**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, 2007




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)
                702-4315  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
o





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





Large
      Accelerated Filer o   Accelerated
      Filer o   Non-Accelerated
      Filer x




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, 2007 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, 2007 (unaudited) and
                December
                31, 2006 (audited)
            4Condensed
                Consolidated Statements of Income - Three Months Ended September
                30, 2007
                and 2006 (unaudited)
            5Condensed
                Consolidated Statements of Operations - Nine Months Ended September
                30,
                2007 and 2006 (unaudited)
            6Condensed
                Consolidated Statements of Cash Flows - Nine Months Ended September
                30,
                2007 and 2006 (unaudited)
            7Notes
                to Condensed Consolidated Financial Statements (unaudited)
            8 -
                11Item
                2.Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            12
                - 13Item
                3.Quantitative
                and Qualitative Disclosures About Market Risk
            13Item
                4.Controls
                and Procedures
            14PART
                II - OTHER INFORMATIONItem
                1.Legal
                Proceedings
            14Item
                1A. Risk Factors
            14Item
                2.Unregistered
                Sales of Equity Securities and Use of Proceeds
            14Item
                3.Defaults
                Upon Senior Securities
            14Item
                4.Submission
                of Matters to a Vote of Security Holders
            14Item
                5.Other
                Information
            14Item
                6.Exhibits
            14SIGNATURES
            15EXHIBIT
                INDEX
            16





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 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, 2006. 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,
              2007
            
            December
                31,
              2006(Unaudited)
            
            (Audited)**ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            25,686,189
            
            $
            24,602,202Prepaid
                and other current assets
            
            
            46,459
            
            
            5,210Investment
                in marketable securities
            
            
            —
            
            
            628,585Total
                current assets
            
            
            25,732,648
            
            
            25,235,997Investment
                in other ventures
            
            
            183,416
            
            
            173,427Patents,
                net
            
            
            572,443
            
            
            637,267Total
                assets
            
            $
            26,488,507
            
            $
            26,046,691**LIABILITIES
                AND STOCKHOLDERS’ EQU**ITY****Current
                liabilities:Accrued
                expenses and other current liabilities
            
            $
            94,612
            
            $
            61,307Total
                current liabilities
            
            
            94,612
            
            
            61,307CommitmentsStockholders’
                equity:Common
                stock
            
            
            132,857
            
            
            132,857Additional
                paid-in capital
            
            
            59,844,355
            
            
            59,844,355Accumulated
                deficit
            
            
            (33,283,242
            )
            
            (33,183,960
            )Accumulated
                other comprehensive (loss) income
            
            
            —
            
            
            (507,793
            )Treasury
                stock
            
            
            (300,075
            )
            
            (300,075
            )Total
                stockholders’ equity
            
            
            26,393,895
            
            
            25,985,384Total
                liabilities and stockholder’s equity
            
            $
            26,488,507
            
            $
            26,046,691




See
      accompanying notes to condensed consolidated financial statements.




4




**CADUS
      CORPORATION**


**Condensed
      Consolidated Statements of Income**





Three
                Months Ended
              September
                30,2007
            
            2006(Unaudited)
            
            (Unaudited)License
                and maintenance fees
            
            $
            -
            
            $
            -Total
                revenues
            
            
            -
            
            
            -Costs
                and expenses:General
                and administrative expenses
            
            
            103,816
            
            
            122,383(Income)
                from equity in other ventures
            
            
            (3,919
            )
            
            (3,300
            )Total
                costs and expenses
            
            
            99,897
            
            
            119,083Operating
                loss
            
            
            (99,897
            )
            
            (119,083
            )Other
                income:Interest
                income
            
            
            340,124
            
            
            319,418Income
                before provision for income taxes
            
            
            240,227
            
            
            200,335Provision
                for income taxes
            
            
            -
            
            
            -Net
                income
            
            $
            240,227
            
            $
            200,335Basic
                and diluted income per weighted average share of common stock
                outstanding
            
            $
            0.02
            
            $
            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
                30,2007
            
            2006(Unaudited)
            
            (Unaudited)License
                and maintenance fees
            
            $
            100,000
            
            $
            100,000Total
                revenues
            
            
            100,000
            
            
            100,000Costs
                and expenses:General
                and administrative expenses
            
            
            530,023
            
            
            603,289(Income)
                from equity in other ventures
            
            
            (9,989
            )
            
            (8,668
            )Total
                costs and expenses
            
            
            520,034
            
            
            594,621Operating
                loss
            
            
            (420,034
            )
            
            (494,621
            )Other
                income:Interest
                income
            
            
            989,766
            
            
            871,154Loss
                on sale of marketable securities
            
            
            (668,246
            )
            
            -(Loss)
                income before provision for income taxes
            
            
            (98,514
            )
            
            376,533Provision
                for income taxes
            
            
            768
            
            
            -Net
                (loss) income
            
            
            ($
                99,282
            )
            $
            376,533Basic
                and diluted (loss) income per weighted average share of common stock
                outstanding
            
            
            ($
                0.01
            )
            $
            0.03Weighted
                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
                30,2007
            
            2006(Unaudited)
            
            (Unaudited)Cash
                flows from operating activities:Net
                (loss) income
            
            
            ($
                99,282
            )
            $
            376,533Adjustments
                to reconcile net (loss) income to net cash provided by operating
                activities:Amortization
                of patent costs
            
            
            64,824
            
            
            64,824(Income)
                from equity in other ventures
            
            
            (9,989
            )
            
            (8,668
            )Loss
                on sale of marketable securities
            
            
            668,246
            
            
            -Changes
                in assets and liabilities:(Increase)
                in prepaid and other current assets
            
            
            (41,249
            )
            
            (31,250
            )Increase
                in accrued expenses and other current liabilities
            
            
            33,305
            
            
            19,966Net
                cash provided by operating activities
            
            
            615,855
            
            
            421,405Cash
                flows provided by investing activities:
              Proceeds
                from sale of securities
            
            
            468,132
            
            
            -Net
                cash provided by investing activities
            
            
            468,132
            
            
            -Net
                increase in cash and cash equivalents
            
            
            1,083,987
            
            
            421,405Cash
                and cash equivalents - beginning of period
            
            
            24,602,202
            
            
            24,044,619Cash
                and cash equivalents - end of period
            
            $
            25,686,189
            
            $
            24,466,024




See
      accompanying notes to condensed consolidated financial statements.




7


**CADUS
        CORPORATION**
 **Notes
        to Condensed Consolidated Financial Statements**




Note
      -
      1  **Organization
      and Basis of Preparation**





The
      information presented as of September 30, 2007 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, 2006 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, 2006.





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




The
      results of operations for the three and nine-month period ended September 30,
      2007 are not necessarily indicative of the results to be expected for the year
      ending December 31, 2007.





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




For
      the
      three and nine-month periods ended September 30, 2007 and 2006, basic net (loss)
      income per share is computed by dividing the net (loss) income by the weighted
      average number of common shares outstanding. Diluted earnings per share for
      the
      three and nine months ended September 30, 2007 and 2006 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 and nine months ended September 30, 2007 and
      2006, respectively, 2,500 and 57,167 options and warrants were excluded from
      the
      calculation of diluted earnings per share.





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 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 nine-month
      periods ended September 30, 2007 and 2006, 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
      402,939 common shares of Sequenom, Inc. in exchange for its shares in Axiom
      after forfeiting 38,507 shares pursuant to the indemnification provisions of
      the
      merger agreement. On June 1, 2006, Sequenom, Inc. effected a one-for-three
      reverse stock split which resulted in the Company’s ownership being converted to
      134,313 common shares of Sequenom, Inc.





8


**CADUS
        CORPORATION**
 **Notes
        to Condensed Consolidated Financial Statements**




Pursuant
      to the provisions of Statement of Financial Accounting Standards No. 115, *"Accounting
      for Certain Debt and Equity Securities,"* management deemed its investment in Sequenom, Inc. to be available for sale
      and
      reported its investment at fair value with net unrealized gains or losses
      reported in accumulated other comprehensive (loss) income within stockholders'
      equity. At March 31, 2007 the investment was written down to $468,132, resulting
      in a loss of $668,246. In April 2007 the entire investment in Sequenom, Inc.
      was
      sold for $468,132.





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 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 or 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 and nine months ended September 30, 2007.





Note
      -
      6  **Stock
      Based Compensation**





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 requires 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, and became effective during the reporting period ended March
      31,
      2006.





The
      Company adopted the modified prospective method in accounting for share-based
      payment 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. Previously, as permitted by
      SFAS No. 123, the Company accounted for share-based payments to employees using
      the APB No. 25 intrinsic value method and recognized 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 future. However, valuation of employee stock options under 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.





9


**CADUS
        CORPORATION**
 **Notes
        to Condensed Consolidated Financial Statements**


Pro
      forma
      net income and basic and diluted earnings per share as if the fair-value-based
      method had been applied to all awards is not required since all options were
      vested prior to all periods presented.





Options
      granted under the Company’s 1996 Incentive Plan expire ten years from date of
      grant. Under the 1996 Incentive Plan, there are currently outstanding options
      to
      purchase 2,500 shares of common stock at $6.38 per share. The following table
      summarizes stock option information for such grants as of September 30,
      2007:




Options
                Outstanding
            
            Options
                ExercisableRange
                ofExercise
                Prices
            
            NumberOutstanding
            
            Weighted
                Average RemainingContractual
                Life
            
            Weighted
                AverageExercise
                Price
            
            NumberExercisable
            
            Weighted
                AverageExercise
                Price$6.38
            
            
            2,500
            
            
            0.18
            
            $
            6.38
            
            
            2,500
            
            $
            6.38





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 (loss) income, a component of
                stockholders’ equity. There was no comprehensive income for the three and
                nine months ended September 30,
                2007.





Other
      comprehensive income for the three and nine months ended September 30, 2006
      was:





ThreeMonths
            
            NineMonthsNet
                income
            
            $
            200,335
            
            $
            376,553Accumulated
                other comprehensive income
            
            
            59,608
            
            
            13,431Comprehensive
                income
            
            $
            259,943
            
            $
            389,984





Note
      -
      8  **Recently
      Issued Accounting Pronouncements**





In
      June
      2006, the FASB issued Financial Interpretation No. 48, “ *Accounting
      for Uncertainty in Income Taxes - an interpretation of FASB Statement No.
      109* ”
(“FIN
      48”). This interpretation clarifies the accounting for uncertainty in income
      taxes recognized in an entity’s financial statements and prescribes recognition
      thresholds and measurement attributes for tax positions taken in a tax return.
      The Company adopted FIN 48 as of January 1, 2007 and the adoption did not have
      a
      material impact to the Company’s consolidated financial statements.





10


**CADUS
        CORPORATION**
 **Notes
        to Condensed Consolidated Financial Statements**


In
      September 2006, the FASB issued Statement No. 157, “ *Fair
      Value Measurements* .”
SFAS
      157 defines fair value, establishes a framework and gives guidance regarding
      the
      methods used for measuring fair value, and expands disclosures about fair value
      measurements. SFAS 157 is effective for financial statements issued for fiscal
      years beginning after November 15, 2007, and interim periods within those fiscal
      years. The application of SFAS 157 will not have a material effect on our
      results of operations and financial position.




11





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, 2007, the Company had an accumulated deficit of approximately
      $33.3 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 September 30, 2007 and September 30, 2006*





*Revenues*





There
      were no revenues for the three months ended September 30, 2007 and
      2006.





*Costs
      and Expenses*





General
      and administrative expenses decreased to $103,816 for the three months ended
      September 30, 2007 from $122,383 for the same period in 2006. Professional
      fees
      and patent costs decreased by $18,465. There was a net decrease in other
      expenses of $102.





For
      the
      three months ended September 30, 2007, the Company recognized income of $3,919
      in its investment in Laurel Partners Limited Partnership. The income from such
      investment for the same period in 2006 was $3,300.





*Interest
      Income*





Interest
      income for the three months ended September 30, 2007 was $340,124 compared
      to
      interest income of $319,418 for the same period in 2006. This increase is
      attributable primarily to higher interest rates earned on invested
      funds.





*Net
      Income*





Net
      income for the three months ended September 30, 2007 was $240,227, compared
      to
      net income of $200,335 for the same period in 2006. This increase in net income
      can be attributed primarily to a decrease in expenses of $18,567, and an
      increase in interest income of $20,706.




12




*Nine
      Months Ended September 30, 2007 and September 30, 2006*





*Revenues*





Revenues
      for the nine months ended September 30, 2007 and 2006 were $100,000, which
      is
      the annual maintenance fee from OSI.





*Costs
      and Expenses*





General
      and administrative expenses decreased to $530,023 for the nine months ended
      September 30, 2007 from $603,289 for the same period in 2006. Professional
      fees
      and patent costs decreased by $69,135 and franchise taxes decreased by $6,237.
      There was a net increase in other expenses of $2,106.





For
      the
      nine months ended September 30, 2007 the Company recognized income of $9,989
      in
      its investment in Laurel Partners Limited Partnership. The income from such
      investment for the same period in 2006 was $8,668.





*Interest
      Income*





Interest
      income for the nine months ended September 30, 2007 was $989,766 compared to
      interest income of $871,154 for the same period in 2006. This increase is
      attributable primarily to higher interest rates earned on invested
      funds.





*Net
      (Loss) Income*





Net
      loss
      for the nine months ended September 30, 2007 was $99,282 compared to net income
      of $376,533 for the same period in 2006. This decrease in income can be
      attributed primarily to a $668,246 loss on the sale of marketable securities
      offset by an increase in interest income of $118,612 and a decrease in expenses
      of $73,266.





*Liquidity
      and Capital Resources*





At
      September 30, 2007, the Company held cash and cash equivalents of approximately
      $25.7 million. The Company's working capital at September 30, 2007 was
      approximately $25.6 million.





The
      Company believes that its existing capital resources, together with interest
      income, will be sufficient to support its operations through the end of 2008.
      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.





13




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, 2006 as filed
      with
      the Securities and Exchange Commission on March 30, 2007.





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.




14




**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
              12, 2007
            By:
            /s/ David
              BlitzDavid
                Blitz
              President
                and Chief Executive Officer
              (Authorized
                Officer and Principal Financial Officer)




15




**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




16