operating Expenses

The Company's research and development expenses for the three months ended March
31, 2000 decreased to $0 from $3.9 million for the same period in 1999. This
decrease was attributable to the Company having ceased its drug discovery
operations and research efforts for collaborators and having no research
personnel after its asset sale in July 1999.

General and administrative expense decreased to $852,462 for the three months
ended March 31, 2000 from $1.3 million for the same period in 1999. This
decrease was attributable primarily to the elimination of facility related
expenses and the reduction in administrative personnel. For the three months
ended March 31, 2000, the Chief Executive Officer's compensation was $580,000,
which includes $497,500 in severance pay.


                                       -9-
<PAGE>


Net Interest Income

Interest income for the three months ended March 31, 2000 decreased to
$71,697 from $337,175 for the same period in 1999. The decrease is attributable
primarily to the decrease in the Company's unrestricted cash equivalent balances
as compared to the prior year's three-month period.

Equity In Other Ventures

For the three months ended March 31, 2000 the Company recognized a net loss of
$360,354 in its investment in Axiom Biotechnologies, Inc. and Laurel Partners
Limited Partnership. The loss for the same period in 1999 was $321,788.

Net Loss

The net loss for the three months ended March 31, 2000 decreased to $341,119
from $2.2 million for the same period in 1999. This decrease can be attributed
to a decrease in the Company's operating expenses which was partially offset by
a decrease in revenues.

Liquidity and Capital Resources

At March 31, 2000 the Company held cash and cash equivalents exclusive of
restricted cash of $5,885,655. The Company's working capital at March 31, 2000
was $5,487,331.

On July 30, 1999, the Company sold its drug discovery assets to OSI and ceased
its internal drug discovery operations and research efforts for collaborative
partners. Pursuant to such sale transaction, OSI assumed, among other things,
the Company's lease to the Company's research facility in Tarrytown, New York
and the Company's equipment lease with GECC. The Company terminated all
employees who were not hired by OSI or who did not voluntarily resign, except
for its Chief Executive Officer. As a result of the foregoing, the Company
ceased to have 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.

In February 2000, the Company licensed to OSI, on a non-exclusive basis, its
yeast technologies. OSI paid to the Company 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 2010 and a supplemental license fee of $250,000 if the
injunction obtained by SIBIA is lifted or dissolved.

The Company believes that its existing capital resources, together with interest
income, will be sufficient to support its current and projected funding
requirements through the end of 2001. 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 license its technologies and otherwise realize value
from its assets, the transactions, if any, arising from the Company's efforts to
acquire technologies or products or to acquire or invest in companies, expenses
of pursuing such transactions and the outcome of its appeal of the judgment in
the SIBIA patent litigation.


                                      -10-
<PAGE>


New Accounting Pronouncements

      On December 3, 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 - "Revenue Recognition in Financial
Statements" ("SAB No. 101"). SAB No. 101 provides the SEC staff's views on the
recognition of revenue including nonrefundable technology access fees received
by biotechnology companies in connection with research collaborations with third
parties. SAB No. 101 states that in certain circumstances the SEC staff believes
that up-front fees, even if nonrefundable, should be deferred and recognized
systematically over the term of the research arrangement. SAB No. 101A, which
amends the implementation date for SAB No. 101, requires registrants with a
fiscal year that begins between December 16, 1999 and March 15, 2000 to adopt
the accounting guidance contained therein by no later than the second fiscal
quarter of the fiscal year beginning after December 15, 1999. The Company is
currently assessing the financial impact of complying with SAB No. 101 and has
not yet determined whether applying the accounting guidance of SAB No. 101 will
have a material effect on its financial position or results of operations.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Not applicable.


PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         The Company is not a party to any material legal proceedings other than
         SIBIA Neurosciences, Inc. v. Cadus Pharmaceutical Corporation and an
         arbitration proceeding commenced by Philip N. Sussman, the former
         Senior Vice President, Finance and Corporate Development, and Chief
         Financial Officer of the Company.

         (a) SIBIA commenced an action on July 9, 1996 in the United States
         District Court for the Southern District of California alleging
         infringement by the Company of a patent covering the use of cells,
         engineered to express any type of cell surface receptor and a reporter
         gene, used to report results in the screening of compounds against
         target assays, and seeking injunctive relief and monetary damages.
         After trial, on December 18, 1998, the jury issued a verdict in favor
         of SIBIA and awarded SIBIA $18.0 million in damages. On January 29,
         1999, the United States District Court granted SIBIA's request for
         injunctive relief that precludes the Company from using the method
         claimed in SIBIA's patent. On February 26, 1999, the United States
         District Court denied the Company's motions to set aside the jury
         verdict, to grant a new trial and to reduce or set aside the $18.0
         million damage award by the jury. The Company has appealed the
         judgment. The appeal will be heard by the Court of Appeals for the
         Federal Circuit in Washington, D.C. All briefs have been filed and the
         Court of Appeals heard oral argument on March 9, 2000. In order to stay
         execution pending appeal of the $18.0 million judgment obtained by
         SIBIA, in March 1999, the Company deposited $18.5 million in escrow to
         secure payment of the judgment in the event the Company were to lose
         the appeal. If the Company is not successful in materially reducing or
         setting aside the $18.0 million damage award on appeal, the business,
         financial condition and results of operations of the Company will be
         materially adversely affected. The costs of and the diversion of
         Company resources associated with this litigation have had a material
         adverse effect on the business, financial condition, results of
         operations and liquidity of the Company.


                                      -11-
<PAGE>


         In January 1999, the U.S. Patent and Trademark Office granted the
         Company's request to re-examine the patent issued to SIBIA that was the
         subject of the litigation. In March 2000, the Patent Office issued an
         office action rejecting all claims of SIBIA's patent. This office
         action is an initial determination only to which SIBIA will have an
         opportunity to respond. The Patent Office is not expected to issue a
         final decision for several months. A final decision by the Patent
         Office that SIBIA's patent is invalid would take precedence over the
         outstanding jury verdict and judgment. There can be no assurance,
         however, that the Patent Office will issue a final decision finding
         SIBIA's patent to be invalid.

         (b) On October 4, 1999, Philip N. Sussman, the former Senior Vice
         President, Finance and Corporate Development, and Chief Financial
         Officer of the Company, commenced an arbitration proceeding against the
         Company seeking severance pay of approximately $525,000. The Company
         believes that Mr. Sussman is not entitled to such severance pay and
         intends to vigorously defend the action.

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

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

         (a)  The exhibits listed in the Exhibit Index are included in this
              report.

         (b)  Reports on Form 8-K.

              None


                                      -12-
<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 12, 2000                    By: /s/ Russell D. Glass
                                          ---------------------
                                          Russell D. Glass
                                          President and Chief Executive Officer
                                          (Authorized Officer and Principal
                                          Financial Officer)


                                      -13-
<PAGE>


                                  EXHIBIT INDEX

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

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

             10.29                   Yeast Technology License Agreement, dated
                                     as of February 15, 2000, between the
                                     Company and OSI Pharmaceuticals, Inc.
                                     (Exhibits to the Yeast Technology License
                                     Agreement have been intentionally omitted.
                                     The Company hereby undertakes to furnish
                                     supplementally to the Securities and
                                     Exchange Commission upon request a copy of
                                     the omitted exhibits).

              27                     Financial Data Schedule


                                      -14-