UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

|ý                                                             | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|For the Fiscal Year Ended December 31, 2007                  
|OR                                                           
|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 0-27628

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SUPERGEN, INC.(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction
of incorporation or organization)           |  | 91-1841574(IRS Employer
Identification Number)
|-------------------------------------------------------------------------------- |  | ----------------------------------------------
|4140 Dublin Blvd., Suite 200, Dublin, CA(Address of principal executive offices) |  | 94568(Zip Code)                               
|Registrant's telephone number, including area code:(925) 560-0100               

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Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Name of each exchange on which registered:Common Stock, $0.001 par value per share

The NASDAQ Stock Market LLC


Securities
registered pursuant to Section 12(g) of the Act:None

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o No ý

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 ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K. o

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

|Large accelerated filer o |  | Accelerated filer ý |  | Non-accelerated filer o (Do not check if a smaller reporting company) |  | Smaller reporting company o
|------------------------- |  | ------------------- |  | --------------------------------------------------------------------- |  | ---------------------------

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes o No ý

The aggregate market value of the voting stock held by non-affiliates of the Registrant (based on the closing sale price of the Common Stock as
reported on the Nasdaq Stock Market on June 30, 2007, the last business day of the Registrant's most recently completed second fiscal quarter) was approximately $316,460,477. This determination
of affiliate status is not necessarily a conclusive determination for other purposes. The number of outstanding shares of the Registrant's Common Stock as of the close of business on March 4,
2008 was 57,520,094.

DOCUMENTS INCORPORATED BY REFERENCE

Items 10, 11, 12, 13 and 14 of Part III incorporate by reference information from the definitive proxy statement for the Registrant's Annual Meeting
of Stockholders to be held on June 12, 2008.



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SUPERGEN, INC.    2007 ANNUAL REPORT ON FORM 10-K    TABLE OF CONTENTS

|           |          |     |                                                                                                              | Page
|---------- | -------- | --- | ------------------------------------------------------------------------------------------------------------ | ----
|PART I     |          |     |                                                                                                              |     
|           | Item 1.  |     | Business                                                                                                     |     
|           | Item 1A. |     | Risk Factors                                                                                                 |     
|           | Item 1B. |     | Unresolved Staff Comments                                                                                    |     
|           | Item 2.  |     | Properties                                                                                                   |     
|           | Item 3.  |     | Legal Proceedings                                                                                            |     
|           | Item 4.  |     | Submission of Matters to a Vote of Security Holders                                                          |     
|PART II    |          |     |                                                                                                              |     
|           | Item 5.  |     | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |     
|           | Item 6.  |     | Selected Financial Data                                                                                      |     
|           | Item 7.  |     | Management's Discussion and Analysis of Financial Condition and Results of Operations                        |     
|           | Item 7A. |     | Quantitative and Qualitative Disclosures About Market Risk                                                   |     
|           | Item 8.  |     | Financial Statements and Supplementary Data                                                                  |     
|           | Item 9.  |     | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |     
|           | Item 9A. |     | Controls and Procedures                                                                                      |     
|           | Item 9B. |     | Other Information                                                                                            |     
|PART III   |          |     |                                                                                                              |     
|           | Item 10. |     | Directors, Executive Officers and Corporate Governance Matters                                               |     
|           | Item 11. |     | Executive Compensation                                                                                       |     
|           | Item 12. |     | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |     
|           | Item 13. |     | Certain Relationships and Related Transactions and Director Independence                                     |     
|           | Item 14. |     | Principal Accounting Fees and Services                                                                       |     
|PART IV    |          |     |                                                                                                              |     
|           | Item 15. |     | Exhibits and Financial Statement Schedules                                                                   |     
|SIGNATURES |          | S-1

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Special Note Regarding Forward-Looking Statements

Our disclosure and analysis in this report contain forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act, and within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide our current expectations or forecasts
of future events. When we use the words "anticipate," "estimate," "project," "intend," "expect," "plan," "believe," "should," "likely" and similar expressions, we are making forward-looking
statements. In particular, these statements include statements such as: our estimates about becoming profitable; our forecasts regarding our research and development expenses; and our statements
regarding the sufficiency of our cash to meet our operating needs. Our actual results could differ materially from those predicted in the forward-looking statements as a result of risks and
uncertainties including, but not limited to, delays and risks associated with conducting and managing our clinical trials; developing products and obtaining regulatory approval; ability to establish
and maintain collaboration relationships; competition; ability to obtain funding; ability to protect our intellectual property; our dependence on third party suppliers; risks associated with the
hiring and loss of key personnel; adverse changes in the specific markets for our products; and ability to launch and commercialize our products. Certain unknown or immaterial risks and uncertainties
can also affect our forward-looking statements. Consequently, no forward-looking statement can be guaranteed and you should not rely on these forward-looking statements.

The forward-looking statements reflect our position as of the date of this report, and we undertake no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K, or other filings. Also note that we provide a cautionary discussion of risks and uncertainties relevant to our business
under Item 1ARisk Factors in this report. These are currently known and material risks that we believe could cause our actual results to differ materially from expected and
historical results. Other unknown and immaterial risks besides those listed in this report could also adversely affect us.

PART I

ITEM 1. BUSINESS.

We incorporated in March 1991 as a California corporation and changed our state of incorporation to Delaware in May 1997. Our executive offices are located at
4140 Dublin Blvd., Suite 200, Dublin, CA, 94568 and our telephone number at that address is (925) 560-0100. We maintain a website on the internet at www.supergen.com. This is
a textual reference only. We do not incorporate the information on our website into this annual report on Form 10-K, and you should not consider any information on, or that can be
accessed through, our website as part of this annual report on Form 10-K.

Overview

We are a pharmaceutical company dedicated primarily to the discovery, development and commercialization of therapies to treat patients with cancer. Historically
we acquired products that were developed by other companies and applied additional developmental effort to expand sales or advance these products clinically towards potential approval for marketing.
In 2006, Dacogen received approval for marketing in the United States, Nipent and our commercial infrastructure was sold, and we acquired a discovery and development company to internally discover and
develop our own products. These changes have been implemented to mitigate the escalating risk of competitive in-licensing and maximize the return on both existing resources and our
incoming royalty and milestone revenue.

Our
new drug application ("NDA") for Dacogen was approved by the United States Food and Drug Administration ("FDA") in May 2006 for the treatment of patients with myelodysplastic
syndromes ("MDS"). In September 2004, we had executed an agreement granting MGI PHARMA Inc. ("MGI") exclusive worldwide rights to the development, manufacture, commercialization and

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distribution
of Dacogen. In July 2006, MGI executed an agreement to sublicense Dacogen to Janssen-Cilag GmbH, a Johnson & Johnson company, granting exclusive development and
commercialization rights in all territories outside North America. Janssen-Cilag companies are responsible for conducting regulatory and commercial activities related to Dacogen in all territories
outside North America, while MGI retains all commercialization rights and responsibility for all activities in the United States, Canada and Mexico.

Our
current developmental efforts revolve around the products progressing out of our acquisition of Montigen Pharmaceuticals, Inc. ("Montigen"), a small-molecule drug discovery
company, in April 2006. We initiated Phase I in-human clinical trials in July 2007 and initiated Phase Ib clinical trials in late 2007 for the first Montigen product,
MP-470, a multi-targeted Tyrosine Kinase inhibitor ("TKI") that may have Rad 51 activity.

Strategy

We are a pharmaceutical company dedicated to the discovery, development and commercialization of therapies to treat patients with cancer. Our founding strategy
was to acquire rights to late stage clinical products and commercialize these products by executing selective developmental and commercialization strategies that might allow these products to come
into the market and be utilized by the widest possible patient populations. The competition for late-stage compounds that can be obtained through licensure or acquisition, that have shown
initial efficacy in humans, has increased significantly with most major pharmaceutical companies taking positions in this market. The acquisition of Montigen mitigates the competitive risk of
in-licensure and may allow us to out-license selective products to our licensing competitors or other pharmaceutical companies. Our primary objective is to become a leading
developer and seller of therapies for patients suffering from cancer. Key elements of our strategy include the following:

Discover and advance into clinical trials at least one product every twelve months.Our drug discovery group has optimized a
process called CLIMB that allows our developmental chemists and biologists to model previously unknown cancer targets. These targets become templates for computerized drug creation and
development. The flexibility and relatively low cost of both human and developmental capital for this type of discovery and development has allowed us to transition from just a licensee to a potential
licensor.

Focus on drug targets that are difficult to screen by traditional methods.Most established companies use some version of a
high through-put screening. This methodology does not work well for a wide variety of complex targets. Our modeling process has demonstrated an ability to create lead candidates for these
complex targets. One such area of future work is modeling protein to protein interactions that might be modified by small molecules.

Capitalize on our existing clinical expertise and regulatory development to maximize the commercial value of our
products.Computer and animal models are only modestly predictive of how a product might work in humans. We have acquired significant expertise at planning,
managing, and filing clinical data in both the United States and Europe. Proving the concept that a specific drug will translate into an approvable, commercially viable product in humans is a
difficult task. Some drug candidates demonstrate this "proof of concept" very early in pre-clinical development, while other drug candidates might need to be compared clinically to
existing therapies to achieve such a proof of concept. Typically this proof of concept comes in Phase II trials where it is demonstrated that a drug candidate can destroy tumors in specific
diseases. As product candidates move from pre-clinical into Phase I and Phase II studies, the potential value of the drug candidates should increase as the proof of concept
is achieved. Historically, products that are in Phase II trials command a higher in-licensing value than products that are still in Phase I trials.

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CLIMB Discovery Process

Traditional drug discovery processes may require five or more years of development before becoming a candidate suitable for the clinic. This lengthy timeline
leads to incredibly high research and development costs. Utilizing our CLIMB platform, we have effectively streamlined the discovery and lead optimization process in order to get potentially
life-saving therapeutics to the clinical testing stage of development faster and at a much lower cost. CLIMB is SuperGen's approach to small molecule drug discovery, which merges rapid
screening of compound libraries with computational chemistry and systems biology techniques to identify drug leads that bind to target proteins.

CLIMB
is an iterative and evolving process, incorporating techniques from computational design to laboratory bench biology and chemistry, to yield targeted therapeutics for use in the
clinic. In traditional small molecule screening, very large physical libraries of millions of compounds may be created and screened in order to identify the few that interact selectively with a
disease-related protein target. This approach has worked fairly well for simple or known targets, but is very time and cost intensive. Since CLIMB works with a virtual library of compounds and
compound fragments to screen against the target models, we can screen up to 2.5 million virtual compounds per day against very complex targets.

CLIMB
has been used to create models and identify products that have exhibited considerable activity by screening as few as several hundred rationally-selected compounds. This reduces
the time from target identification to clinical candidate by several years, and vastly decreases the cost of drug development. As part of CLIMB, our software development team is actively involved in
the creation of algorithms to integrate computation, biochemistry, medicinal chemistry and systems biology to improve the predictive properties of our models and streamline the drug discovery process
even further.

Products in Development

The chart below lists our current products or projects in development:

GRAPHIC

MP-470

MP-470 is a multi-targeted Tyrosine Kinase Inhibitor that inhibits mutant forms of c-kit, PDGFRa, and FLT3. These protein kinase targets
are involved in the growth and proliferation of cancer cells. MP-470 is also an inhibitor of Rad 51, a repair protein which is involved in resistance to a variety of

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chemotherapy
agents and radiation. We submitted an Investigational New Drug Application ("IND") to the FDA in March 2007, and initiated a first-in-human Phase I single
agent MP-470 trial in patients with refractory solid tumors and lymphomas in June 2007. This trial is ongoing and is expected to complete patient enrollment in 2008. The goal of this
Phase I trial is to establish the safety and toxicity of MP-470 and define a dose to take into Phase II studies. A second multi-arm Phase Ib trial of
MP-470 in combination with a variety of chemotherapy regimens was also initiated in 2007. The goal of this study is to establish the safety and dose of MP-470 in combination
with standard-of-care regimens used in cancer patients.

MP-529

The ability of cancer cells to rapidly divide weighs heavily on the functional machinery of cell division, such as the centrosome and spindle apparatus. If this
machinery is rendered nonfunctional, the cancer cells cannot proliferate. Aurora A kinase is a protein that regulates the organization of this cell division machinery. Our Aurora kinase inhibitor,
MP-529, was designed to block the action of Aurora A kinase, thus disrupting the machinery of cell division vital for cancer survival.

We
held a pre-IND meeting with the FDA in October 2007. Agreement was reached on key elements of the development plan and recommendations for further refinement and later
implementation in our program were discussed. The IND submission and the clinical program have been deferred pending identification of a more suitable formulation.

SGI-1776 Pim Kinase Inhibitor

Pim kinases are proteins that play a pivotal role in transformation of cancer cells. When Pim kinases are over-expressed in cells, it prevents them
from undergoing the programmed cell death pathway that occurs when cells malfunction. This can lead to unchecked cell propagation, or cancer. Our Pim kinase inhibitor effectively blocks the
pro-survival activity of Pim kinases, allowing these potentially malignant cells to self-abort.

S-110

Certain genes in our bodies, known as "tumor suppressor genes," do just as their name implies: suppress formation of tumors. If these genes are silenced, or
turned off, by a process known as methylation, cancer may ultimately form. In order to prevent these genes from being turned off, we have developed a compound called S-110 which targets
and blocks the mechanism by which methylation occurs, thus allowing tumor suppressor genes to remain "on."

JAK2 Inhibitor

JAK2 kinase is critical in a number of signaling pathways within cells. Activation of these pathways by JAK2 eventually leads to cell differentiation and
proliferation. When the activity of JAK2 kinase gets out of control, cancer may form. Irregularities in JAK2 kinase have been seen in many types of cancer, including leukemia. Our JAK2 Inhibitor is a
compound designed by us to get the erratic activity of JAK2 kinase in cancer cells back in check.

Products Recently Sublicensed or Sold

Dacogen

In September 2004, we executed a definitive agreement granting MGI exclusive worldwide rights to the development, manufacture, commercialization and distribution
of Dacogen. Under the terms of the
agreement, MGI made a $40.0 million equity investment in us and will pay up to $45.0 million in specific regulatory and commercialization milestones. To date, we have received
$32.5 million of these milestones. The Dacogen license has created a royalty income stream on worldwide net sales starting at 20% and escalating to a maximum of 30%.

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In
July 2006, MGI executed an agreement to sublicense Dacogen to Janssen-Cilag, a Johnson & Johnson company, granting exclusive development and commercialization rights in all
territories outside North America. In accordance with our license agreement with MGI, we are entitled to receive 50% of any payments MGI receives as a result of any sublicenses. We received
$5.0 million, or 50% of the $10 million upfront payment MGI received, and, as a result of both the original agreement with MGI and this sublicense with Janssen-Cilag, may receive up to
$17.5 million in future milestone payments as they are achieved for Dacogen globally. Janssen-Cilag will be responsible for conducting regulatory and commercial activities related to Dacogen in
all territories outside North America, while MGI retains all commercialization rights and responsibility for all activities in the United States, Canada and Mexico.

Nipent

We acquired Nipent from the Parke-Davis division of the Warner-Lambert Company (Pfizer) in 1996 and the remaining European rights in February 2004. We sold Nipent
in the United States and the EU for the treatment of hairy cell leukemia, a type of B-lymphocytic leukemia. Nipent had been our principal source of revenue from 1997-2006. We
sold the North American rights to Nipent to Mayne Pharma ("Mayne") in August 2006, and sold the remaining worldwide rights to Nipent to Mayne in April 2007.

Mitomycin, Paclitaxel, Etoposide

In April 2007, we sold the rights and related inventory to anticancer agents mitomycin and paclitaxel to Intas Pharmaceuticals Ltd. In May 2007, we also
sold the rights to generic etoposide to Intas.

Non-Core Products and Product Candidates

The following products, technology and developmental opportunities have been identified and valued as not critical to our future success. We are working to
further define and realize the value of each, which may include the selling, out-licensing, or finding marketing opportunities/partners.

|Product Category     |  | Compound                  |  | Indication or
Intended Use                    |  | Therapeutic
Category |  | Regulatory
Status
|-------------------- |  | ------------------------- |  | --------------------------------------------- |  | -------------------- |  | -----------------
|Anti-Cancer Products |  | Orathecin                 |  | Solid tumors                                  |  | Cancer               |  | Phase III        
|                    
|Formulation Products |  | Mitozytrex               |  | Solid tumors                                  |  | Cancer               |  | Approved         
|                     |  | Partaject busulfan        |  | Neoplastic meningitis/
bone marrow transplant |  | Cancer               |  | Phase I/II       
|                     |  | Partaject Orathecin       |  | Solid tumors                                  |  | Cancer               |  | Pre-clinical     
|                     |  | CZ 112                    |  | Solid tumors                                  |  | Cancer               |  | Phase I          
|                     |  | Cremophor-free paclitaxel |  | Solid tumors                                  |  | Cancer               |  | Pre-clinical     
|                    
|Product Candidates   |  | Avicine                   |  | Therapeutic Vaccine                           |  | Cancer               |  | Phase II         
|                     |  | VEGF                      |  | Anti-angiogenesis                             |  | Cancer               |  | Pre-clinical     
|                     |  | PZG                       |  | Lipid disorders                               |  | Type II Diabetes     |  | Phase II         
|                     |  | AM454                     |  | Phosphocholine derivative                     |  | Obesity/Diabetes     |  | Pre-clinical     

Orathecin.Orathecin is an oral chemotherapy compound in the camptothecin class, licensed from the Stehlin
Foundation for Cancer Research ("Stehlin") in 1997. Orathecin is a second-generation topoisomerase I inhibitor that causes single-strand breaks in the DNA of rapidly dividing tumor cells. Based on our
developmental program and clinical trial results, we believe that Orathecin may have significant advantages over many existing anti-cancer drugs, including efficacy, side effect profile
and oral dosing. Orathecin has been tested in 46 clinical trials in 17 tumor types and 7 hematologic malignancies in over 2,800 patients. Orathecin received orphan drug designation for pancreatic
cancer in both the United States and Europe. Similar marketing exclusivity is available in Japan.

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Stehlin
continues to hold the title to all inventions and other intellectual property made solely by employees or consultants of Stehlin with respect to Orathecin, and we hold the title
to all inventions and other intellectual property made solely by our employees or consultants in connection with activities under the agreement. Title to all inventions and other intellectual property
made jointly by employees or consultants of the parties in connection with the agreement are jointly owned by the parties. In the event Stehlin elects to license any product (other than the Orathecin
products) for human medicinal purposes for any uses that include pancreatic cancer or antineoplastic use, we have the right of first refusal to obtain from Stehlin a license under patents owned or
controlled by Stehlin to market such products.

Unless
terminated sooner as provided in the agreement, the agreement will continue in full force and effect on a country-by-country and licensed
product-by-licensed product basis until there are no remaining royalty payment obligations in a country, at which time the agreement will terminate in its entirety in such
country. We will continue to have a perpetual, non-exclusive, royalty-free license, with the right to grant sublicenses, to make, import, use, sell, offer for sale and
otherwise distribute and exploit the Orathecin products for human medicinal purposes in such country. We may terminate the agreement with respect to any country with 60 days written notice to
Stehlin. In addition, if either party materially breaches the agreement, the other party will have certain termination rights.
Further, either party may terminate the agreement if the other becomes the subject of a voluntary or involuntary petition in bankruptcy or any proceeding relating to insolvency, receivership or
liquidation for the benefit of creditors, if that petition or proceeding is not dismissed with prejudice within 60 days after filing.

Mitozytrex.Mitozytrex (mitomycin for injection), which is a formulation of generic mitomycin, was approved by the FDA in
November 2002 for use in the therapy of disseminated adenocarcinoma of the stomach or pancreas in proven combinations with other approved chemotherapeutic agents and as palliative treatment when other
modalities have failed. We cannot promote Mitozytrex as providing any injection site ulceration protection, nor can we promote any commercially viable increased stability, solubility or shelf
life extension, as compared to generic mitomycin. We must develop and submit additional data to the FDA in NDA supplements and receive FDA approval for additional claims. We are currently exploring
marketing opportunities and/or marketing partners for Mitozytrex.

Partaject Drug Delivery Technology.Partaject drug delivery technology is a drug delivery system that accommodates poorly
water-soluble and water-insoluble compounds by encapsulating them with a fatty layer, known as a phospholipid. The Partaject technology involves coating particles of a drug that are of submicron or
near micron size with a membrane-forming phospholipid layer, thereby permitting the creation of a suspension of the drug rather than a solution, and its intravenous injection without the use of
potentially toxic solubilizing agents. As a result, we believe the Partaject technology may reduce toxicity created by other injectable forms of delivery mechanisms and potentially increase efficacy
by facilitating delivery of compounds whose prior intravenous delivery was impractical because of solubility-related formulation difficulties.

Busulfan
is currently marketed in an oral dosage form by GlaxoSmithKline for the palliative treatment of chronic myelogenous leukemia. It is used "off-label" as a bone marrow
ablating agent prior to bone marrow transplants. In 1998, we completed a Phase I clinical trial of Partaject busulfan at both Johns Hopkins Oncology Center and Duke University Medical Center. A
Phase I clinical trial in pediatric bone marrow ablation has been completed in 35 patients at St. Jude's Children's Hospital in Memphis.

Oral Prodrug Delivery TechnologyCZ 112.Oral prodrug delivery technology involves administering an inactive
compound, known as a prodrug, which is absorbed in the digestive tract and is converted enzymatically to an active agent in the liver. Oral prodrug delivery technology could potentially enable the
oral delivery of drugs that are otherwise only used in an intravenous formulation. The resulting active compounds may pass through the systemic circulation and act at peripheral sites.

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We
are applying the oral prodrug delivery technology to compounds selected for their potential either to serve as oral delivery agents for systemically active chemotherapeutic or radio sensitizing
drugs previously available only in intravenous form. CZ 112 is an oral prodrug for Orathecin we licensed from Stehlin in November 1999 after initial Phase I testing.

Cremophor-Free Paclitaxel.In January and October 2000, we were issued two United States patents for a
cremophor-free formulation of paclitaxel. We were issued a third patent for an oral formulation in November 2001. We believe that these patents have important clinical and strategic
implications as such a formulation obviates the need for pre-medication, which is currently required with the use of paclitaxel. We believe that the lack of pre-medication and
an oral formulation will prove to be major competitive advantages in the paclitaxel market.

Avicine.In July 2000, we acquired the sales and marketing rights in the United States to Avicine from AVI
BioPharma, Inc. ("AVI"). Avicine is a therapeutic cancer vaccine and has completed Phase II clinical trials for colorectal and pancreatic cancer.

VEGF (Anti-Angiogenesis).In February 2001, we licensed from Peregrine Pharmaceuticals (formerly known as
Techniclone Corp.) a platform drug-targeting technology known as Vascular Targeting Agent ("VTA"). The licensed technology is related to Vascular Endothelial Growth Factor ("VEGF"). The
VTA technology is a proprietary platform designed to specifically target a tumor's blood supply and subsequently destroy the tumor with various attached therapeutic agents. We sublicensed this
technology to Targa Therapeutics Corp. ("Targa") in 2006.

PZG.PZG is a product for treatment of Type II, or adult-onset, diabetes. Animal studies and early clinical studies of
PZG suggest that it may help to control the blood sugar and lipid abnormalities of diabetes, and may have utility in treating a lipid disorder unrelated to diabetes called hypertriglyceridemia,
obesity, hypertension and the uremia of renal failure. We initiated a small, well-defined and controlled Phase II study to characterize the hypoglycemic and lipid-lowering effects
of PZG in Type II diabetes.

AM454.AM 454 is a DHEA phosphocholine derivative which may have utility in obesity and diabetes.

Proprietary Formulation Technology.We have developed several applications for our proprietary formulation technology, a
platform technology that employs the use of an inert chemical excipient, cyclodextrin, combined with a drug. Most anti-cancer drugs are cytotoxic, and most must be administered
intravenously. If a vein is missed on injection, the drug can leak to surrounding tissue, causing ulceration that sometimes requires plastic surgery to correct. Our proprietary formulation
technology is designed to "shield" the drug from the injection site, thus helping to provide the patient protection from tissue ulceration. It may also increase the relative solubility of
hard-to-dissolve anti-cancer drugs, hence potentially increasing its stability or shelf life. Each of these benefits must be supported by appropriate data and
approved by the FDA as part of an NDA filing. We believe that such features, if approved by the FDA, will result in our formulation products having a significant competitive advantage over their
counterparts currently on the market. In March 1994, we acquired exclusive worldwide rights to the patented cyclodextrin technology used in our formulation technology from Janssen Biotech, N.V.
and others.

Acquisition of New Products and Technologies

We are continually reviewing new product development opportunities in an effort to enhance and create a broader product pipeline for future development.

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On April 4, 2006, we completed our acquisition of Montigen, a privately held, oncology-focused drug discovery and development company headquartered in Salt Lake City, Utah.
Montigen's assets included its research and development team, a proprietary drug discovery technology platform and optimization process, CLIMB, and late-stage pre-clinical
compounds targeting Aurora-A Kinase and members of the Tyrosine Kinase receptor family. Pursuant to the terms of the merger agreement, we paid the Montigen stockholders a total of
$17.9 million upon the closing of the transaction, consisting of $9.0 million in cash and $8.9 million in shares of SuperGen common stock. In April 2007, we paid the former
Montigen stockholders a milestone payment of approximately $10.0 million, which was paid in shares of our common stock. We will pay the Montigen stockholders an additional $12.0 million
in shares of our stock, contingent upon achievement of additional regulatory milestones. The acquisition of Montigen has strengthened our pre-clinical development efforts while we continue
to focus on later-stage opportunities as well.

Research and Development

Because of the stage of our development and the nature of our business, we expend significant resources on research and development activities. We expended
$23.4 million in 2007, $16.5 million in 2006, and $15.1 million in 2005 on research and development. We conduct research internally and also through collaborations with third
parties, and we intend to maintain our strong commitment to our research and development efforts in the future. Our major research and development projects in past years included Dacogen, Orathecin,
and studies on additional uses for Nipent, while our current research and development efforts are focused on our drug discovery and pre-clinical activities as well as Phase I and
Phase Ib clinical trials for MP-470.

Sales and Marketing

We currently have no employees focused on sales, marketing, and sales support. Our marketing efforts are handled by our Corporate Communications and Business
Development group.

Manufacturing

We currently outsource manufacturing for all of our product candidates to qualified United States and foreign suppliers. We expect to continue to outsource
manufacturing in the near term. We believe our current suppliers will be able to efficiently manufacture our proprietary compounds in sufficient quantities and on a timely basis, maintaining product
quality and compliance with FDA and foreign regulations. We maintain oversight of the quality of our third-party manufacturers through ongoing audits, rigorous review, control over documented
operating procedures, and thorough analytical testing by qualified, contracted laboratories. We believe that our current strategy of outsourcing manufacturing is cost-effective because we
avoid the high fixed costs of plant, equipment, and large manufacturing staffs.

The
FDA must issue marketing clearance and deem a manufacturer acceptable under current good manufacturing practices ("GMPs") before release of active pharmaceutical ingredients ("API"),
finished dosage forms, including proprietary and generic drugs for commercial sale may begin.

We
intend to continue evaluating our manufacturing requirements and may establish or acquire our own facilities to manufacture our products for commercial distribution if doing so would
reduce costs or improve control and flexibility of product supply.

Government Regulation: New Drug Development and Approval Process

Regulation by governmental authorities in the United States and other countries is a significant factor in the manufacture and marketing of pharmaceuticals and in
our ongoing research and development activities. All of our drug products will require regulatory approval by governmental

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agencies
prior to commercialization. In particular, human therapeutic products are subject to rigorous pre-clinical testing, clinical trials, and other pre-marketing approval
requirements by the FDA and regulatory authorities in other countries. In the United States, various federal, and in some cases state statutes and regulations, also govern or have an impact upon the
manufacturing, safety, labeling, storage, record-keeping and marketing of such products. The lengthy process of seeking required approvals and the continuing need for compliance with applicable
statutes and regulations require the expenditure of substantial resources. Regulatory approval, when and if obtained, may be limited in scope which may significantly limit the indicated uses for which
a product may be marketed. Further, approved drugs, as well as their manufacturers, are subject to ongoing review and inspections which could reveal previously unknown problems with such products,
which may result in restrictions on their manufacture, sale or use or in their withdrawal from the market.

The
process for new drug approval has three major stages, discovery, pre-clinical and clinical:

Drug discovery.In the initial stages of drug discovery, large numbers of potential compounds are screened for activity. This
drug discovery process can take several years. Once a company defines a lead compound, the next steps are to conduct further preliminary studies on the mechanism of action,in
vitro(test tube) screening against particular disease targets and somein vivo(animal) screening. If the compound passes these
hurdles, animal toxicology studies are initiated. If the results demonstrate acceptable levels of toxicity, the compound emerges from the basic research mode and moves into the
pre-clinical phase.

Pre-clinical testing.During the pre-clinical testing stage, laboratory and animal studies are
conducted to show biological activity of the compound against the disease target and the compound is evaluated for safety. These tests can take several years to complete and must be conducted in
compliance with Good Laboratory Practice ("GLP") regulations.

Clinical TestingThe Investigational New Drug Application.After appropriate animal testing is evaluated and the
candidate molecule is found to have an acceptable safety profile, we may decide to expand the development programs to a clinical setting. To accomplish this in the United States an IND is submitted to
the FDA. Health authorities in Europe and the rest of the world require a similar clinical trial application. If the controlling authority does not object, we may initiate human testing. These
applications include the known chemistry of the compound, how the compound is manufactured, the results of animal studies and other previous experiments, the method by which the drug is expected to
work in the human body, a proposed clinical development plan and how, where and by whom the proposed new clinical studies will be conducted. All clinical trials must be conducted in accordance with
globally-accepted standards of good clinical practices ("GCPs"). This means we have specific obligations to protect trial subjects and potential patients, monitor the study, collect the data and
prepare a report of the study. Clinical trial applications must be updated with new information obtained during the course of the trials.

Clinical
protocols must be approved by independent reviewers, referred to as Institutional Review Boards ("IRB") in the United States and Ethical Committees in Europe. The IRB is charged
with providing an independent assessment of the appropriateness of the study, particularly focusing on the safety of the patients that might enroll in the study. The IRB's responsibilities continue
while the study is ongoing, focusing on protecting the rights and safety of those enrolled in the study.

We
have an obligation to provide progress reports on clinical trials at least annually to the FDA. The FDA may, at any time during a clinical trial, impose a "clinical hold" if it has
serious safety concerns about a trial. If this occurs, the clinical trial cannot continue until the FDA is satisfied that it is appropriate to proceed.

Clinical Development Plan.Clinical trials are typically conducted in three sequential phases, but the phases may overlap.

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Phase I clinical trials.After an IND becomes effective, Phase I human clinical trials can begin. These trials
generally involve 20 to 80 healthy patients and typically take approximately one year to complete. These trials are designed to evaluate a drug's safety profile and may include studies to assess the
optimal safe dosage range. Phase I clinical studies may evaluate how a drug is absorbed, distributed, metabolized and excreted from the body.

Phase II clinical trials.In Phase II clinical trials, studies are conducted in patients who have the targeted
disease. The primary purpose of these trials is to evaluate the safety of the drug in the target patient population but often preliminary efficacy data is also obtained. These studies typically take a
few years to complete. For anti-cancer drugs, the first human studies are referred to as Phase I/II studies because they evaluate safety and preliminary efficacy directly in the
target patient population. This is done because most anti-cancer drugs are very toxic and cannot be administered to healthy subjects, as is typical in Phase I studies in other
therapeutic areas such as cardiovascular, central nervous system and infectious diseases.

Phase III clinical trials.These trials are typically large, involving several hundred or even thousands of patients.
Phase III trials typically compare an investigational agent against a control product which could be a product already approved for use in that disease or a placebo. During these trials,
physicians record observations as defined in the sponsor's protocol onto Case Report forms. The data generated in these studies are monitored regularly by company clinical monitors as well as the
participating physician. There are specific requirements for the physician to report any adverse reactions that may result from the use of the drug. Company clinical monitors visit the sites regularly
and transmit the data back to the company for analysis and ultimately for presentation to the FDA.

Marketing application.Companies have the opportunity to interact with health authorities during the course of a drug
development program. Most companies take advantage of this access to gain further insights about the kinds of data that will be expected in their marketing application. After completion of the
clinical trial phase, a company must compile all of the chemistry, manufacturing, pre-clinical and clinical data into a marketing application. In the United States, this is called a New
Drug Application; in the EU it is called a Marketing Authorization Application ("MAA"). This is a significant amount of information, often in excess of 100,000 pages, and it will be independently
reviewed by these health authorities.

Both
the FDA and the European Medicines Evaluation Agency ("EMEA") review these submissions for overall content and completeness before accepting them for review and may request
additional
information. Once an application is accepted for filing, each agency independently begins its in-depth review. In both the United States and Europe, there are specified timeframes for the
completion of review. This process may be extended if an agency requests additional information or clarification regarding the data provided in the submission.

In
the United States, the FDA may refer the application to an appropriate advisory committee for a recommendation as to whether the application should be approved, but the FDA is not
bound by this recommendation. If FDA evaluations of the NDA and the manufacturing facilities are favorable, the FDA may issue either an approval letter or an approvable letter. The latter typically
contains a number of conditions that must be met in order to secure final approval. When and if those conditions are met to the FDA's satisfaction, the FDA will issue an approval letter, authorizing
commercialization of the drug for specific indications. If the FDA's evaluation of the NDA submission or manufacturing facilities is not favorable, the FDA may reject the application by issuing a
non-approvable letter. The review and approval process in Europe has substantial similarities to that outlined for the United States.

Marketing approval.When a health authority grants marketing approval for a drug, it can now be made available in that
country or region. Periodic safety reports must be submitted to health authorities as a way to monitor the use of new drugs introduced to the market. Regulatory agencies around the

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world
place great emphasis on pharmacovigilance, the process of monitoring the safety of a drug when it is released for general use, as the real world setting is very different from the controlled
environment of clinical trials.

Phase IV clinical trials and post marketing studies.In addition to studies that might have been requested by health
authorities as a condition of approval, clinical trials may be conducted to generate more information about the drug after initial approval of the product; including use for additional indications,
the use of new dosage forms or new dosing regimens. These studies may generate approved label changes and publications that provide further information to patients and the medical community.

Fast Track.The FDA Modernization Act of 1997 specifies that the FDA can assign a fast track designation to a new drug or
biologic product that is intended for the treatment of a serious or life-threatening condition and has the potential to address unmet medical needs for such a condition. Under this
program, the sponsoring company may request this designation at any time during the development of the product. The FDA must determine whether the product qualifies within 60 days of receipt of
the sponsoring company's request. For a product designated as fast track, the FDA has the ability to define a faster review, including allowing the sponsor to provide the NDA in discrete sections.
This process is called a "rolling" NDA and is intended to accelerate the review and approval process.

SuperGen
obtained fast track designations for Orathecin for the treatment of patients with locally advanced or metastatic pancreatic cancer and for Dacogen for the treatment of patients
with MDS and intends to seek such designation for other products, where appropriate. We cannot predict the ultimate impact, if any, of the fast track process on the timing or likelihood of FDA
approval of any of our future products.

Priority Review.This is a designation by the FDA for a review period of 6 months, instead of the standard
10 months defined by federal regulation.

Accelerated Approval.This is a program intended to make promising products for life-threatening diseases
available on the market on the basis of preliminary evidence prior to formal demonstration of patient benefit.

Approvals in the European Union.In 1993, the EU established a system for the registration of medicinal products in the EU
whereby marketing authorization may be submitted at either a centralized or decentralized level. The centralized procedure is administered by the EMEA and is mandatory for the approval of
biotechnology products and is available, at the applicant's option, for other innovative products. The centralized procedure provides for the granting of a single marketing authorization that is valid
in all EU member states. A mutual recognition procedure is available at the request of the applicant for all medicinal products that are not subject to the mandatory centralized procedure, under a
decentralized procedure.

Approvals outside of the United States and EU.Applications to market a new drug product must be made to virtually all
countries prior to marketing. The approval procedure and the time required for approval vary from country to country and may involve additional testing and cost. There can be no assurance that
approvals will be granted on a timely basis or at all. In addition, pricing approval is required in many countries and there can be no assurance that the resulting prices would be sufficient to
generate an acceptable return on investment.

Off-Label Use.Drugs are approved for a specific use ("label use") that is then set forth in the document
("label") accompanying the dispensed drug. Physicians may prescribe drugs for uses that are not approved in the product's label. Such "off-label" prescribing may be used by physicians
across medical specialties. The FDA does not regulate the behavior of physicians in their choice of treatments but it does limit a manufacturer's communications on the subject of off-label
use. Companies cannot

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promote
FDA approved drugs for off-label uses, nor can companies promote the use of a drug before it is approved.



As a United States-based company, in addition to laws and regulations enforced by the FDA, we are also subject to regulation by other agencies under the
Occupational Safety and Health Act, the Environmental Protection Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act and other present and potential future federal, state
or local laws and regulations. These agencies have specialized responsibilities to monitor the controlled use of hazardous materials such as chemicals, viruses and various radioactive compounds.

Market Exclusivity

The commercial success of a product, once it is approved for marketing, will depend primarily on a company's ability to create and sustain market share and
exclusivity. Market exclusivity can be gained and maintained by a number of methods, including, but not limited to: patents, trade secrets, know-how, trademarks, branding and special
market exclusivity provided by regulations.

Data Exclusivity and Generic Copies

There is an abbreviated regulatory review and approval process for a generic copy of an approved drug product. The generic drug can be approved on the basis of an
application that is usually limited to manufacturing and biologic equivalence data, with reference to the non-clinical and clinical data that were the bases of approval of the innovator
product. The copy can be approved after expiration of relevant patents, and regulatory exclusivity afforded by special circumstances. A new chemical entity will have 5 or 10 years of regulatory
exclusivity in the United States or European Union, precluding approval of a generic copy. Additional exclusivity can be afforded by approval of a product or use that has orphan drug status
(7 years), or that requires review of new clinical data (3 years), or is for expansion of use to a pediatric population (6 months). These exclusivities are independent, and could
run sequentially, effectively extending the period of market exclusivity. There is no assurance that such special regulatory exclusivities are applicable for our compounds. Further, a company seeking
to market a generic might successfully challenge the patent protection of the marketed drug, thereby shortening its exclusive marketing period.

Orphan Drug Designation

The United States, European Union, Japan and Australia have all enacted regulations to encourage the development of drugs intended to treat rare diseases. Orphan
drug designation must be requested before submitting an application for marketing approval. After the granting of an orphan drug designation, the chemical identity of the therapeutic agent and its
potential treatment use are disclosed publicly. If and when a product with orphan drug status receives marketing approval for the orphan indication, the product is entitled to marketing exclusivity,
which means the regulatory authority may not approve any other applications to market the same drug for the same indication for seven years in the United States, ten years in Europe and Japan and four
years in Australia.

Patents and Proprietary Technology

Patents are very important to us in establishing proprietary rights to the products we develop or license. The patent positions of pharmaceutical and
biotechnology companies, including us, can be uncertain and involve complex legal, scientific, and factual questions. See "Risk FactorsOur ability to protect our
intellectual property rights will be critically important to the success of our business, and we may not be able to protect these rights in the United States or abroad."

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We
actively pursue patent protection when applicable for our proprietary products and technologies, whether they are developed in-house or acquired from third parties. We
attempt to protect our intellectual property position by filing United States and foreign patent applications related to our proprietary technology, inventions and improvements that are important to
the development of our business. Importantly, we are prosecuting a number of patent applications directed to various compounds in our pipeline, including those from our Discovery group. Additionally,
we have been granted patents and have received patent licenses relating to our proprietary formulation technology, non-oncology and non-core technologies.

There
can be no assurance that the patents granted or licensed to us will afford adequate legal protection against competitors or provide significant proprietary protection or
competitive advantage. The patents granted or licensed to us could be held invalid or unenforceable by a court, or infringed or circumvented by others. In addition, third parties could also obtain
patents that we would need to license or circumvent. Competitors or potential competitors may have filed patent applications or received patents, and may obtain additional patents and proprietary
rights relating to proteins, small molecules, compounds, or processes that are competitive with the products we are developing.

In
general, we obtain licenses from various parties we deem necessary or desirable for the development, manufacture, use, or sale of our products or product candidates. Some of our
proprietary products are dependent upon compliance with numerous licenses and agreements. These licenses and agreements may require us to make royalty and other payments, to reasonably exploit the
underlying technology of applicable patents, and to comply with regulatory filings. If we fail to comply with these and other terms in these licenses and agreements, we could lose the underlying
rights to one or more of these potential products, which would adversely affect our product development and harm our business.

We
also have patents, licenses to patents and pending patent applications outside of the United States, such as in Europe, Australia, Japan, Canada, Mexico, China, Israel and India.
Limitations on patent protection in these countries, and the differences in what constitutes patentable subject matter in these countries outside the United States, may limit the protection we have on
patents issued or licensed to us outside the United States. In addition, laws of foreign countries may not protect our intellectual property to the same extent as would laws in the United States. To
minimize our costs and expenses and maintain effective protection, we focus our foreign patent and licensing activities primarily in the European Union, Canada, Australia and Japan. In determining
whether or not to seek a patent or to license any patent in a certain foreign country, we weigh the relevant costs and benefits, and consider, among other things, the market potential and
profitability, the scope of patent protection afforded by the law of the jurisdiction and its enforceability, and the nature of terms with any potential licensees. Failure to obtain adequate patent
protection for our proprietary drugs and technology would impair our ability to be commercially competitive in these markets.

Trade Secrets and Trademarks

We also rely on trade secret protection for certain proprietary technology. To protect our trade secrets and our other confidential information, we pursue a
policy of having our employees and consultants execute proprietary information agreements upon commencement of employment or consulting relationships with us. These agreements provide that all
confidential information developed or made known to the individual during the course of the relationship is confidential except in specified circumstances. Further, we minimize the dissemination of
our trade secrets by limiting the knowledge of staff only to the specific knowledge of a trade secret to what they need to know, and protective sequestering of trade secrets behind, for example, locks
and passwords.

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Competition

The pharmaceutical industry in general and the oncology sector in particular is highly competitive and subject to significant and rapid technological change.
There are many companies, both public and private, including well-known pharmaceutical companies that are engaged in the discovery and development of products for some of the applications
that we are pursuing. Some of our competitors and probable competitors include Rigel, Exelixis, SGX, Millennium, Sanofi-Aventis, Bristol-Myers Squibb Company, Celgene, Eli Lilly & Co.,
GlaxoSmithKline, Novartis AG, Pfizer, Pharmion Corp. and others.

Many
of our competitors have substantially greater financial, research and development and manufacturing resources than we do and represent substantial long-term competition
for us. Some of our competitors have received regulatory approval for products or are developing or testing product candidates that compete directly with our product candidates. For example,
MP-470 faces competition from a multitude of other investigational drugs which are multi-targeted tyrosine kinase inhibitors and inhibitors of the DNA repair pathway. There are a number of
investigational drugs that are inhibitors of aurora kinases which are direct competitors of MP-529. We also expect that there will be other inhibitors of Pim kinases that will emerge as
competition for SGI-1776 as well as other investigational drugs progressing through our discovery pipeline. In addition, Dacogen faces competition from
5-aza-cytidine as well as oral formulations of 5-aza-cytidine and other drugs in development to treat MDS.

In
addition, many of these competitors, either alone or together with their customers and partners, have significantly greater experience than we do in discovering products, undertaking
pre-clinical testing and clinical trials, obtaining FDA and other regulatory approvals, and manufacturing and marketing products. Accordingly, our competitors may succeed in obtaining
patent protection, receiving FDA approval or commercializing products before we do. If we elect to commence commercial product sales of our product candidates, we could be at a disadvantage relative
to many companies with greater marketing and manufacturing capabilities, areas in which we have limited or no experience.

Factors
affecting competition in the pharmaceutical industry vary depending on the extent to which competitors are able to achieve an advantage based on superior differentiation of their
products' greater institutional knowledge or depth of resources. If we are able to establish and maintain a competitive advantage based on the ability of CLIMB to discover new drug candidates more
quickly and against targets not accessible by many competitors, our advantage will likely depend primarily on the ability of our CLIMB technology to make accurate predictions about the effectiveness
and safety of our drug candidates as well as our ability to effectively and rapidly develop investigational drugs.

Extensive
research and development efforts and rapid technological progress characterize the industry in which we compete. Although we believe that our proprietary drug discovery
capabilities afford us a competitive advantage relative to other discovery and development companies competing in oncology,
we expect competitive intensity in this pharmaceutical segment to continue. Discoveries by others may render CLIMB and our current and potential products noncompetitive. Our competitive position also
depends on our ability to attract and retain qualified scientific and other personnel, develop effective proprietary products, implement development plans, obtain patent protection and secure adequate
capital resources.

Employees

As of December 31, 2007, we had 80 full-time employees. We use consultants and temporary employees to complement our staffing. Our employees
are not subject to any collective bargaining agreements, and we consider our relations with employees to be good.

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Geographic Area Financial Information

We operate in one business segmenthuman therapeutics. In 2007, 100% of our product revenues were from the EU. In 2006 and 2005, 94% of our product
revenues were from the United States and 6% from the EU.

Available Information

We are subject to the information requirements of the Securities Exchange Act of 1934 (the "Exchange Act"). Therefore, we file periodic reports, proxy statements,
and other information with the Securities and Exchange Commission ("SEC"). Such reports, proxy statements, and other information may be obtained by visiting the Public Reference Room of the SEC at 450
Fifth Street, NW, Washington, DC 20549 or by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website (www.sec.gov) that contains reports, proxy
and information statements, and other information regarding issuers that file electronically.

Financial
and other information about us is available on our website at www.supergen.com. We make available on our website, free of charge, copies of our annual report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC. Information on our website does not
constitute a part of this annual report on Form 10-K.

ITEM 1A.    RISK FACTORS

The following section lists some, but not all, of the risks and uncertainties that may have a material adverse effect on our business,
financial condition and results of operations. You should carefully consider these risks in evaluating our company and business. Our business operations may be impaired if any of the following risks
actually occur, and by additional risks and uncertainties that we do not know of or that we currently consider immaterial. In such case, the trading price of our common stock could
decline.

This report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in
the forward-looking statements as a result of certain factors, including the risks described below and elsewhere in this report.

Risks Related to Dacogen and Nipent

Dacogen may not be commercially successful.

Even though Dacogen has been approved in the United States and even if it receives regulatory approval in Europe on a future date, patients and physicians may not
readily accept it, which would result in lower than projected sales and cause substantial harm to our business through the receipt of lower royalty revenue from MGI. In addition, pursuant to our
license agreement with MGI, we are expecting to receive payments from MGI in connection with the achievement of certain commercialization milestones. If these commercialization milestones are not met,
we will not receive these payments and our financial condition and business would be harmed.

If Dacogen does not receive regulatory approval in Europe, our future revenues may be limited and our business would be harmed.

Our European subsidiary, EuroGen Pharmaceuticals Ltd., submitted a marketing application for Dacogen to the European regulatory authorities, which
submission was accepted for review on October 25, 2004. MGI and SuperGen determined that additional clinical data will be required to continue the review of Dacogen in Europe. Therefore, we
withdrew the marketing application for Dacogen in November 2005.

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In
July 2006, MGI announced that it had sublicensed Dacogen to Cilag GmbH, a Johnson & Johnson company, granting exclusive development and commercialization rights in all
territories outside North America. We received 50% of the $10 million upfront payment and, as a result of both the original agreement with MGI and this sublicense with Cilag GmbH, may
receive up to $17.5 million in future milestone payments upon achievement of global sales and regulatory targets. Cilag will be responsible for conducting regulatory and commercial activities
related to Dacogen in all territories outside North America, while MGI retains all commercialization rights and responsibility for all activities in the United States, Canada and Mexico. However, if
Dacogen is never approved in Europe, we will not receive any of the expected royalty payments for commercial sales by Janssen-Cilag and future revenues and our business will be harmed.

Our right to receive a significant portion of the consideration for the sale of Nipent to Mayne Pharma is subject to contingencies beyond our control.

In August 2006 we sold the North American rights to Nipent and Surface Safe to Mayne Pharma (USA), Inc. for a total aggregate consideration of
approximately $34.0 million. Over $2.0 million of the aggregate consideration will not be paid to us unless and until Mayne achieves specified targets for sales of Nipent, over the next
two years. Achievement of these sales targets are beyond our control. In April 2007 we sold the remaining worldwide rights to Nipent to Mayne for approximately $8.3 million. $250,000 of that
aggregate purchase price is an indemnification holdback to be held by Mayne until October 2008 to cover any potential claims. If there are claims against the indemnification holdbacks, and/or we are
not entitled to the approximately $2.0 million of deferred payments under the North American transaction, we will not have received full value for Nipent. If we are not able to sell our revenue
generating and otherwise valuable assets for full value, our financial condition and business will be harmed.

Risks Related to Our Financial Condition and Common Stock

We have a history of operating losses and we expect to continue to incur losses for the foreseeable future.

Since inception, we have funded our research and development activities primarily from private placements and public offerings of our securities, milestone
payments and revenues generated primarily from sales of Nipent. The North American rights to Nipent were sold to Mayne in August 2006 and we sold the remaining worldwide rights to Nipent to Mayne in
April 2007. Our substantial research and development expenditures and limited revenues have resulted in significant net losses. We have incurred cumulative losses of $352.2 million from
inception through December 31, 2007, and our
products have not generated sufficient revenues to support our business during that time. We expect to continue to incur substantial operating losses at least through 2008 and may never achieve
profitability.

Whether
we achieve profitability depends primarily on the following factors:



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Our
products and product candidates, even if successfully developed and approved, may not generate sufficient or sustainable revenues to enable us to achieve or sustain profitability.

We will require additional funding to expand our product pipeline and commercialize new drugs, and if we are unable to raise the necessary capital or to do so on acceptable
terms, our planned expansion and continued chances of survival could be harmed.

We
will continue to spend substantial resources on expanding our product pipeline, commercializing future products, and conducting research and development, including clinical trials for
our product candidates. Based on our currently forecasted product development activities, we anticipate that our capital resources will be adequate to fund operations and capital expenditures at least
through 2009. However, if we experience unanticipated cash requirements during this period, we could require additional funds much sooner. We may raise money by the sale of our equity securities or
debt, or the exercise of outstanding warrants and stock options by the holders of such warrants and options. However, given uncertain market conditions and the volatility of our stock price, we may
not be able to sell our securities in public offerings or private placements at prices and/or on terms that are favorable to us, if at all. Also, the dilutive effect of additional financings could
adversely affect our per share results. We may also choose to obtain funding through licensing and other contractual agreements. For example, we licensed the worldwide rights to the development,
commercialization and distribution of Dacogen to MGI. Such arrangements may require us to relinquish our rights to our technologies, products or marketing territories, or to grant licenses on terms
that are not favorable to us. If we fail to obtain adequate funding in a timely manner, or at all, we will be forced to scale back our product development activities, or be forced to cease our
operations.

Our collaborative relationship with MGI may not produce the financial benefits that we are anticipating, which could cause our business to suffer.

We expect to record development and license revenue from payments made to us by MGI upon the achievement of regulatory and commercialization milestones. However,
we may fail to achieve these milestones, either because we are unable to secure regulatory approval of Dacogen in Europe or Asia or due to MGI's or Janssen-Cilag's inability to expend the resources to
grow or commence sales of Dacogen as prescribed by the license agreement. In addition, the license agreement provides that MGI will pay us (i) a certain portion of revenues payable to MGI as a
result of MGI sublicensing the rights to market, sell and/or distribute Dacogen, to the extent such revenues are in excess of the milestone payments, and (ii) a 20% royalty increasing to a
maximum of 30% on annual worldwide net sales of Dacogen. We cannot guarantee that we will continue to receive these payments, and we cannot be assured that MGI will expend the resources to expand
sales of Dacogen in North America, or that the Janssen-Cilag companies will expend the resources to sell it in Europe and elsewhere, or that either company will be successful in doing so.

Our equity investment in AVI exposes us to equity price risk and any impairment charge would affect our results of operations.

Our investments in marketable securities are carried at fair value with unrealized gains and losses included in accumulated other comprehensive income or loss in
stockholders' equity. However, we are exposed to equity price risk on our equity investment in AVI. Currently we own 2,384,211 shares of

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AVI
and have recorded an unrealized loss of $2.4 million related to this investment as of December 31, 2007. During the year ended December 31, 2004, we recorded a
write-down of $7.9 million related to an other than temporary decline in the value of our equity investment in AVI, resulting in a reduction of our cost basis in the AVI shares.
Under our accounting policy, marketable equity securities are presumed to be impaired if their fair value is less than their cost basis for more than six months, absent compelling evidence to the
contrary. As of June 30, 2004, the AVI shares had been trading below our original cost basis for more than six months. Since there was no compelling evidence to the contrary, we recorded the
impairment charge of $7.9 million in our results of operations. The amount of the charge was based on the difference between the market price of the shares as of June 30, 2004 and our
adjusted cost basis. The public trading prices of the AVI shares have fluctuated significantly since we purchased them and could continue to do so. If the public trading prices of these shares
continue to trade below their new cost basis in future periods, we may incur additional impairment charges relating to this investment, which in turn will affect our results of operations.

Product Development and Regulatory Risks

Before we can seek regulatory approval of any of our product candidates, we must complete clinical trials, which are expensive and have uncertain outcomes.

All of our product candidates are either in the developmental or clinical trial stage and, prior to their sale, will require regulatory approval and the
commitment of substantial resources. Before obtaining regulatory approvals for the commercial sale of any of our product candidates, we must demonstrate through pre-clinical testing and
clinical trials that our product candidates are safe and effective for use in humans.

We
have a portfolio of cancer drugs in various stages of development. In addition, we expect to commence new clinical trials from time to time in the course of our business as our
product development work continues. Conducting clinical trials is a lengthy, time consuming and expensive process and the results are inherently uncertain. We have incurred and will continue to incur
substantial expense for, and we have devoted and expect to continue to devote a significant amount of time to, pre-clinical testing and clinical trials. However, regulatory authorities may
not permit us to undertake any additional clinical trials for our product candidates. If we are unable to complete our clinical trials, our business will be severely harmed and the price of our stock
will likely decline.

We
also have ongoing research and pre-clinical projects that may lead to product candidates, but we have not begun clinical trials for these projects. If we do not
successfully complete our pre-clinical trials, we might not be able to commence clinical trials as planned.

Our clinical trials may be delayed or terminated, which would prevent us from seeking necessary regulatory approvals.

Completion of clinical trials may take several years or more. The length of a clinical trial varies substantially according to the type, complexity, novelty and
intended use of the product candidate. The length of time and complexity of these studies make statistical analysis difficult and regulatory approval unpredictable. The commencement and rate of
completion of our clinical trials may be delayed by many factors, including:



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If
we are unable to achieve a satisfactory rate of completion of our clinical trials, our business will be significantly harmed.

We may be required to suspend, repeat or terminate our clinical trials if they are not conducted in compliance with regulatory requirements.

Our clinical trials must be conducted in accordance with the requirements of the FDA and other regulatory authorities, and are subject to continuous oversight by
these authorties, and institutional review boards and ethical committees. We outsource certain aspects of our research and development activities to contract research organizations ("CROs"). We have
agreements with these CROs for certain of our clinical programs. We and our CROs are required to comply with good clinical practice ("GCP") regulations and guidelines for all of our products in
clinical development. GCPs are enforced through periodic inspections of study sponsors, principal investigators, and study sites. If our CROs or we fail to comply with applicable GCPs, the clinical
data generated in our studies may be deemed unreliable and regulatory authorities may require us to perform additional studies before approving our applications. In addition, our clinical trials must
be conducted with product candidates produced under current good manufacturing practices ("GMPs"), and may require a large number of test subjects. Our failure to comply with these regulations may
require us to repeat clinical studies, which would delay the regulatory approval process.

We may be required to suspend, repeat or terminate our clinical trials if later trial results fail to demonstrate safety and efficacy, or if the results are negative or
inconclusive.

Our clinical trials may be suspended at any time if we or the FDA believe the patients participating in our studies are exposed to unacceptable health risks or if
we or the FDA find deficiencies in the conduct of these trials. Adverse medical events during a clinical trial could cause us to terminate or repeat a clinical trial.

We
may encounter other problems and failures in our studies that would cause us or the FDA to delay or suspend the studies. Even if we achieve positive interim results in clinical
trials, these results do not necessarily predict final results, and acceptable results in early trials may not be repeated in later trials. A number of companies in the pharmaceutical industry have
suffered significant setbacks in advanced clinical trials, even after achieving promising results in earlier trials.

Negative
or inconclusive results during a clinical trial could cause us to terminate or repeat a clinical trial. The potential failures would delay development of our product candidates,
hinder our ability to conduct related pre-clinical testing and clinical trials and further delay the commencement of the regulatory approval process. Further, the failures or perceived
failures in our clinical trials would delay our product development and the regulatory approval process, damage our
business prospects, make it difficult for us to establish collaboration and partnership relationships and negatively affect our reputation and competitive position in the pharmaceutical industry.
Finally, if we are required to conduct other clinical trials for the product candidates, the additional trials would require substantial funding and time, and we may be unable to obtain funding to
conduct such clinical trials.

19

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Our failure to obtain regulatory approvals to market our product candidates in foreign countries and delays caused by government regulation would adversely affect our
anticipated revenues.

Sales of our products in foreign jurisdictions will be subject to separate regulatory requirements and marketing approvals. Approval in the United States, or in
any one foreign jurisdiction, does not ensure approval in any other jurisdiction. The process of obtaining foreign approvals may result in significant delays, difficulties and expenses for us, and may
require additional clinical trials. Although many of the regulations applicable to our products in these foreign countries are similar to those promulgated by the FDA, many of these requirements also
vary widely from country to country, which could delay the introduction of our products in those countries. Failure to comply with these regulatory requirements or to obtain required approvals would
impair our ability to commercialize our products in foreign markets.

Even
if regulatory approval of our products is obtained, later discovery of previously unknown problems may result in restrictions of a product, including withdrawal of that product from
the market. Further, governmental approval may subject us to ongoing requirements for post-marketing studies. For example, despite receipt of governmental approval, the facilities of our
third-party manufacturers are still subject to unannounced inspections by the FDA and must continue to comply with GMPs and other regulations. These regulations govern all areas of production, record
keeping, personnel and quality control. If we or our third-party manufacturers fail to comply with any of the manufacturing regulations, we may be subject to, among other things, product seizures,
recalls, fines, injunctions, suspensions or revocations of marketing licenses, operating restrictions and criminal prosecution.

If we are unable to comply with environmental laws and regulations, our business may be harmed.

We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of hazardous materials and waste
products. We currently maintain a supply of biohazardous materials at some of our facilities. We believe our safety procedures for these materials comply with all applicable environmental laws and
regulations, and we carry insurance coverage we believe is adequate for the size of our business. However, we cannot entirely eliminate the risk of
accidental contamination or injury from these materials. If an accident or environmental discharge occurs, we could be held liable for any resulting damages, which could exceed our insurance coverage
and financial resources.

We
currently outsource certain of our research and development programs involving the controlled use of biohazardous materials. We believe our collaborators have in place safety
procedures for these materials that comply with governmental standards. Nevertheless, if an accident does occur, our research and product development will be negatively affected.

Additional Risks Associated with Our Business

If the third-party manufacturers upon whom we rely fail to produce our products in the volumes that we require on a timely basis, or fail to comply with stringent regulations
applicable to pharmaceutical drug manufacturers, we may face delays in the delivery of, or be unable to meet demand for, our products.

Because we have no manufacturing facilities, we rely on third parties for manufacturing activities related to all of our product candidates. As we develop new
products, we must establish and maintain relationships with manufacturers to produce and package sufficient supplies of our finished pharmaceutical products. Reliance on third party manufacturing
presents the following risks:



20

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Any
of these factors could delay clinical trials or commercialization of our product candidates under development, and entail higher costs.

Our business may be harmed if the manufacture of our products is interrupted or discontinued.

We may be unable to maintain our relationships with our third-party manufacturers. If we need to replace or seek new manufacturing arrangements, we may have
difficulty locating and entering into arrangements with qualified contract manufacturers on acceptable terms, if at all. We are aware of only a limited number of companies on a worldwide basis who
operate manufacturing facilities in which our products can be manufactured to our specifications and in compliance with GMPs. It could take several months, or significantly longer, for a new contract
manufacturing facility to obtain FDA approval and to develop substantially equivalent processes for the production of our product candidates. We may not be able to contract with any of these companies
on acceptable terms, if at all.

If our suppliers cannot provide the components we require, our future product sales and revenue could be harmed.

We rely on third-party suppliers to provide us with numerous components used in our products under development. Relying on third-party suppliers makes us
vulnerable to component failures and interruptions in supply, either of which could impair our ability to conduct clinical trials or to ship our products to our customers on a timely basis. Using
third-party suppliers makes it difficult and sometimes impossible for us to maintain quality control, manage inventory and production schedules and control production costs. Vendor lead times to
supply us with ordered components vary significantly and can exceed six months or more. Both now and as we expand our need for manufacturing capacity, we cannot be sure that our suppliers will furnish
us with required components when we need them. These factors could make it difficult for us to effectively and efficiently
manufacture our products, and could adversely impact our clinical trials, product development and future sales of our products.

Some
suppliers are our only source for a particular component, which makes us vulnerable to cost increases and supply interruptions. We generally rely on one manufacturer for each
product.

Vendors
may decide to limit or eliminate sales of certain products to the medical industry due to product liability or other concerns. In the event one of our sole source suppliers
decides not to manufacture the component, goes out of business, or decides to cut off our supply, we may be unable to locate replacement supply sources, or the sources that we may locate may not
provide us with similar reliability or pricing and our business could suffer. If we cannot obtain a necessary component, we may need to find, test and obtain regulatory approval for a replacement
component, produce the component or redesign the related product, which would cause significant delay and could increase our manufacturing costs. Any of these events could adversely impact our future
sales and results of operations.

21

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If we are not able to maintain and successfully establish new collaborative and licensing arrangements with third parties, our product development and business will be harmed.

Our business model is based on establishing collaborative relationships with other parties both to license compounds upon which our products and technologies are
based and to manufacture our products or our collaborators' products. It is critical that we gain access to compounds and technologies to license for further development. Due to the expense of the
drug approval process we must have relationships with established pharmaceutical companies to offset some of our development costs in exchange for a combination of development, marketing and
distribution rights.

From
time to time we enter into discussions with various companies regarding the establishment of new collaborations. If we are not successful in establishing new partners for our
product candidates, we may not be able to pursue further development of such product candidates and/or may have to reduce or cease our current development programs, which would materially harm our
business. Even if we are successful in establishing new collaborations, they are subject to numerous risks and uncertainties including:



In
addition, our collaborators may undergo business combinations, which could have the effect of making the collaboration with us less attractive to them for a number of reasons. For
example, if an existing collaborator purchases a company that is one of our competitors, that company may be less willing to continue its collaboration with us. A company that has a strategy of
purchasing companies with attractive technologies might have less incentive to enter into a collaboration agreement with us. Moreover, disputes may arise with respect to the ownership of rights to any
technology or products developed with any current or future collaborator. Lengthy negotiations with potential collaborators or disagreements between us and our collaborators may lead to delays in or
termination of the research, development or commercialization of product candidates or result in time consuming and expensive litigation or arbitration.

Our collaborative relationships with third parties could cause us to expend significant funds on development costs with no assurance of financial return.

From time to time we enter into collaborative relationships with third parties to co-develop and market products. These relationships require
substantial financial commitments from us, and at the same time the product developments are subject to the same regulatory requirements, risks and uncertainties associated with the development of our
other product candidates. The compounds that are the subject of these collaborative agreements may prove to be ineffective, may fail to receive regulatory approvals, may be unprotectable by patents or
other intellectual property rights, or may not be otherwise commercially viable. If these collaborative
relationships are not successful, our product developments will be adversely affected, and our investments and efforts devoted to the product developments will be wasted.

22

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Our ability to protect our intellectual property rights will be critically important to the success of our business, and we may not be able to protect these rights in the
United States or abroad.

The success of our operations depends in part on our ability to obtain patents, protect trade secrets, operate without infringing the proprietary rights of others
and enforce our proprietary rights against accused infringers.

We
actively pursue a policy of seeking patent protection when applicable for our proprietary products and technologies, whether they are developed in-house or acquired from
third parties. We attempt to protect our intellectual property position by filing United States and foreign patent applications related to our proprietary technology, inventions and improvements that
are important to the development of our business. To date, we have ownership of or acquired licenses to numerous patents covering various aspects of our proprietary drugs and technologies. In
addition, we are prosecuting a number of patent applications for new drug candidates that we are actively developing at this time.

We
also have patents, licenses to patents, and pending patent applications in Europe, Australia, Japan, Canada, China and Israel among other countries. Limitations on patent protection,
and the differences in what constitutes patentable subject matter, may limit the protection we have on patents issued or licensed to us in these countries. In addition, laws of foreign countries may
not protect our intellectual property to the same extent as would laws in the United States. In determining whether or not to seek patent protection or to license any patent in a foreign country, we
weigh the relevant costs and benefits, and consider, among other things, the market potential and profitability, the scope of patent protection afforded by the law of the jurisdiction and its
enforceability, and the nature of terms with any potential licensees. Failure to obtain adequate patent protection for our proprietary drugs and technology would impair our ability to be commercially
competitive in these markets.

The
pharmaceutical industry is characterized by a large number of patent filings involving complex legal and factual questions, and therefore we cannot predict with certainty whether our
patents will be enforced effectively. Competitors may have filed applications for, or been issued patents on, products or processes that compete with or are similar to ours. We may not be aware of all
of the patents potentially adverse to our interests which may have been issued to others. In addition, third parties may challenge, invalidate or circumvent any of our patents. Thus, any patents that
we own or license from third parties may not provide adequate protection against competitors, if at all. Our pending patent
applications and those we may file in the future, or those we may license from third parties, may not result in patents being issued with adequate claim scope, if at all.

In
addition to pursuing patent protection in appropriate instances, we also rely on trade secret protection or regulatory marketing exclusivity for unpatented proprietary technology.
However, trade secrets are difficult to protect. Our trade secrets or those of our collaborators may become known or may be independently discovered by others. Furthermore, regulatory marketing
exclusivity is for a limited time period, which may not be an adequate period for our business interests.

In
the pharmaceutical industry there has been, and we believe that there will continue to be, significant litigation regarding patent and other intellectual property rights. Claims may
be brought against us in the future based on patents held by others. These persons could bring legal actions against us claiming damages and seeking to enjoin clinical testing, manufacturing and
marketing of the affected product. If we become involved in litigation, it could consume a substantial portion of our resources, regardless of the outcome of the litigation. If a lawsuit against us is
successful, in addition to any potential liability for damages, we could be required to obtain a license to continue to manufacture or market the affected product. We cannot assure you that we would
prevail in a lawsuit filed against us or that we could obtain any licenses required under any patents on acceptable terms, if at all.

23

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Our proprietary products are dependent upon compliance with numerous licenses and agreements. These licenses and agreements require us to make royalty and other payments, reasonably
exploit the underlying technology of the applicable patents, and comply with regulatory filings. If we fail to comply with these licenses and agreements, we could lose the underlying rights to one or
more of these potential products, which would adversely affect our product development and harm our business.

If we fail to compete effectively against other pharmaceutical companies, our business will suffer.

The pharmaceutical industry in general and the oncology sector in particular is highly competitive and subject to significant and rapid technological change.
There are many companies, both public and private, including well-known pharmaceutical companies that are engaged in the discovery and development of products for some of the applications
that we are pursuing. Some of our competitors and probable competitors include Rigel, Exelixis, SGX, Millennium, Sanofi-Aventis, Bristol-Myers Squibb Company, Celgene, Eli Lilly & Co.,
GlaxoSmithKline, Novartis AG, Pfizer, Pharmion Corp. and others.

Many
of our competitors have substantially greater financial, research and development and manufacturing resources than we do and represent substantial long-term competition
for us. Some of our competitors have received regulatory approval for products or are developing or testing product candidates that compete directly with our product candidates. For example,
MP-470 faces competition from a multitude of other investigational drugs which are multi-targeted tyrosine kinase inhibitors and inhibitors of the DNA repair pathway. There are a number of
investigational drugs that are inhibitors of aurora kinases which are direct competitors of MP-529. We also expect that there will be other inhibitors of Pim kinases that will emerge as
competition for SGI-1776 as well as other investigational drugs progressing through our discovery pipeline. In addition, Dacogen faces competition from
5-aza-cytidine as well as oral formulations of 5-aza-cytidine and other drugs in development to treat MDS.

In
addition, many of these competitors, either alone or together with their customers and partners, have significantly greater experience than we do in discovering products, undertaking
pre-clinical testing and clinical trials, obtaining FDA and other regulatory approvals, and manufacturing and marketing products. Accordingly, our competitors may succeed in obtaining
patent protection, receiving FDA approval or commercializing products before we do. If we elect to commence commercial product sales of our product candidates, we could be at a disadvantage relative
to many companies with greater marketing and manufacturing capabilities, areas in which we have limited or no experience.

Factors
affecting competition in the pharmaceutical industry vary depending on the extent to which competitors are able to achieve an advantage based on superior differentiation of their
products' greater institutional knowledge or depth of resources. If we are able to establish and maintain a competitive advantage based on the ability of CLIMB to discover new drug candidates more
quickly and against targets not accessible by many competitors, our advantage will likely depend primarily on the ability of our CLIMB technology to make accurate predictions about the effectiveness
and safety of our drug candidates as well as our ability to effectively and rapidly develop investigational drugs.

Extensive
research and development efforts and rapid technological progress characterize the industry in which we compete. Although we believe that our proprietary drug discovery
capabilities afford us a competitive advantage relative to other discovery and development companies competing in oncology, we expect competitive intensity in this pharmaceutical segment to continue.
Discoveries by others may render CLIMB and our current and potential products noncompetitive. Our competitive position also depends on our ability to attract and retain qualified scientific and other
personnel, develop effective proprietary products, implement development plans, obtain patent protection and secure adequate capital resources.

24

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The pharmaceutical industry in general and the oncology sector in particular is subject to significant and rapid technological change. Developments by competitors may render
our product candidates or technologies obsolete or non-competitive.

Our competitors may succeed in developing technologies or products that are more effective than ours. Additionally, our products that are under patent protection
face intense competition from competitors' proprietary products. This competition may increase as new products enter the market.

A
number of our competitors have substantially more capital, research and development, regulatory, manufacturing, marketing, human and other resources and experience than we have. As a
result, our competitors may:



We
will also face increasing competition from lower-cost generic products after patents on our proprietary products expire. Loss of patent protection typically leads to a
rapid decline in sales for that product and could affect our future results. As new products enter the market, our products may become obsolete or our competitors' products may be more effective or
more effectively marketed and sold than our products. Technological advances, competitive forces and loss of intellectual property protection rights for our products may render our products obsolete.

We may be subject to product liability lawsuits and our insurance may be inadequate to cover damages.

Clinical trials and commercial use of our current and potential products may expose us to liability claims from the use or sale of these products. Consumers,
healthcare providers, pharmaceutical companies and others selling such products might make claims of this kind. We may experience financial losses in the future due to product liability claims. We
have obtained limited product liability insurance coverage for our products and clinical trials, under which the coverage limits are $10.0 million per occurrence and $10.0 million in the
aggregate. We do not know whether this coverage will be adequate to protect us in the event of a claim. We may not be able to obtain or maintain insurance coverage in the future at a reasonable cost
or in sufficient amounts to protect us against losses. If third parties bring a successful product liability claim or series of claims against us for uninsured liabilities or in excess of insured
liabilities, we may not have sufficient financial resources to complete development or commercialization of any of our product candidates and our business and results of operations will be adversely
affected.

If we are unable to attract and retain additional, highly skilled personnel required for the expansion of our activities, our business will suffer.

Our success is dependent on key personnel, including members of our senior management and scientific staff. If any of our executive officers decides to leave and
we cannot locate a qualified replacement in time to allow a smooth transition, our business may be adversely affected. To successfully expand our operations, we will need to attract and retain
additional highly skilled individuals, particularly in the areas of clinical administration, pre-clinical and development research, manufacturing and finance. We compete with other
companies for the services of existing and potential employees, however to the extent these employees favor larger, more established employers, we may be at a disadvantage.

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Earthquake or other natural or man-made disasters and business interruptions could adversely affect our business.

Our operations are vulnerable to interruption by fire, power loss, floods, telecommunications failure and other events beyond our control. In addition, our
operations are susceptible to disruption as a result of natural disasters such as earthquakes. So far we have never experienced any significant disruption of our operations as a result of earthquakes
or other natural disasters. Although we have a contingency recovery plan, any significant business interruption could cause delays in our drug development and future sales and harm our business.

Provisions in our certificate of incorporation, bylaws and applicable Delaware law may prevent or discourage third parties or stockholders from attempting to replace our
management.

Anti-takeover provisions of our certificate of incorporation and bylaws make it more difficult for a third party to acquire us, even if doing so would
be beneficial to our stockholders. These provisions include:



Our
bylaws establish procedures, including notice procedures, with regard to the nomination, other than by or at the direction of our board of directors, of candidates for election as
directors or for stockholder proposals to be submitted at stockholder meetings.

We
are also subject to Section 203 of the Delaware General Corporation Law, an anti-takeover provision. In general, Section 203 of the Delaware General
Corporation Law prevents a stockholder owning 15% or more of a corporation's outstanding voting stock from engaging in business combinations with a Delaware corporation for three years following the
date the stockholder acquired 15% or more of a corporation's outstanding voting stock. This restriction is subject to exceptions, including the approval of the board of directors and of the holders of
at least two-thirds of the outstanding shares of voting stock not owned by the interested stockholder.

We
believe that the benefits of increased protection of our potential ability to negotiate with the proponents of unfriendly or unsolicited proposals to acquire or restructure us
outweigh the disadvantages of discouraging those proposals because, among other things, negotiation of those proposals could result in an improvement of their terms. Nevertheless, these provisions are
expected to discourage different types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of our company to first negotiate with us, and
may have the effect of preventing or discouraging third parties or stockholders from attempting to replace our management.

ITEM 1B.    UNRESOLVED STAFF COMMENTS.

None

ITEM 2.    PROPERTIES.

Our principal administrative facility is currently located in leased general office space, containing approximately 50,000 square feet, in Dublin, California,
under a lease that expires in November 2010. Our drug formulation laboratory operations are located in a 10,000 square foot industrial building that we own in Pleasanton, California. We are currently
leasing 11,700 square feet of space for our drug discovery laboratory operations in Salt Lake City, Utah. The lease on this space expires in May 2012. We believe the above properties are adequate and
suitable for our operations in the foreseeable future.

26

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ITEM 3.    LEGAL PROCEEDINGS.

We are not currently subject to any pending material legal proceedings.

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

None

PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market for Common Stock

Our common stock trades on the Nasdaq Global Market under the symbol "SUPG." The following table sets forth the high and low sales information for our common
stock for each quarterly period in the two most recent fiscal years as reported on the Nasdaq Global Market:

High

Low2007Quarter ended March 31, 2007

$
6.12

$
4.57Quarter ended June 30, 2007


7.53


5.47Quarter ended September 30, 2007


6.63


3.92Quarter ended December 31, 2007


4.89


3.602006Quarter ended March 31, 2006

$
5.97

$
4.80Quarter ended June 30, 2006


5.82


3.18Quarter ended September 30, 2006


5.01


3.01Quarter ended December 31, 2006


5.78


4.51


Holders of Record

As of March 6, 2008, there were 578 holders of record of our common stock and approximately 19,500 beneficial stockholders.

Dividends

We have never paid cash dividends on our capital stock and do not expect to pay any dividends in the foreseeable future. We intend to retain future earnings, if
any, for use in our business.

Recent Sales of Unregistered Securities

None.

Purchase of Equity Securities by the Issuer

None.

27

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Company Stock Price Performance Graph

The performance graph below is required by the SEC and shall not be deemed to be incorporated by reference by any general statement incorporating by reference
this annual report on Form 10-K into any filing under the Securities Act or the Securities Exchange Act except to the extent we specifically incorporate this information by
reference and shall not otherwise be deemed soliciting material or filed under such Acts.

The
graph compares our cumulative total stockholder return with those of the Nasdaq Composite Index and the Nasdaq Pharmaceutical Index. The graph assumes that $100 was invested on
December 31, 2002 in the Company's common stock and in the Nasdaq Composite Index and the Nasdaq Pharmaceutical Index, including reinvestment of dividends. Note that historic stock price
performance should not be considered indicative of future stock price performance.

GRAPHIC

28

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ITEM 6.    SELECTED FINANCIAL DATA.

The information set forth below is not necessarily indicative of results of future operations and should be read in conjunction with the financial statements and
notes thereto appearing in Item 15 of Part IV of this report.

|                                                                  |  | Year ended December 31, |        
|----------------------------------------------------------------- |  | ----------------------- | -------
|
|
|
|Total revenues                                                    |  | $                       | 22,954 
|Cost of product revenue                                           |  |                         | 221    
|Research and development expenses                                 |  |                         | 23,423 
|Selling, general and administrative expenses                      |  |                         | 13,520 
|Acquired in-process research and development                      |  |                         | 9,967  
|Gain on sale of products                                          |  |                         | (33,677
|                                                                  |  |                         |        
|Income (loss) from operations                                     |  |                         | 9,500  
|Other income (expense)                                            |  |                         | 3,581  
|                                                                  |  |                         |        
|Net income (loss)                                                 |  | $                       | 13,081 
|                                                                  |  |                         |        
|Basic net income (loss) per common share                          |  | $                       | 0.23   
|                                                                  |  |                         |        
|Diluted net income (loss) per common share                        |  | $                       | 0.23   
|                                                                  |  |                         |        
|Shares used to compute basic net income (loss) per common share   |  |                         | 56,868 
|                                                                  |  |                         |        
|Shares used to compute diluted net income (loss) per common share |  |                         | 57,301 
|                                                                  |  |                         |        

|
|

|                                                                                                 |  | As of December 31,
|------------------------------------------------------------------------------------------------ |  | ------------------
|
|
|
|Cash, cash equivalents, marketable securities, investments, and restricted cash and investments. |  | $                 
|Other current assets                                                                             |  |                   
|Property, plant and equipment, net                                                               |  |                   
|Other assets                                                                                     |  |                   
|                                                                                                 |  |                   
|Total assets                                                                                     |  | $                 
|                                                                                                 |  |                   
|Convertible debt, net of discounts                                                               |  | $                 
|Other current liabilities                                                                        |  |                   
|Non-current liabilities                                                                          |  |                   
|Total stockholders' equity                                                                       |  |                   
|                                                                                                 |  |                   
|Total liabilities and stockholders' equity                                                       |  | $                 
|                                                                                                 |  |                   

29

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion together with our consolidated financial statements and related notes included elsewhere in this
report. The results discussed below are not necessarily indicative of the results to be expected in any future periods. Our disclosure and analysis in this section of the report also contain
forward-looking statements. When we use the words "anticipate," "estimate," "project," "intend," "expect," "plan," "believe," "should," "likely" and similar expressions, we are making forward-looking
statements. Forward-looking statements provide our current expectations or forecasts of future events. In particular, these statements include statements such as: our estimates about becoming
profitable; the percentage of royalties we expect to earn on Dacogen sales under our agreement with MGI; our forecasts regarding our research and development expenses; and our statements regarding the
sufficiency of our cash to meet our operating needs. Our actual results could differ materially from those predicted in the forward-looking statements as a result of risks and uncertainties including,
but not limited to, delays and risks associated with conducting and managing our clinical trials; developing products and obtaining regulatory approval; ability to establish and maintain collaboration
relationships; competition; ability to obtain funding; ability to protect our intellectual property; our dependence on third party suppliers; risks associated with the hiring and loss of key
personnel; adverse changes in the specific markets for our products; and our ability to launch and commercialize our products. Certain unknown or immaterial risks and uncertainties can also affect our
forward-looking statements. Consequently, no forward-looking statement can be guaranteed and you should not rely on these forward-looking statements. For a discussion of the known and material risks
that could affect our actual results, please see the "Risk Factors" section of this report. We undertake no obligation to update any forward-looking statements, whether as a result of new information,
future events or otherwise. Readers should carefully review the Risk Factors section as well as other reports or documents we file from time to time with the Securities and Exchange
Commission.

Overview

We are a pharmaceutical company dedicated to the discovery, development, and commercialization of therapies to treat patients with cancer. We have a number of
Aurora-A and Tyrosine Kinase inhibitors and DNA methyltransferase clinical and pre-clinical products under development. In 2006, Dacogen received approval for marketing in the
United States, during 2006 and 2007 we sold the North American and remaining worldwide rights to Nipent to Mayne Pharma, and in 2006 we acquired a drug discovery and development company to complement
our ongoing licensing efforts. These changes were implemented to mitigate the ongoing risk of competitive in-licensing and to maximize the return on both existing resources and our
incoming royalty and milestone revenue.

Since
our incorporation in 1991 we have devoted substantially all of our resources to our product development efforts. Our past development efforts have been focused primarily on the key
compounds of Dacogen and Nipent.

Dacogen.Dacogen is approved by the FDA for the treatment of patients with MDS. In September 2004, we executed an agreement
granting MGI exclusive worldwide rights to the development, manufacture, commercialization and distribution of Dacogen. Under the terms of the agreement, MGI made a $40 million equity
investment in our company and will pay up to $45 million in specific regulatory and commercialization milestone payments. To date, we have received $32.5 million of these milestone
payments, including $20 million upon first commercial sale of Dacogen in the U.S. in May 2006. In accordance with our agreement with MGI, we are entitled to receive a royalty on worldwide net
sales starting at 20% and escalating to a maximum of 30%. During the year ended December 31, 2007, we recorded royalty revenue of $22.3 million. Because we do not have sufficient ability
to accurately estimate Dacogen sales, we recognize royalty revenue on a cash basis when it is received from MGI.

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In
July 2006, MGI executed an agreement to sublicense Dacogen to Janssen-Cilag, a Johnson & Johnson company, granting exclusive development and commercialization rights in all
territories outside North America. In accordance with our license agreement with MGI, we are entitled to receive 50% of any payments MGI receives as a result of any sublicenses. We received
$5 million, 50% of the $10 million upfront payment MGI received, and, as a result of both the original agreement with MGI and this sublicense with Janssen-Cilag, we may receive up to
$23.75 million in future milestone payments as they are achieved for Dacogen globally. Janssen-Cilag companies will be responsible for conducting regulatory and commercial activities related to
Dacogen in all territories outside North America, while MGI retains all commercialization rights and responsibility for all activities in the United States, Canada and Mexico.

Nipent.Nipent is approved by the FDA and EMEA for the treatment of hairy cell leukemia. Nipent was marketed by us in the
United States until August 2006, and distributed in Europe through March 2007.

On
June 1, 2006, we entered into an amended and restated supply agreement with Wyeth to terminate the European distribution of Nipent by Wyeth and transition distribution to
SuperGen. The original distribution and supply agreement with Wyeth would have terminated on its own terms at no cost to SuperGen over a period of time, varying by country, through March 2007. Under
the amended agreement, distribution rights transitioned for most countries, except Spain and France, on December 1, 2006. Spain and France transitioned in February 2007. During the transition
period, we shipped vials of Nipent to Wyeth for sale and distribution in various countries in Europe. On December 1, 2006, we repurchased most of the unsold European inventory held by Wyeth
with a shelf life greater than 12 months, and repurchased the inventories for Spain and France in February 2007.

On
August 22, 2006, we closed a transaction with Mayne Pharma (USA), Inc., whereby Mayne acquired the North American rights to Nipent and our SurfaceSafe cleaning system.
Pursuant to the Asset Acquisition Agreement, we received cash proceeds of $13.4 million upon closing of the transaction. In addition to the initial payment and holdbacks, we had the right to
receive annual deferred payments totaling $14.1 million over the following five years based on achievement of specific sales targets. These annual deferred payments might be accelerated under
certain circumstances, including a change of control of Mayne. Such a change of control occurred in February 2007 when Mayne was acquired by Hospira, Inc. and we received $10.3 million
of the deferred payments. We continued to maintain our commercial operations organization to support the sales and marketing of Nipent during the six month transition period, which ended on
February 21, 2007. We were reimbursed by Mayne for all Nipent sales and marketing costs during the transition period, including employee salaries and overhead.

On
April 2, 2007, we closed another transaction with Mayne, completing the sale of the remaining worldwide rights for Nipent for total consideration of up to $8.3 million.
We received an initial up-front payment of $3.75 million as a condition of the closing, plus an additional $389,000 for the carrying value of the remaining Nipent inventory. The
balance of the purchase price is guaranteed and payable in five installments over a five year period on the anniversary of the closing date, except for $1.25 million that will be received when
certain contractual conditions are met, including a $1 million supply holdback payment.

In
August 2007, we received a sales milestone payment of $1.8 million from Mayne and in December 2007 received $6 million in supply holdback payments.

Montigen Acquisition.In April 2006, we completed our acquisition of Montigen, a privately-held oncology-focused
drug discovery and development company headquartered in Salt Lake City, Utah. Montigen's assets included its research and development team, a proprietary drug discovery technology platform and
optimization process known as CLIMB, and late-stage pre-clinical compounds targeting Aurora-A Kinase and members of the Tyrosine Kinase receptor family.

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Pursuant
to the terms of the merger agreement with Montigen, we paid the Montigen stockholders a total of $17.9 million upon the closing of the transaction in cash and shares of
SuperGen common stock. The merger agreement also specified an additional $22 million due to the Montigen stockholders, payable in shares of SuperGen common stock, contingent upon achievement of
specific regulatory milestones. The first Montigen compound was cleared in April 2007 by the FDA to begin Phase I clinical trials, which triggered the first milestone payment to the former
Montigen stockholders of approximately $10 million which we paid in shares of our common stock.

To
date, our product revenues have been limited and were derived primarily from sales of Nipent for the treatment of hairy cell leukemia, which was marketed in the United States until
August 2006 and in Europe through March 2007. All of our current products are in the development or clinical trial stage, and will require substantial additional investments in research and
development, clinical trials, regulatory and sales and marketing activities to commercialize these product candidates. Conducting clinical trials is a lengthy, time-consuming, and
expensive process involving inherent uncertainties and risks, and our studies may be insufficient to demonstrate safety and efficacy to support FDA approval of any of our product candidates.

As
a result of our substantial research and development expenditures and minimal product revenues, we have incurred cumulative losses of $352 million through December 31,
2007, and have never generated enough funds through our operations to support our business. We expect to continue to incur operating losses at least through 2008.

Ultimately,
our ability to become profitable will depend upon a variety of factors, including regulatory approvals of our products, the timing of the introduction and market acceptance
of our products and competing products, MGI's success in selling Dacogen, the launch of new products and our ability to control our ongoing costs and operating expenses. If our drug discovery and
research efforts are not successful, or if the results from our clinical trials are not positive, we may not be able to get sufficient funding to continue our trials or conduct new trials, and we
would be forced to scale down or cease our business operations. Moreover, if our products are not approved or commercially accepted we will remain unprofitable for longer than we currently anticipate.
Additionally, we might be forced to substantially scale down our operations or sell certain of our assets, and it is likely the price of our stock would decline precipitously.

Critical Accounting Policies

Our management discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and reported disclosures. On an on-going basis, we evaluate our estimates, including those related to revenue and gain
recognition, goodwill and intangible assets, the valuation of investments and stock-based compensation. We base our estimates on historical experience and on various other assumptions that we believe
are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or conditions.

Our
significant accounting policies are more fully disclosed in Note 1 to our consolidated financial statements. However, some of our accounting policies are particularly
important to the portrayal of our financial position and results of operations and require the application of significant judgment by our
management. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

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In 2006 and 2007, we accounted for stock-based compensation in accordance with the fair value recognition provisions of Statement of Financial Accounting
Standards No. 123(R), "Share-Based Payment" ("SFAS 123R").

The
fair value of each stock award is estimated on the grant date using the Black-Scholes option-pricing model based on assumptions for volatility, risk-free interest rates,
expected life of the option, and dividends (if any). Expected volatility is determined based on a blend of historical volatility and implied volatility of our common stock based on the period of time
corresponding to the expected life of the stock options. The expected life of our stock options is based on our historical data and represents the period of time that stock options granted are
expected to be outstanding. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected life assumption. We do not
expect to pay any dividends in the foreseeable future.

We
are using the straight-line attribution method to recognize stock-based compensation expense. The amount of stock-based compensation recognized during a period is based on
the value of the portion of the awards that are ultimately expected to vest. SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods
if actual forfeitures differ from those estimates. The term "forfeitures" is distinct from "cancellations" or "expirations" and represents only the unvested portion of the surrendered option. This
analysis is re-evaluated annually and the forfeiture rate is adjusted as necessary. Ultimately, the actual expense recognized over the vesting period will only be for those shares that
vest.

As
of December 31, 2007, there was $4.2 million of total unrecognized compensation cost related to unvested stock-based awards. This cost is expected to be recognized over
a weighted average period of 2.25 years. We expect approximately 1.8 million in unvested options to vest at some point in the future. Options expected to vest is calculated by applying
an estimated forfeiture rate to the unvested options.



Our net product revenues have related principally to Nipent. We recognized sales revenue upon shipment and related transfer of title to customers, when
collectibility was reasonably assured.

Cash
advance payments received in connection with distribution agreements, license agreements, or research grants are generally deferred and recognized ratably over the period of the
respective agreements or until services are performed. We recognize cost reimbursement revenue under collaborative agreements as the related research and development costs are incurred. We recognize
milestone fees upon completion of specified substantive milestones according to contract terms. Deferred revenue represents the portion of such cash advance payments received that have not been
earned.

We
accounted for our $2.1 million payment to Wyeth in June 2006 as Prepaid distribution and marketing rights, which were amortized against revenue over 10 months, equaling
the termination acceleration period of June 2006 through March 2007. The amortization of $630,000 through the year ended December 31, 2007 was reflected as a reduction of product revenue.
Proceeds from our initial product shipments to Wyeth were deferred and were recognized as revenue (and related cost of revenue) when the product was delivered to the end customer by Wyeth. Under the
terms of our amended license agreement with Wyeth, we received an additional amount of net profit based on Wyeth's sales of Nipent. During the year ended December 31, 2007, we received $257,000
of net profit, which was included in net product revenue.

MGI
is required to pay us royalties starting at 20% and escalating to a maximum of 30% of net worldwide Dacogen sales within 45 days after the end of each calendar quarter. During
the year ended

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December 31,
2007, we recorded royalty revenue of $22.3 million. Because we do not have sufficient ability to accurately estimate Dacogen sales, we recognize royalty revenue on a cash
basis when it is received from MGI. In accordance with our license agreement with MGI, we are entitled to receive 50% of any payments MGI receives as a result of any sublicenses. During 2006, we
received $5 million, 50% of the $10 million upfront payment MGI received, and, as a result of both the original agreement with MGI and a sublicense with Cilag GmbH, may receive up
to $23.75 million in future milestone payments as they are achieved for Dacogen globally.

We
received initial cash proceeds from the North American transaction with Mayne Pharma of $13.4 million. From the initial cash proceeds from the agreement of
$13.4 million, the accelerated milestone payment of $10.3 million, and $4.0 million in net proceeds from the sale of the remaining worldwide rights, we deducted the value of net
assets delivered to Mayne, including inventory, prepaid
expenses, and manufacturing equipment, certain legal fees, and the reimbursement of alternative supply costs, and deferred amounts for additional alternative supply reimbursements and price protection
exposure. This resulted in a remaining net gain of $24.6 million, which was recognized during the quarter ended June 30, 2007. The gain recognized included proceeds received in prior
periods related to the sale of the North American rights to Nipent that were previously recorded on the balance sheet as of December 31, 2006 as a deferred gain because Mayne entered into a
supply agreement with an FDA approved manufacturing site during the quarter ended June 30, 2007, and as a result, we were able to estimate our price protection exposure. The remaining balance
of the deferred gain on sale of products of $600,000 at December 31, 2007 consists solely of the estimated price protection exposure.

We
received our first annual sales milestone payment of $1.8 million in August 2007, and received $6.0 million in supply holdback payments in December 2007, which were also
recorded as a gain on sale of products in the year ended December 31, 2007, together with $1.2 million received upon the sale of certain products to Intas Pharmaceuticals, Ltd.

As
we have determined that the Nipent operations sold to Mayne did not represent a separate component of our business, we have reflected activities related to the Nipent and Surface Safe
business in operating activities for all periods presented.



We have intangible assets related to goodwill and other acquired intangibles such as acquired workforce, CLIMB process technology, trademarks, covenants not to
compete, and customer lists. The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgment. Changes in strategy and/or market
conditions could significantly impact these judgments and require adjustments to recorded asset balances. We review intangible assets, as well as other long-lived assets, for impairment
whenever events or circumstances indicate that the carrying amount may not be fully recoverable. Additionally, we review goodwill for impairment annually in accordance with FASB Statement
No. 142, "Goodwill and Other Intangible Assets."



Investments in financial instruments are carried at fair value with unrealized gains and losses included in Accumulated other comprehensive income or loss in
stockholders' equity. Our investment portfolio includes equity securities that could subject us to material market risk and corporate and U.S. government (or U.S. governmental agency) obligations that
subject us to varying levels of credit risk. Specifically, as of December 31, 2007, we own 2,384,211 shares of AVI BioPharma, Inc. and have recorded an unrealized loss of
$2.4 million related to this investment as of December 31, 2007. If the fair value of a financial instrument has declined below its carrying value for a period in excess of six
consecutive months or if the decline is due to a significant adverse event, such that the carrying amount of these investments may not be fully recoverable, the impairment is considered to be other
than

34

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temporary.
An other than temporary decline in fair value of a financial instrument would be subject to a write-down resulting in a charge against earnings. The determination of whether a
decline in fair value is other than temporary requires significant judgment, and could have a material impact on our balance sheet and results of operations. Our management reviews the securities
within our portfolio for other than temporary declines in value on a regular basis. The prices of some of our marketable securities, are subject to considerable volatility. Decreases in the fair value
of these securities may significantly impact our results of operations. It is reasonably possible that we will determine that the unrealized loss related to AVI is other than temporary in the near
term.

Investments
in equity securities without readily determinable fair value are carried at cost. We periodically review those carried costs and evaluate whether an impairment has occurred.
The determination of whether an impairment has occurred requires significant judgment, as each investment has unique market and development opportunities.



The value assigned to acquired in-process research and development in 2006 represented the fair value of Montigen's incomplete research and
development programs that had not yet reached technological feasibility and had no alternative future use as of the acquisition date. The value of the acquired in-process research and
development was determined by estimating the future net cash flows for two compounds between 2006 and 2029 using a present value risk adjusted discount rate of 26%. This discount rate is a significant
assumption and is based on our estimated weighted average cost of capital adjusted upward for the risks associated with the projects acquired. The projected cash flows from the acquired projects were
based on estimates of revenues and operating profits related to the projects considering the stage of development of each potential product acquired, the time and resources needed to complete the
development and approval of each product, the life of each potential commercialized product and associated risks including the inherent difficulties and
uncertainties in developing a drug compound, including obtaining FDA and other regulatory approvals, and risks related to the viability of and potential alternative treatments in any future target
markets. In 2007, the first Montigen compound received clearance from the FDA to commence Phase I clinical trials, which triggered a milestone payment of $10.0 million to the former
Montigen stockholders. This amount was paid in shares of our common stock and recorded as acquired in-process research and development expense in 2007.



In connection with our June 2003 convertible debt transaction, we issued to the note holders warrants to purchase 2,634,211 shares of common stock of AVI at $5.00
per share. In January 2006, 300,000 of these warrants were exercised, and the remaining warrants expired on December 31, 2006 unexercised. These warrants were considered to be a derivative and
were recorded on the balance sheet at estimated fair value. The accounting for derivatives is complex, and requires significant judgments and estimates involved in determining the estimated fair value
in the absence of quoted market values. These estimates are based on valuation methodologies and assumptions deemed appropriate in the circumstances. The estimated fair value of the warrants is based
on various assumptions input into the Black-Scholes pricing model. These assumptions include the estimated market volatility and interest rates used in the determination of fair value. The use of
different assumptions may have a material effect on the estimated fair value amount and the results of operations.

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Results of Operations

|Revenues (in thousands)                  |                | 2007 |        | 2006   |   | 2005  
|---------------------------------------- | -------------- | ---- | ------ | ------ | - | ------
|Net product revenue                      |                | $    | 621    |        | $ | 9,563 
|Development and license revenue          |                |      |       |        |   | 25,093
|Royalty revenue                          |                |      | 22,333 |        |   | 3,427 
|Distribution agreement and other revenue |                |      |       |        |   |      
|                                         |                |      |        |        |   |       
|                                         | Total revenues |      | $      | 22,954 |   | $     
|                                         |                |      |        |        |   |       

The
decline in our net product revenue has been due primarily to the disposal of our commercial products in 2006 and 2007. Our net product revenues had consisted of sales of Nipent,
Surface Safe, and generic mitomycin. We sold the North American rights to Nipent and Surface Safe to Mayne Pharma in August 2006 and ceased selling mitomycin at the same time. We sold the rights to
mitomycin to Intas Pharmaceuticals in April 2007 and sold the remaining worldwide rights to Nipent to Mayne Pharma in April 2007.

Development
and license revenue relates to our license agreement entered into with MGI Pharma in September 2004 for Dacogen. In 2006, development and license revenue consisted primarily
of $20 million in milestone revenue related to the approval of Dacogen by the FDA, and $5 million associated with the sublicense of Dacogen in all territories outside North America from
MGI to Janssen-Cilag. Development and license revenue for 2005 included $9.9 million related to the amortization of deferred revenue in connection with an upfront payment received from MGI, and
$3.4 million related to the reimbursement of Dacogen development and allocated overhead costs. We had no similar revenues in 2007.

MGI
is required to pay us royalties starting at 20% and escalating to a maximum of 30% of net Dacogen sales within 45 days after the end of each calendar quarter. We recognize
royalty revenue on a cash basis when it is received from MGI because we do not have sufficient ability to accurately estimate Dacogen sales. The royalty revenues recorded in 2007 represent MGI's
Dacogen sales for the fourth quarter of 2006 and the first three quarters of 2007. The $3.4 million of royalty revenue we recognized in 2006 reflected royalties from MGI's Dacogen sales for the
second and third quarters of 2006. Royalty revenue has been increasing each quarter due to increasing sales of Dacogen subsequent to its introduction into the U.S. market in 2006.

Distribution
agreement and other revenue for 2005 included $167,000 relating to the termination of our Nipent distribution agreement with Abbott Laboratories, and $590,000 relating to
the proceeds received from the transfer agreement with American Pharmaceutical Partners, Inc. whereby we transferred the ANDA and all rights, title, and interest in our generic daunorubicin.
There were no similar transactions in 2006 or 2007.

|Costs and operating expenses (in thousands)  |                                    | 2007 |         | 2006   |   | 2005  
|-------------------------------------------- | ---------------------------------- | ---- | ------- | ------ | - | ------
|Cost of product revenue                      |                                    | $    | 221     |        | $ | 2,003 
|Research and development                     |                                    |      | 23,423  |        |   | 16,544
|Selling, general and administrative          |                                    |      | 13,520  |        |   | 24,714
|Acquired in-process research and development |                                    |      | 9,967   |        |   | 16,318
|Gain on sale of products                     |                                    |      | (33,677 | )      |   |      
|                                             |                                    |      |         |        |   |       
|                                             | Total costs and operating expenses |      | $       | 13,454 |   | $     
|                                             |                                    |      |         |        |   |       

The
decrease in cost of product revenue was due primarily to the disposal of our commercial products in 2006 and 2007 as noted in the discussion of the decline in our product revenue
above.

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The increases in research and development expenses were due to higher drug discovery research costs associated with the acquisition of the Montigen facility in Salt Lake City, Utah in
2006 and clinical trial costs related to the initiation of Phase I and Phase Ib studies for MP470 in 2007, partially offset by the cessation of clinical research and supply costs related to
Nipent. We conduct research internally and also through collaborations with third parties, and we intend to maintain our strong commitment to our research and development efforts in the future. Our
research and development activities consist primarily of clinical development and the related advancement of our existing product candidates through clinical trials. Conducting clinical trials is a
lengthy, expensive and uncertain process. Completion of clinical trials may take several years or more. The length of time generally varies substantially according to the type, complexity, novelty and
intended use of the product candidate. Our clinical trials may be suspended at any time if we or the FDA believe the patients participating in our studies are exposed to unacceptable health risks. We
may encounter problems in our studies which will cause us or the FDA to delay or suspend the studies. Because of these uncertainties, we cannot predict when or whether we will successfully complete
the development of our product candidates or the ultimate product development cost.

The
decreases in selling, general and administrative expenses for 2007 and 2006 relate primarily to lower costs associated with sales and marketing programs due to the sale of our North
American and worldwide rights to Nipent and Surface Safe to Mayne and lower costs related to our European operations, partially offset by higher expenses related to stock-based compensation expense.
We sold the North American rights to Nipent and Surface Safe to Mayne Pharma in August 2006 and ceased selling mitomycin at the same time. We sold the rights to mitomycin to Intas Pharmaceuticals in
April 2007 and sold the remaining worldwide rights to Nipent to Mayne Pharma in April 2007.

In
April 2007, the first Montigen compound received clearance from the FDA to begin Phase I clinical trials, triggering the first milestone payment to the former Montigen
stockholders of $9,967,000, which we paid through the issuance of 1,477,000 shares of our common stock, which was recorded as acquired in-process research and development expense in the
year ended December 31, 2007. Acquired in-process research and development expense recorded in the year ended December 31, 2006 related to the acquisition of Montigen in
April 2006. The value assigned to acquired in-process research and development represented the fair value of Montigen's incomplete research and development programs that had not yet
reached technological feasibility and had no alternative future use as of the acquisition date.

Gain
on sale of products recorded in the year ended December 31, 2007 relates to the sale of our worldwide rights to Nipent and Surface Safe to Mayne Pharma and the sale of
mitomycin, paclitaxel, and etoposide to Intas Pharmaceuticals, as well as the first annual milestone payment of $1.8 million
received from Mayne/Hospira in August 2007 relating to the achievement of certain Nipent sales targets and $6 million in supply holdbacks received in December 2007.

|Other income (expense) (in thousands)              |  | 2007 |       | 2006 |   | 2005  | 
|-------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | 
|Interest income                                    |  | $    | 4,017 |      | $ | 2,746 | 
|Gain on disposition of investment in AVI BioPharma |  |      |      |      |   | 780   | 
|Other income (expense)                             |  |      | (25   | )    |   | 241   | 
|Change in valuation of derivatives                 |  |      |      |      |   | 1,817 | 
|Income tax provision                               |  |      | 411   |      |   | 575   | 

The
increases in interest income are due to higher available cash and marketable securities balances due primarily to increased Dacogen royalty revenues and payments received from MGI,
the receipt of initial proceeds from the sale of North American rights to Nipent and Surface Safe to Mayne in August 2006, milestone payments received from Mayne in February 2007, proceeds from the
sale of the worldwide rights to Nipent to Mayne in April 2007, and sales milestones and supply holdback payments received from Mayne in August and December 2007.

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As
part of our June 2003 convertible debt transaction, we issued to the note holders warrants to purchase 2,634,211 shares of AVI at $5.00 per share. In January 2006, one of the warrant
holders exercised 300,000 warrants. As part of this transaction, we received $1.5 million in cash and transferred 300,000 of the AVI Shares to the warrant holder. We recognized a gain on
disposition of the shares of $780,000, representing the difference between our $2.40 per share adjusted cost basis of the shares and the exercise price. We had no similar transactions in 2005 or 2007.

During
2006, other income (expense) primarily represented transaction gains on foreign currency exchange relating to activities of our subsidiary EuroGen, reflecting increased activity
at EuroGen that began selling and distributing Nipent in 2006. Prior year transaction gains or losses were not material and were included in operating expenses.

The
warrants issued in our June 2003 convertible debt transaction represented a derivative instrument and were revalued each quarter using the Black-Scholes pricing model. The warrants
expired on December 31, 2006, so there was no corresponding change in value recorded in 2007.

The
tax provision recorded in 2007 reflects federal and state income taxes at statutory rates and the application of net operating loss carryforwards, offset by certain
non-deductible expenses, including acquired in-process research and development expense. Although we had a net loss for book purposes in 2006, we recorded a tax provision
primarily due to non-deductible acquired in-process research and development expenses.

Liquidity and Capital Resources

Our cash, cash equivalents, and current and non-current marketable securities totaled $90.8 million at December 31, 2007, compared to
$67.9 million at December 31, 2006.

Net
cash used in operating activities was $5.8 million in 2007, and consisted primarily of the net income of $13.1 million, plus the non-cash impacts of
acquired in-process research and development of $10.0 million, non-cash stock-based compensation expense of $4.3 million, and depreciation and amortization of
$2.0 million. We also had a decrease in accounts receivable of $1.9 million due to the sale of our commercial operations, more than offset by a decrease in accounts payable and other
liabilities of $2.8 million, and the recognition of and change in the deferred gain on sale of products of $34.6 million. Net cash provided by operating activities was
$7.2 million in 2006, and consisted primarily of the net loss of $16.5 million, plus the change in valuation of derivatives of $1.8 million and the cash payment of
$2.1 million to Wyeth to acquire the European distribution rights to Nipent, more than offset by adjustments related to the non-cash amortization of intangibles and distribution and
marketing rights of $2.1 million, the non-cash impacts of stock compensation expense of $3.4 million, and acquired in-process research and development of
$16.3 million relating to the acquisition of Montigen. We also had a decrease in accounts receivable of $4.1 million due to the sale of the North American rights to Nipent and Surface
Safe to Mayne, and an increase in accounts payable and other liabilities of $1.1 million. Net cash used in operating activities was $11.7 million in 2005, and consisted primarily of the
net loss of $14.5 million, plus the amortization of deferred revenue of $9.9 million from the MGI license agreement, payment of $1.5 million to Abbott terminating our Nipent
distribution agreement, and a $1.1 million reduction in accounts payable and other liabilities primarily due to lower research and development related activities, partially offset by decreases
in accounts receivable of $11.6 million, due primarily to the receipt of $12.5 million in milestone related payments from MGI in 2005, and inventories of $1.9 million.

Net
cash provided by investing activities was $12.4 million in 2007, and consisted primarily of milestone payments of $17.1 million from Mayne relating to the sale of the
North American rights to Nipent, $5.1 million from Mayne for the sale of the remaining worldwide rights to Nipent, $1.5 million in maturities of marketable securities, and
$1.2 million for the sale of products to Intas, partially offset by $10.9 million for purchases of marketable securities and $1.7 million for purchases of property and equipment.
Net cash provided by investing activities in 2006 was $5.3 million, and consisted primarily of

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$1.5 million
in proceeds from the sale of marketable securities and $13.4 million received from Mayne for the sale of the North American rights to Nipent and Surface Safe, partially
offset by $900,000 relating to purchases of property and equipment and $8.7 million relating to the cash paid upon the acquisition of Montigen. Net cash provided by investing activities was
$18.8 million in 2005, and consisted of $29.8 million in proceeds from the maturities of marketable securities partially offset by $11.6 million in purchases of marketable
securities.

Net
cash provided by financing activities in 2007, 2006, and 2005 of $3.8 million, $7.5 million, and $2.2 million, respectively, consisted of proceeds from the
issuance of common stock upon exercise of stock options and warrants.

Our
contractual obligations as of December 31, 2007 are as follows (in thousands):

|                                   |  | Payments Due by Period
|---------------------------------- |  | ----------------------
|
|Operating leases, net              |  | $                     
|                                   |  |                       
|Total contractual cash obligations |  | $                     
|                                   |  |                       

We
are also obligated to potentially spend up to $80.0 million in milestone and development related payments to AVI for development of Avicine. We are unable to determine
precisely when and if our payment obligations under our agreement with AVI will become due as these obligations are based on milestone events the achievement of which is subject to a significant
number of risks and uncertainties. Because some of the milestone events are revenue-related and payment obligation would not be triggered absent our receipt of revenues from the relationship, we may
be able to use funds generated from these relationships to make the milestone payments if they become due.

We
have financed our operations primarily through the issuance of equity and debt securities, the receipt of milestone and royalty payments in connection with collaborative agreements,
and the sale of non-core assets. Based on our current forecasted product development activities, we believe that our current cash, cash equivalents, marketable securities and other
investments will satisfy our cash requirements through at least December 31, 2009. We may pursue additional financing options, including the selling of additional shares of stock in public or
private offerings.

We
believe that our need for additional funding will increase in the future, especially if we acquire new product technologies for development and sale, and our ability to continue
raising funds from external sources will be critical to our success. We continue to actively consider future contractual arrangements that would require significant financial commitments. If we
experience currently unanticipated cash requirements, we could require additional capital much sooner than presently anticipated. We may raise money by the sale of our equity securities or debt, or
the exercise of outstanding warrants and stock options by the holders of such warrants or options. However, given uncertain market conditions and the
volatility of our stock price, we may not be able to sell our securities in public offerings or private placements at prices and on terms that are favorable to us, if at all. We may also choose to
obtain funding through licensing and other contractual agreements. Such arrangements may require us to relinquish our rights to our technologies, products or marketing territories, or to grant
licenses on terms that are not favorable to us. If we fail to obtain adequate funding in a timely manner, or at all, we will be forced to scale back our product development activities, or our
operations in a manner that will ensure we can discharge our obligations as they come due in the ordinary course of business at least through December 31, 2009.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are currently material or reasonably likely to be material to our consolidated financial
position or results of operations.

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Related Party Transactions



In November 2001, we made an equity investment of $150,000 to acquire 100,000 shares of Series A Convertible Preferred stock of KineMed, Inc.
("KineMed"), a start-up biotech company. In March 2003, we made an additional equity investment of $30,000 to acquire an additional 15,000 shares. The president and chief executive officer
of KineMed is a former director of SuperGen. Our current president and chief executive officer is a member of the board of directors of KineMed. We accounted for this investment under the cost method
as our ownership was less than 20% of KineMed's outstanding shares. During 2005, we determined that the value of this investment was impaired due to the uncertain viability of KineMed as a going
concern. As a result, the entire cost of the investment of $180,000 was charged to Selling, general, and administrative expense in 2005. We had no similar transactions in 2006 or 2007.



In December 1999, we entered into an agreement with AVI BioPharma, Inc. At the time, the chief executive officer of AVI was a member of our board of
directors. He later resigned from our board in May 2002. The former president and chief executive officer of SuperGen was a member of the board of directors of AVI through March 2004. Under the terms
of the agreement, we acquired one million shares of AVI common stock, which amounted to approximately 7.5% of AVI's outstanding common stock, for $2.5 million cash and 100,000 shares of our
common stock at $28.25 per share. We also acquired exclusive negotiating rights for the United States market for Avicine, AVI's proprietary cancer vaccine.

In
July 2000, we finalized an agreement with AVI to obtain the U.S. marketing rights for Avicine. We issued 347,826 shares of our common stock along with $5 million in cash to AVI
as payment for our investment, in exchange for 1,684,211 shares of AVI common stock. As part of this agreement, we obtained the right of first discussion to all of AVI's oncology compounds and an
option to acquire an additional 10% of AVI's common stock for $35.625 per share. This option is exercisable for a three-year period commencing on the earlier of the date the FDA accepts
the NDA submitted for Avicine or the date on which the closing price of AVI's common stock exceeds the option exercise price. We have accounted for the investment in AVI as an investment in equity
securities that are available-for-sale as our ownership is less than 20% of AVI's outstanding shares.

Avicine
will require significant additional expenditures to complete the clinical development necessary to gain marketing approval from the FDA and equivalent foreign regulatory
agencies. As part of this agreement, we are obligated to make additional payments to AVI based on successful achievement of developmental, regulatory approval, and commercialization milestones over
the next several years that could total $80 million. In 2003 and 2002, we recorded a total of $565,000 in research and development expenses for Avicine. At December 31, 2007, this amount
was still payable and is presented on the balance sheet as Payable to AVI BioPharma, Inc.



Our current president and chief executive officer is a former director and our former president and chief executive officer is currently a director and both are
stockholders of Quark Biotech, Inc. ("QBI"), a privately-held development stage biotechnology company. In June 1997, we made an equity investment of $500,000 in QBI's preferred
stock, which represented less than 1% of the company's outstanding shares as of December 31, 2001. Our investment in QBI is carried at cost and was recorded as Investment in stock of related
parties as of December 31, 2006. At December 31, 2007 the investment is included in Other assets.

40

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Recently Issued Accounting Standards

In September 2006, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements"
("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This statement clarifies how to
measure fair value as permitted under other accounting pronouncements but does not require any new fair value measurements. However, for some entities, the application of this statement will change
current practice. We were required to adopt SFAS 157 as of January 1, 2008. We are currently evaluating the impact of SFAS 157 and have not yet determined the effect on our
earnings or financial position.

In
December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (Revised 2007), "Business Combinations" ("SFAS 141R"). SFAS 141R establishes
principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any
non-controlling interest in the acquired business. SFAS 141R also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines
what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R is effective for business
combinations in fiscal years beginning on or after December 15, 2008. Earlier adoption is prohibited. We will adopt SFAS 141R beginning January 1, 2009, as required. We do not
anticipate that the adoption of SFAS 141R will currently have a material impact on our consolidated financial statements but will impact any business combination beginning in 2009.

In
February 2007, the FASB issued Statement No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS 159"). SFAS 159 permits entities
to choose to measure many financial instruments, and certain other items, at fair value. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons
between entities that choose different measurement attributes for similar types of assets and liabilities. The provisions of SFAS 159 are effective for fiscal years beginning after
November 15, 2007. We will adopt SFAS 159 during its fiscal year ending December 31, 2008. The adoption of SFAS 159 in our first fiscal quarter of 2008 did not have a
material impact on our consolidated financial statements as we did not elect the fair value option for any financial assets or liabilities.

In
June 2007, the Emerging Issues Task Force ("EITF") reached a consensus on EITF No. 07-03, Accounting for Nonrefundable Advance Payments for Goods or Services to Be
Used in Future Research and Development Activities. EITF 07-03 specifies the timing of expense recognition for nonrefundable advance payments for goods or services that will be used
or rendered for research and development activities. EITF 07-03 is effective for fiscal years
beginning after December 15, 2007, and early adoption is not permitted. As a result, EITF 07-03 is effective for the Company as of January 1, 2008.
EITF 07-03 will not have a material impact on our financial position or results of operations.

Income Taxes

As of December 31, 2007, we have net operating loss carryforwards for federal income tax purposes of approximately $268 million which expire in the
years 2011 through 2026, and federal research and development credit carryforwards of approximately $8.7 million, which expire in the years 2008 through 2027.

Utilization
of our net operating loss carryforwards may be subject to substantial annual limitations due to ownership change limitations provided by the Internal Revenue Code and similar
state provisions. Such an annual limitation could result in the expiration of the net operating losses before utilization.

In
July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"), an interpretation of SFAS 109, "Accounting for
Income Taxes." FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in

41

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accordance
with SFAS 109. The interpretation applies to all tax positions accounted for in accordance with SFAS 109 and requires a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken, or expected to be taken, in an income tax return. Subsequent recognition, derecognition, and measurement is based on
management's best judgment given the facts, circumstances, and information available at the reporting date.

We
adopted the provisions of FIN 48 on January 1, 2007. There was no impact on our consolidated financial position, results of operations and cash flows as a result of
adoption. We have no unrecognized tax benefits, as described in FIN 48, as of December 31, 2007. Also, there are no accrued amounts for interest and penalties.

Our
policy is to recognize interest and penalties related to income taxes as a component of income tax expense. No interest and penalties expenses are recognized in the statement of
operations in the current year. We do not expect any unrecognized tax benefits to be recognized within the next twelve months. We are subject to income tax examinations for U.S. Federal incomes taxes
and state income taxes from 1992 forward due to net operating losses in tax years 1992 through 2005. We are subject to tax examinations in the United Kingdom from 2001 forward. We do not anticipate
that total unrecognized tax benefits will significantly change prior to December 31, 2008.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.



Due to the short-term nature of our interest bearing assets, which consist primarily of certificates of deposit, United States corporate obligations,
and United States government obligations, we believe that our exposure to interest rate market risk would not significantly affect our operations.

Our
investment policy is to manage our marketable securities portfolio to preserve principal and liquidity while maximizing the return on the investment portfolio. Our marketable
securities portfolio is primarily invested in corporate debt securities with an average maturity of under one year and a minimum investment grade rating of A, A-1 or better to minimize
credit risk. Although changes in interest rates may affect the fair value of the marketable securities portfolio and cause unrealized gains or losses, such gains or losses would not be realized unless
the investments were to be sold prior to maturity.



We sold products in Europe through March 2007. Based on our ongoing activities in Europe, we are subject to exposure from adverse movements in foreign currency
exchange rates. To date, the effect of changes in foreign currency exchange rates on revenue and operating expenses has not been material, nor do we expect it to be material in the future. Operating
expenses incurred by our foreign subsidiaries are denominated primarily in local currencies. We currently do not use financial instruments to hedge these operating expenses. We will assess our need to
utilize financial instruments to hedge currency exposures on an ongoing basis.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

All information required by this item is included on pages F-1 to F-31 in Item 15 of Part IV of this Report and is
incorporated into this item by reference.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

42

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ITEM 9A.    CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.

We carried out an evaluation, under the supervision of and with the participation of our management, including our Chief Executive Officer and our Chief Financial
Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended) as of the end of the period covered by this report. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2007 our
disclosure controls are sufficiently effective to ensure that the information required to be disclosed by us in this Form 10-K was recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and instructions for Form 10-K.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive
Officer and Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and
procedures that:



Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Under
the supervision of and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, our management has assessed the
effectiveness of internal control over financial reporting as of December 31, 2007. Our assessment was based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") Internal Control-Integrated Framework. Based on using the COSO criteria, we believe our internal control over financial reporting as of December 31, 2007 was effective.

Ernst &
Young LLP, our independent registered public accounting firm, has issued an attestation report that the Company's internal control over financial reporting was
effective as of December 31, 2007.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fourth quarter of 2007 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.

43

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board
of Directors and Stockholders
SuperGen, Inc.

We
have audited SuperGen, Inc.'s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal ControlIntegrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). SuperGen, Inc.'s management is responsible for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over
Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company's assets that could have a material effect on the financial statements.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, SuperGen, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the COSO
criteria.

We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of SuperGen, Inc. as of
December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2007
of SuperGen, Inc. and our report dated March 14, 2008 expressed an unqualified opinion thereon.

|                                     |  |                     
|------------------------------------ |  | --------------------
|                                     |  | /s/ERNST & YOUNG LLP
|Palo Alto, California
March 14, 2008 |  |                     

44

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ITEM 9B.    OTHER INFORMATION.

None

PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE MATTERS.

Information regarding our Board of Directors is incorporated by reference to the section entitled "Election of Directors" appearing in our definitive Proxy
Statement for the 2008 Annual Meeting of Stockholders to be filed with the Commission within 120 days after the end of our fiscal year pursuant to Regulation 14A (the "Proxy Statement").

The
names of our executive officers and their ages, titles and biographies as of March 7, 2008 are set forth below.

Executive Officers

|Name                      |  | Age |  | Position                                       
|------------------------- |  | --- |  | -----------------------------------------------
|James S. J. Manuso, Ph.D. |  | 59  |  | President, Chief Executive Officer and Director
|Gregory Berk, M.D.        |  | 49  |  | Chief Medical Officer                          
|Michael Molkentin         |  | 53  |  | Chief Financial Officer                        

James S. J. Manuso, Ph.D.,has served as our president and chief executive officer since January 1, 2004, as our chief executive
officer-elect from September 2003 to December 2003 and as a director since February 2001. Dr. Manuso is co-founder and immediate past president and chief executive officer of
Galenica Pharmaceuticals, Inc. Dr. Manuso co-founded and was general partner of PrimeTech Partners, a biotechnology venture management partnership, from 1998 to 2002, and
managing general partner of The Channel Group LLC, an international life sciences corporate advisory firm. He was also president of Manuso, Alexander & Associates, Inc.,
management consultants and financial advisors to pharmaceutical and biotechnology companies. Dr. Manuso was a vice president and director of Health Care Planning and Development for The
Equitable Companies (now Group Axa), where he also served as acting medical director. He currently serves on the boards of Merrion Pharmaceuticals Ltd. (MERR:IEX; Dublin, Ireland), Novelos
Therapeutics, Inc. (NVLT:OB) and privately-held, KineMed, Inc. Previously, he served on the boards of Inflazyme Pharmaceuticals, Inc., Symbiontics, Inc., Quark
Biotech, Inc., Galenica Pharmaceuticals, Inc., and Supratek Pharma, Inc. Dr. Manuso earned a B.A. with Honors in Economics and Chemistry from New York University, a Ph.D.
in Experimental Psychophysiology from the Graduate Faculty of The New School University, a Certificate in Health Systems Management from Harvard Business School, and an Executive M.B.A. from Columbia
Business School. Dr. Manuso is the author of over 30 chapters, articles and books on topics including health care cost containment and biotechnology company management. He has taught and
lectured at Columbia, New York University, Georgetown, Polytechnic University, and Waseda University (Japan). He has delivered invited addresses at meetings of the American Management Association, the
American Medical Association, the Securities Industry Association, the Biotechnology Industry Organization, and many other professional associations.
Dr. Manuso previously served as vice president and a member of the Board of Trustees of the Greater San Francisco Bay Area Leukemia & Lymphoma Society.

Dr. Gregory Berkjoined us as chief medical officer in May 2007. An oncology veteran with more than 23 years of experience,
Dr. Berk was most recently senior vice president and chief medical officer for Hana Biosciences, a San Francisco-based oncology company. Previously, he was medical director for the Network of
Medical Communications and Research, a consulting and medical education company focused on clinical-stage oncology research. Dr. Berk was an attending physician in the Department of

45

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Medicine
at New York Presbyterian Hospital (Cornell Campus) and an assistant professor of medicine at the Weill Medical College of Cornell University, where he was an investigator in numerous oncology
clinical trials, including the pivotal trials for Gleevec as well as colorectal and breast cancer trials for Avastin and a number of CALGB studies. Dr. Berk holds a medical degree from Case
Western Reserve University School of Medicine in Cleveland, Ohio. He began his undergraduate studies in biochemistry at Cambridge University in Cambridge, England and graduated summa cum laude from
Tulane University in New Orleans, Louisiana. Dr. Berk completed his internship, residency and fellowship at The New York HospitalCornell Medical Center. He is Board certified in
internal medicine and medical oncology and is a member of the American Society of Hematology and the American Society of Clinical Oncology.

Michael Molkentinjoined us as chief financial officer and corporate secretary in October 2003. Prior to joining us, Mr. Molkentin
served as interim chief financial officer at Aradigm Corporation from May 2000 to September 2002. From January 1995 to April 2000, Mr. Molkentin served as division controller for Thermo
Finnigan Corporation, a subsidiary of Thermo Electron. Mr. Molkentin served in a variety of financial management positions with technology companies, including field controller of Vanstar
Corporation, controller of Republic Telcom Systems, Inc. and corporate controller of Computer Automation, Inc. Mr. Molkentin is a CPA and received a B.B.A. in accounting from
Bernard M. Baruch College in New York City, New York.

Audrey Jakubowski, Ph.D.,served as our chief regulatory and quality officer until she retired from the Company in August 2007.

Audit Committee Financial Expert

Information regarding the financial expert(s) on the Audit Committee is incorporated by reference to the Proxy Statement.

Audit Committee

Information regarding the Audit Committee is incorporated by reference to the Proxy Statement.

Code of Ethics

Information regarding the Code of Ethics is incorporated by reference to the Proxy Statement.

Corporate Governance

Information regarding Corporate Governance is incorporated by reference to the Proxy Statement.

Section 16(a) Beneficial Ownership Reporting Compliance

Information regarding Section 16(a) beneficial ownership reporting compliance is set forth under "Voting Securities of Principal Stockholders and
Management" in the Proxy Statement, which information is incorporated herein by reference.

ITEM 11.    EXECUTIVE COMPENSATION.

Information regarding executive compensation is incorporated by reference to the information set forth under the caption "Compensation of Directors and Executive
Officers," including Compensation Committee Interlocks and Insider Participation, in the Proxy Statement. The information included under the heading "Compensation Committee Report" in the Proxy
Statement is incorporated herein by reference; however, this information shall not be deemed to be "soliciting material" or to be "filed" with the Commission or subject to Regulation 14A or
14C, or to the liabilities of Section 18 of the Exchange Act.

46

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ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Information regarding security ownership of certain beneficial owners and management is incorporated by reference to the information set forth under the caption
"Voting Securities of Principal Stockholders and Management" in the Proxy Statement. Information regarding our Equity Compensation Plans is incorporated by reference in the Proxy Statement.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

Information regarding certain relationships and related transactions is incorporated by reference to the information set forth under the caption "Certain
Transactions" in the Proxy Statement. Certain of our relationships and related transactions are addressed in the "Management's Discussion and Analysis of Financial Condition and Results of Operations"
section of this report. The information regarding director independence is incorporated herein by reference to the Proxy Statement.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES.

Information regarding principal auditor fees and services is set forth under "Principal Accounting Fees and Services" in the Proxy Statement, which information is
incorporated herein by reference.

PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.



The
following financial statements and report of Ernst & Young LLP, Independent Registered Public Accounting Firm, are included in Part IV of this Report on the
pages indicated:

PageReport of Independent Registered Public Accounting Firm

F-1Consolidated Balance Sheets

F-2Consolidated Statements of Operations

F-3Consolidated Statement of Stockholders' Equity

F-4Consolidated Statements of Cash Flows

F-5Notes to Consolidated Financial Statements

F-6




All
schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or the notes thereto.

47

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|Exhibit
Number |  | Description of Document                                                                                                                                                         
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(d)3.1         |  | Amended and Restated Certificate of Incorporation of the Registrant.                                                                                                            
|(s)3.2         |  | Bylaws of the Registrant, as amended and restated through May 30, 2001.                                                                                                         
|(i)4.1         |  | Specimen Common Stock Certificate.                                                                                                                                              
|(h)10.1        |  | Form of Indemnification Agreement between the Registrant and each of its directors and officers.                                                                                
|(**)(p)10.2    |  | 1993 Stock Option Plan (as amended through July 11, 2000).                                                                                                                      
|(**)(e)10.3    |  | Forms of stock option agreements under the 1993 Stock Option Plan.                                                                                                              
|(**)(j)10.4    |  | 1996 Directors' Stock Option Plan, as amended effective February 7, 2001.                                                                                                       
|(**)(n)10.5    |  | 2003 Stock Plan, as amended effective March 10, 2005.                                                                                                                           
|(**)(m)10.6    |  | 1998 Employee Stock Purchase Plan, as amended effective March 1, 2004.                                                                                                          
|(**)(a)10.7    |  | Executive Employment and Confidential Information and Invention Assignment Agreement dated January 1, 2004 between Registrant and James Manuso.                                 
|(**)(c)10.8    |  | Executive Employment and Confidential Information and Invention Assignment Agreement effective January 1, 2007 between Registrant and James Manuso.                             
|(d)10.9        |  | Office Building Lease dated June 23, 2000 between the Registrant and Koll Dublin Corporate Center, L.P.                                                                         
|(*)(f)10.10    |  | License Agreement between Stehlin Foundation for Cancer Research and the Registrant dated September 3, 1997.                                                                    
|(*)(r)10.11    |  | Amendment No. 1 to License Agreement dated November 1, 1999 between the Registrant and the Stehlin Foundation for Cancer Research.                                              
|(*)(g)10.12    |  | Supply Agreement dated October 20, 1997 between the Registrant and Warner-Lambert Company.                                                                                      
|(r)10.13       |  | Common Stock and Warrant Purchase Agreement dated April 4, 2000 between the Registrant and AVI BioPharma, Inc.                                                                  
|(r)10.14       |  | United States of America Sales, Distribution, and Development Agreement dated April 4, 2000 between the Registrant and AVI BioPharma, Inc.                                      
|(q)10.15       |  | Registration Rights Agreement dated April 4, 2000 between the registrant and AVI BioPharma, Inc.                                                                                
|(*)(t)10.16    |  | Supply and Distribution Agreement dated September 21, 2001 between the Registrant and EuroGen Pharmaceuticals Ltd.                                                              
|(o)10.17       |  | Securities Purchase Agreement dated February 26, 2003 by and among the Registrant and the purchasers named therein.                                                             
|(o)10.18       |  | Form of Warrant dated February 26, 2003 issued to the purchasers under the Securities Purchase Agreement dated February 26, 2003.                                               
|(*)(i)10.19    |  | License Agreement dated February 13, 2001 between the Registrant and Peregrine Pharmaceuticals, Inc.                                                                            
|(b)10.20       |  | Securities Purchase Agreement dated as of March 5, 2004 by and among the Registrant and the purchasers named therein.                                                           
|(b)10.21       |  | Form of Warrant dated as of March 5, 2004 for issuance under the Securities Purchase Agreement dated March 5, 2004 by and among the Registrant and the purchasers named therein.
|(*)(k)10.22    |  | Purchase and Sale Agreement dated February 17, 2004 between the Registrant and Pfizer Inc.                                                                                      
|(*)(l)10.23    |  | Amended and Restated License Agreement effective September 21, 2004 between the Registrant and MGI PHARMA, Inc.                                                                 
|(l)10.24       |  | Common Stock Purchase Agreement dated August 31, 2004 between the Registrant and MGI PHARMA, Inc.                                                                               

48

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|(l)10.25 |  | Investor Rights Agreement dated August 31, 2004 between the Registrant and MGI PHARMA, Inc.                                                                                                                                                                                                   
|-------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(l)10.26 |  | Warrant dated September 22, 2004 issued to The Kriegsman Group.                                                                                                                                                                                                                               
|(u)10.27 |  | Amended and Restated Agreement and Plan of Merger and Reorganization, dated March 30, 2006, by and among SuperGen, Inc., King's Peak Acquisition Corporation, Montigen Pharmaceuticals, Inc., James Clarke, as
Stockholder Representative and U.S. Bank National Association, as Escrow Agent.
|(u)10.28 |  | Form of Volume Restriction Agreement between SuperGen, Inc. and each stockholder of Montigen.                                                                                                                                                                                                 
|(v)10.29 |  | Asset Acquisition Agreement, dated June 21, 2006, between SuperGen, Inc. and Mayne Pharma (USA), Inc.                                                                                                                                                                                         
|(w)10.30 |  | Asset Acquisition Agreement Amendment dated August 22, 2006 between SuperGen, Inc. and Mayne Pharma (USA), Inc.                                                                                                                                                                               
|(w)10.31 |  | Transition Services Agreement dated August 22, 2006 between SuperGen, Inc. and Mayne Pharma (USA), Inc.                                                                                                                                                                                       
|(w)10.32 |  | Supply Agreement dated August 22, 2006 between SuperGen, Inc. and Mayne Pharma (USA), Inc.                                                                                                                                                                                                    
|(x)10.33 |  | Amended and Restated Supply and Distribution Agreement between SuperGen, Inc. and Wyeth, effective June 1, 2006.                                                                                                                                                                              
|(y)10.34 |  | Asset Acquisition Agreement, dated November 25, 2006, between SuperGen, Inc. and Mayne Pharma plc.                                                                                                                                                                                            
|23.1     |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                     
|31.1     |  | Certification of Chief Executive Officer under Section 302(a) of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                              
|31.2     |  | Certification of Chief Financial Officer under Section 302(a) of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                              
|32.1     |  | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                               

---

49

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50

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The
Board of Directors and Stockholders
SuperGen, Inc.

We
have audited the accompanying consolidated balance sheets of SuperGen, Inc. as of December 31, 2007 and 2006, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2007. These financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of SuperGen, Inc. at December 31,
2007 and 2006, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2007, in conformity with U.S. generally accepted
accounting principles.

As
discussed in Note 4 to the consolidated financial statements, as of January 1, 2006, SuperGen, Inc. changed its method of accounting for stock-based compensation
in accordance with guidance provided in Statement of Financial Accounting Standards No. 123 (revised 2004),Share-Based Payment.

We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), SuperGen, Inc.'s internal control over financial reporting
as of December 31, 2007, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and
our report dated March 14, 2008 expressed an unqualified opinion thereon.

|                                     |  |                     
|------------------------------------ |  | --------------------
|                                     |  | /s/ERNST & YOUNG LLP
|Palo Alto, California
March 14, 2008 |  |                     

F-1

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SUPERGEN, INC.        CONSOLIDATED BALANCE SHEETS        (In thousands, except share and per share amounts)

|                                             |                                                                                                                                                                   | December 31,                               |      
|-------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | -----
|
|ASSETS                                       |                                                                                                                                                                   |                                            |      
|Current assets:                              |                                                                                                                                                                   |                                            |      
|                                             | Cash and cash equivalents                                                                                                                                         |                                            | $    
|                                             | Marketable securities                                                                                                                                             |                                            |      
|                                             | Accounts receivable, net                                                                                                                                          |                                            |      
|                                             | Development revenue receivable from MGI PHARMA                                                                                                                    |                                            |      
|                                             | Accounts receivable from Mayne Pharma                                                                                                                             |                                            |      
|                                             | Inventories                                                                                                                                                       |                                            |      
|                                             | Prepaid distribution and marketing rights                                                                                                                         |                                            |      
|                                             | Prepaid expenses and other current assets                                                                                                                         |                                            |      
|                                             |                                                                                                                                                                   |                                            |      
|                                             |                                                                                                                                                                   | Total current assets                       |      
|Marketable securities, non-current           |                                                                                                                                                                   |                                            | 3,419
|Investment in stock of related parties       |                                                                                                                                                                   |                                            |     
|Property, plant and equipment, net           |                                                                                                                                                                   |                                            | 4,435
|Goodwill                                     |                                                                                                                                                                   |                                            | 731  
|Other intangibles, net                       |                                                                                                                                                                   |                                            | 532  
|Restricted cash and investments, non-current |                                                                                                                                                                   |                                            | 2,536
|Other assets                                 |                                                                                                                                                                   |                                            | 508  
|                                             |                                                                                                                                                                   |                                            |      
|                                             |                                                                                                                                                                   | Total assets                               |      
|                                             |                                                                                                                                                                   |                                            |      
|LIABILITIES AND STOCKHOLDERS' EQUITY         |                                                                                                                                                                   |                                            |      
|Current liabilities:                         |                                                                                                                                                                   |                                            |      
|                                             | Accounts payable                                                                                                                                                  |                                            | $    
|                                             | Accrued liabilities                                                                                                                                               |                                            |      
|                                             | Payable to AVI BioPharma                                                                                                                                          |                                            |      
|                                             | Deferred gain on sale of products to Mayne Pharma                                                                                                                 |                                            |      
|                                             | Deferred revenue                                                                                                                                                  |                                            |      
|                                             | Accrued payroll and employee benefits                                                                                                                             |                                            |      
|                                             |                                                                                                                                                                   |                                            |      
|                                             |                                                                                                                                                                   | Total current liabilities                  |      
|Deferred rent                                |                                                                                                                                                                   |                                            | 832  
|Deferred revenue, non-current                |                                                                                                                                                                   |                                            |     
|                                             |                                                                                                                                                                   |                                            |      
|                                             |                                                                                                                                                                   | Total liabilities                          |      
|                                             |                                                                                                                                                                   |                                            |      
|Commitments and contingencies                |                                                                                                                                                                   |                                            |      
|Stockholders' equity:                        |                                                                                                                                                                   |                                            |      
|                                             | Preferred stock, $.001 par value; 2,000,000 shares authorized; none outstanding                                                                                   |                                            |      
|                                             | Common stock, $.001 par value; 150,000,000 shares authorized; 57,519,094 and 55,177,377 shares issued and outstanding at December 31, 2007 and 2006, respectively |                                            |      
|                                             | Additional paid in capital                                                                                                                                        |                                            |      
|                                             | Accumulated other comprehensive gain (loss)                                                                                                                       |                                            |      
|                                             | Accumulated deficit                                                                                                                                               |                                            |      
|                                             |                                                                                                                                                                   |                                            |      
|                                             |                                                                                                                                                                   | Total stockholders' equity                 |      
|                                             |                                                                                                                                                                   |                                            |      
|                                             |                                                                                                                                                                   | Total liabilities and stockholders' equity |      
|                                             |                                                                                                                                                                   |                                            |      

See accompanying notes to consolidated financial statements

F-2

---





SUPERGEN, INC.        CONSOLIDATED STATEMENTS OF OPERATIONS        (In thousands, except per share amounts)

|                                                             |                                              | Year Ended December 31,            |       
|------------------------------------------------------------ | -------------------------------------------- | ---------------------------------- | ------
|
|Revenues:                                                    |                                              |                                    |       
|                                                             | Net product revenue                          |                                    | $     
|                                                             | Development and license revenue              |                                    |       
|                                                             | Royalty revenue                              |                                    |       
|                                                             | Distribution agreement and other revenue     |                                    |       
|                                                             |                                              |                                    |       
|                                                             |                                              | Total revenues                     |       
|Costs and operating expenses:                                |                                              |                                    |       
|                                                             | Cost of product revenue                      |                                    |       
|                                                             | Research and development                     |                                    |       
|                                                             | Selling, general, and administrative         |                                    |       
|                                                             | Acquired in-process research and development |                                    |       
|                                                             | Gain on sale of products                     |                                    |       
|                                                             |                                              |                                    |       
|                                                             |                                              | Total costs and operating expenses |       
|                                                             |                                              |                                    |       
|Income (loss) from operations                                |                                              |                                    | 9,500 
|Interest income                                              |                                              |                                    | 4,017 
|Gain on disposition of investment in AVI BioPharma stock     |                                              |                                    |       
|                                                             | resulting from exercise of warrant           |                                    |       
|Other income (expense)                                       |                                              |                                    | (25   
|Change in valuation of derivatives                           |                                              |                                    |      
|                                                             |                                              |                                    |       
|Income (loss) before income tax provision                    |                                              |                                    | 13,492
|Income tax provision                                         |                                              |                                    | (411  
|                                                             |                                              |                                    |       
|Net income (loss)                                            |                                              | $                                  | 13,081
|                                                             |                                              |                                    |       
|Net income (loss) per common share:                          |                                              |                                    |       
|                                                             | Basic                                        |                                    | $     
|                                                             |                                              |                                    |       
|                                                             | Diluted                                      |                                    | $     
|                                                             |                                              |                                    |       
|Weighted average shares used in net income (loss) per common |                                              |                                    |       
|share calculation:                                           |                                              |                                    |       
|                                                             | Basic                                        |                                    |       
|                                                             |                                              |                                    |       
|                                                             | Diluted                                      |                                    |       
|                                                             |                                              |                                    |       

See
accompanying notes to consolidated financial statements

F-3

---





SUPERGEN, INC.        CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY        (In thousands)

|                              |                                                                                | Common Stock                                                                    |       |   |    | Accumulated
Other
Comprehensive
Gain(Loss) |   |         |       |   |       
|----------------------------- | ------------------------------------------------------------------------------ | ------------------------------------------------------------------------------- | ----- | - | -- | ------------------------------------------ | - | ------- | ----- | - | ------
|
|
|Balances at January 1, 2005   |                                                                                | 51,127                                                                          |       | $ | 51 |                                            | $ | 406,789 |       | $ | (99   
|                              | Comprehensive loss:                                                            |                                                                                 |       |   |    |                                            |   |         |       |   |       
|                              |                                                                                | Net loss                                                                        |       |  |    |                                            |  |         |       |  |       
|                              |                                                                                | Other than temporary decline in value of investments                            |       |  |    |                                            |  |         |       |  |       
|                              |                                                                                | Other comprehensive gain (loss)Change in unrealized gain (loss) on investments |       |  |    |                                            |  |         |       |  |       
|                              |                                                                                |                                                                                 |       |   |    |                                            |   |         |       |   |       
|                              | Comprehensive loss                                                             |                                                                                 |       |   |    |                                            |   |         |       |   |       
|                              | Issuance of common stock upon exercise of stock options                        |                                                                                 | 273   |   |    | 1                                          |   |         | 924   |   |       
|                              | Issuance of common stock in connection with employee stock purchase plan       |                                                                                 | 52    |   |    |                                           |   |         | 205   |   |       
|                              | Issuance of common stock upon exercise of warrants                             |                                                                                 | 259   |   |    |                                            |   |         | 1,047 |   |       
|                              | Compensation expense from stock option grants to consultants                   |                                                                                 |      |   |    |                                           |   |         | 132   |   |       
|                              | Compensation expense related to acceleration of vesting of stock option grants |                                                                                 |      |   |    |                                           |   |         | 268   |   |       
|                              |                                                                                |                                                                                 |       |   |    |                                            |   |         |       |   |       
|Balances at December 31, 2005 |                                                                                | 51,711                                                                          |       |   | 52 |                                            |   | 409,365 |       |   | 2,850 
|                              | Comprehensive loss:                                                            |                                                                                 |       |   |    |                                            |   |         |       |   |       
|                              |                                                                                | Net loss                                                                        |       |  |    |                                            |  |         |       |  |       
|                              |                                                                                | Other comprehensive gain (loss)Change in unrealized gain (loss) on investments |       |  |    |                                            |  |         |       |  |       
|                              |                                                                                |                                                                                 |       |   |    |                                            |   |         |       |   |       
|                              | Comprehensive loss                                                             |                                                                                 |       |   |    |                                            |   |         |       |   |       
|                              | Reclassification adjustment for gains included in net loss                     |                                                                                 |       |   |    |                                            |   |         |       |   |       
|                              | Cumulative effect adjustment for adoption of SAB 108                           |                                                                                 |       |   |    |                                            |   |         |       |   |       
|                              | Issuance of common stock to acquire Montigen Pharmaceuticals                   |                                                                                 | 1,625 |   |    | 1                                          |   |         | 8,947 |   |       
|                              | Issuance of common stock upon exercise of stock options                        |                                                                                 | 130   |   |    |                                           |   |         | 608   |   |       
|                              | Issuance of common stock in connection with employee stock purchase plan       |                                                                                 | 45    |   |    |                                           |   |         | 173   |   |       
|                              | Issuance of common stock upon exercise of warrants                             |                                                                                 | 1,666 |   |    | 2                                          |   |         | 6,681 |   |       
|                              | Compensation expense from stock option grants to employees and consultants     |                                                                                 |      |   |    |                                           |   |         | 3,373 |   |       
|                              |                                                                                |                                                                                 |       |   |    |                                            |   |         |       |   |       
|Balances at December 31, 2006 |                                                                                | 55,177                                                                          |       |   | 55 |                                            |   | 429,147 |       |   | 1,922 
|                              | Comprehensive income:                                                          |                                                                                 |       |   |    |                                            |   |         |       |   |       
|                              |                                                                                | Net income                                                                      |       |  |    |                                            |  |         |       |  |       
|                              |                                                                                | Other than temporary decline in value of investments                            |       |  |    |                                            |  |         |       |  |       
|                              |                                                                                | Other comprehensive gain (loss)Change in unrealized gain (loss) on investments |       |  |    |                                            |  |         |       |  |       
|                              |                                                                                |                                                                                 |       |   |    |                                            |   |         |       |   |       
|                              | Comprehensive income                                                           |                                                                                 |       |   |    |                                            |   |         |       |   |       
|                              | Issuance of common stock for milestone payment                                 |                                                                                 | 1,477 |   |    | 2                                          |   |         | 9,965 |   |       
|                              | Issuance of common stock upon exercise of stock options                        |                                                                                 | 270   |   |    |                                           |   |         | 1,018 |   |       
|                              | Issuance of common stock in connection with employee stock purchase plan       |                                                                                 | 44    |   |    |                                           |   |         | 171   |   |       
|                              | Issuance of common stock upon exercise of warrants                             |                                                                                 | 551   |   |    | 1                                          |   |         | 2,581 |   |       
|                              | Compensation expense from stock option grants to employees and consultants     |                                                                                 |      |   |    |                                           |   |         | 4,269 |   |       
|                              |                                                                                |                                                                                 |       |   |    |                                            |   |         |       |   |       
|Balances at December 31, 2007 |                                                                                | 57,519                                                                          |       | $ | 58 |                                            | $ | 447,151 |       | $ | (2,343
|                              |                                                                                |                                                                                 |       |   |    |                                            |   |         |       |   |       

See accompanying notes to consolidated financial statements

F-4

---





SUPERGEN, INC.        CONSOLIDATED STATEMENTS OF CASH FLOWS        (In thousands)

|                                                          |                                                                                                    | Year Ended December 31,                                           |                                                       
|--------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ------------------------------------------------------
|
|Operating activities:                                     |                                                                                                    |                                                                   |                                                       
|                                                          | Net income (loss)                                                                                  |                                                                   | $                                                     
|                                                          | Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |                                                                   |                                                       
|                                                          |                                                                                                    | Depreciation                                                      |                                                       
|                                                          |                                                                                                    | Amortization of intangibles and distribution and marketing rights |                                                       
|                                                          |                                                                                                    | Amortization of deferred revenue                                  |                                                       
|                                                          |                                                                                                    | Change in valuation of derivatives                                |                                                       
|                                                          |                                                                                                    | Other than temporary decline in value of investments              |                                                       
|                                                          |                                                                                                    | Stock compensation expense                                        |                                                       
|                                                          |                                                                                                    | Gain on disposition of investment in AVI BioPharma stock          |                                                       
|                                                          |                                                                                                    | Cash paid for distribution and marketing rights                   |                                                       
|                                                          |                                                                                                    | Recognition of gain on sale of products                           |                                                       
|                                                          |                                                                                                    | Acquired in-process research and development                      |                                                       
|                                                          |                                                                                                    | Write-off of investment in private company                        |                                                       
|                                                          |                                                                                                    | Cash option paid in termination of distribution agreement         |                                                       
|                                                          |                                                                                                    | Changes in operating assets and liabilities:                      |                                                       
|                                                          |                                                                                                    |                                                                   | Accounts receivable and development revenue receivable
|                                                          |                                                                                                    |                                                                   | Inventories                                           
|                                                          |                                                                                                    |                                                                   | Prepaid expenses and other assets                     
|                                                          |                                                                                                    |                                                                   | Restricted cash and investments                       
|                                                          |                                                                                                    |                                                                   | Accounts payable and other liabilities                
|                                                          |                                                                                                    |                                                                   | Deferred gain on sale of products                     
|                                                          |                                                                                                    |                                                                   | Deferred revenue                                      
|                                                          |                                                                                                    |                                                                   |                                                       
|Net cash provided by (used in) operating activities       |                                                                                                    |                                                                   | (5,799                                                
|                                                          |                                                                                                    |                                                                   |                                                       
|Investing activities:                                     |                                                                                                    |                                                                   |                                                       
|                                                          | Purchases of marketable securities                                                                 |                                                                   |                                                       
|                                                          | Maturities of marketable securities                                                                |                                                                   |                                                       
|                                                          | Purchases of property and equipment                                                                |                                                                   |                                                       
|                                                          | Release of restricted cash from collateral account                                                 |                                                                   |                                                       
|                                                          | Proceeds from sale of products                                                                     |                                                                   |                                                       
|                                                          | Acquisition of Montigen net assets, net of cash acquired                                           |                                                                   |                                                       
|                                                          |                                                                                                    |                                                                   |                                                       
|Net cash provided by investing activities                 |                                                                                                    |                                                                   | 12,379                                                
|                                                          |                                                                                                    |                                                                   |                                                       
|Financing activities:                                     |                                                                                                    |                                                                   |                                                       
|                                                          | Proceeds from issuance of common stock, net of issuance costs                                      |                                                                   |                                                       
|                                                          |                                                                                                    |                                                                   |                                                       
|Net cash provided by financing activities                 |                                                                                                    |                                                                   | 3,771                                                 
|                                                          |                                                                                                    |                                                                   |                                                       
|Net increase in cash and cash equivalents                 |                                                                                                    |                                                                   | 10,351                                                
|Cash and cash equivalents at beginning of period          |                                                                                                    |                                                                   | 67,704                                                
|                                                          |                                                                                                    |                                                                   |                                                       
|Cash and cash equivalents at end of period                |                                                                                                    | $                                                                 | 78,055                                                
|                                                          |                                                                                                    |                                                                   |                                                       
|Supplemental Disclosure of Non-Cash Financing Activities: |                                                                                                    |                                                                   |                                                       
|                                                          | Common stock issued in connection with Montigen acquisition                                        |                                                                   | $                                                     
|Supplemental Disclosure of Cash Flow Information:         |                                                                                                    |                                                                   |                                                       
|                                                          | Income taxes paid in cash during the year                                                          |                                                                   | $                                                     

See accompanying notes to consolidated financial statements

F-5

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Summary of Significant Accounting Policies

Description of Business

SuperGen, Inc. ("SuperGen," "we," "us" or the "Company") was incorporated in California in March 1991. We changed our state of incorporation to Delaware in
1997. We are a pharmaceutical company dedicated to the discovery, development, and commercialization of therapies to treat patients with cancer. We operate in one industry segment.

Principles of Consolidation

Our consolidated financial statements include the accounts of EuroGen Pharmaceuticals Ltd. ("EuroGen"), Sparta Pharmaceuticals, Inc. ("Sparta") and
seven wholly-owned subsidiaries, which are immaterial. Intercompany accounts and transactions are eliminated in consolidation. We consolidate all of our wholly-owned and majority-owned subsidiaries.

Reclassification of Prior Year Balances

Certain balances in our 2006 consolidated balance sheet and 2006 and 2005 consolidated statements of operations have been reclassified to conform to the
presentation in 2007. In addition, separate disclosure of Accounts payable and Accrued liabilities in the 2006 consolidated balance sheet has been provided to conform to the presentation in the 2007
consolidated balance sheet.

Foreign Currency

The functional currency of the Company's foreign subsidiaries is the U.S. dollar. Foreign currency assets and liabilities are remeasured into U.S. dollars at the
current exchange rates as of the applicable balance sheet date, except for nonmonetary assets and liabilities, which are remeasured at historical exchange rates. Revenue and expenses are remeasured at
the average exchange rate prevailing during the period, except for those expenses related to the previously noted balance sheet amounts, which are remeasured at historical exchange rates. Gains and
losses resulting from foreign currency remeasurement are included in other income or expense in the accompanying consolidated statements of operations. Beginning in 2006, we recorded transaction gains
on foreign currency exchange relating to activities of our subsidiary EuroGen, reflecting increased activity at EuroGen that began selling and distributing Nipent® in 2006. Aggregate
transaction gains were $26,000 and $241,000 for 2007 and 2006, respectively. Transaction gains or losses for years prior to 2006 were not material and were included in operating expenses.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and
assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

Fair Value of Financial Instruments

The fair values of our cash equivalents and marketable securities are based on quoted market prices. The carrying values of accounts receivable and accounts
payable are considered to be representative of their respective fair values at December 31, 2007 and 2006.

F-6

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1.    Summary of Significant Accounting Policies (Continued)

Revenue Recognition

We ceased selling products in the United States in August 2006 and ceased selling in Europe in April 2007. Our net product revenues related principally to two
pharmaceutical products, with Nipent sales representing 100% in 2007, 88% in 2006, and 93% in 2005. We recognized sales revenue upon shipment, provided that title to the products had been transferred
at the point of shipment; if title of product transferred at point of receipt by the customer, revenue was recognized upon customer receipt of the shipment, and collectibility was reasonably assured,
with allowances provided for bad debt, estimated returns, and estimated cash discounts and chargebacks. We recorded estimated allowances for sales reserves against product revenues for returns, cash
payment discounts, and chargebacks based on historical return patterns for returns, contractual terms for discounts and chargebacks, and expectations regarding utilization rates for these programs.
The allowance for bad debts was $42,000 and $53,000 at December 31, 2007 and 2006, respectively. The allowance for sales returns included in accrued liabilities was $348,000 and $306,000 at
December 31, 2007 and 2006, respectively. The allowance for cash discounts was zero at December 31, 2007 and $1,500 at December 31, 2006. The allowance for chargebacks was zero at
December 31, 2007 and 2006. The provision for returns and allowances was $48,000 in 2007, $418,000 in 2006, and $52,000 in 2005. We recorded no provisions for chargebacks in 2007, $910,000 in
2006 and $525,000 in 2005.

Cash
advance payments received in connection with distribution agreements, license agreements, or research grants are deferred and recognized ratably over the period of the respective
agreements or until services are performed. We recognize cost reimbursement revenue under collaborative agreements as the related research and development costs are incurred. We recognize milestone
fees upon completion of specified substantive milestones according to contract terms. We recognize royalty revenue on a cash basis when we receive it from MGI because we do not have sufficient ability
to accurately estimate Dacogen sales. Deferred revenue as of December 31, 2006 represents the portion of product shipments to Wyeth, our European Nipent distributor as of December 31,
2006, that had not been delivered to the end customer.

Our
principal customers have been clinics, hospitals, hospital buying groups, drug distributors, and wholesaler in the United States and Europe. We do not require collateral from our
customers. We operate in one business segmenthuman therapeutics. In 2007, 100% of our net product revenues were from the European Union ("EU"). In both 2006 and 2005, 94% of our net
product revenues were from the United States and 6% from the EU.

Advertising Expense

Advertising costs are expensed as incurred. We incurred advertising costs of $3,000 in 2007, $19,000 in 2006, and $326,000 in 2005.

Research and Development

Research and development expenditures, including direct and allocated expenses, are charged to expense as incurred. These expenditures include salaries and
employee-related expenses; fees paid to physicians, hospitals, or other research institutions for clinical and pre-clinical studies; fees paid to outside contractors for monitoring of
clinical sites or collection and analysis of data; costs associated with the research and manufacture of clinical drug supplies; and payments made under technology license agreements prior to
regulatory approval of drug candidates.

F-7

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1.    Summary of Significant Accounting Policies (Continued)

Cash, Cash Equivalents and Marketable Securities

Cash and cash equivalents include bank demand deposits, certificates of deposit, marketable securities with maturities of three months or less when purchased,
money market funds which invest primarily in U.S. government obligations and commercial paper. These instruments are highly liquid and are subject to insignificant market risk.

Marketable
securities consist of corporate or government debt securities and equity securities that have a readily ascertainable market value based on quoted market prices and are
readily marketable. These investments are reported at fair value. All marketable securities are designated as available-for-sale, with unrealized gains and losses included in
accumulated other comprehensive gain or loss in stockholders' equity. A decline in the market value of a security below its cost that is deemed to be other than temporary is charged to earnings, and
results in the establishment of a new cost basis for the security.

During
the year ended December 31, 2007, we recorded write-downs of $65,000 related to other than temporary declines in the values of two of our equity investments. During the
year ended December 31, 2005, we recorded a write-down of $11,000 related to the other than temporary decline in the value of one equity investment. We had no such write-downs in
2006. The cost of securities sold and the amount reclassified out of accumulated other comprehensive gain or loss into earnings is based on the specific identification method.

Equity Investments

Equity investments in securities without readily determinable fair value, which consist of investments in privately held companies, are carried at cost. These
investments are carried at cost because it is not practicable to estimate the fair value of these investments. These investments are included in other assets and investment in stock of related parties
on the consolidated balance sheets. We periodically review these investments carried at cost and evaluate whether an impairment has occurred. During 2005, we determined that the value of investments
in stock of a related party made in 2001 and 2003 were impaired due to the uncertain viability of the company as a going concern. As a result, the entire cost of the investments of $180,000 was
charged to selling, general, and administrative expense in 2005. We had no such write-offs in 2006 or 2007. We believe the remaining equity investments continue to be realizable.

Restricted Cash and Investments

Under one of our operating lease agreements and in connection with certain outstanding warrants as noted in Note 10 below, we are required to set aside
cash and/or investments as collateral. At December 31, 2007 and 2006, we had $2,536,000 and $10,043,000, respectively, of restricted cash and investments related to such agreements.

F-8

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1.    Summary of Significant Accounting Policies (Continued)

Inventories

Inventories are stated at the lower of cost (using the first-in, first-out method) or market value. Inventories were as follows at
December 31 (in thousands):

2007

2006Raw materials



$
Work in process




126Finished goods




97

$
223


As
noted above, we ceased selling products in the United States in August 2006 and in Europe in April 2007, and had no inventories as of December 31, 2007.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation of building, office and manufacturing equipment and furniture and fixtures is provided on a
straight-line basis over the estimated original useful lives of the respective assets, as noted below. Leasehold improvements are amortized over the shorter of the life of the lease or
their estimated useful lives using the straight-line method.

Property,
plant and equipment consist of the following at December 31 (in thousands):

2007

2006

Estimated
Useful LivesLand

$
324

$
324

N/ABuilding


2,198


2,109

31 yearsLeasehold improvements


2,670


2,642

5-10 yearsEquipment


2,498


1,270

5 yearsFurniture and fixtures


3,094


4,161

3-5 yearsConstruction in process


476


488

N/ATotal property and equipment


11,260


10,994Less accumulated depreciation and amortization


(6,825
)

(7,242
)Property, plant and equipment, net

$
4,435

$
3,752


Goodwill

Goodwill is reviewed annually, or more frequently if impairment indicators arise, for impairment. Goodwill no longer subject to amortization amounted to $731,000
at December 31, 2007 and 2006.

Intangible Assets

In April 2006, we acquired certain intangible assets relating to our acquisition of Montigen Pharmaceuticals, Inc. ("Montigen") (see Note 6 below).
We assigned values of $235,000 to assembled workforce and $1,042,000 to CLIMB technology platform, which are being amortized over three years, the estimated useful lives of the assets.
The accumulated amortization of the assembled

F-9

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1.    Summary of Significant Accounting Policies (Continued)

workforce
was $137,000 and $59,000 at December 31, 2007 and 2006, respectively. The accumulated amortization of the CLIMB technology was $608,000 and $260,000 at December 31, 2007 and
2006, respectively. We expect to record amortization of the assembled workforce of $78,000 and $20,000 in 2008 and 2009, respectively. We expect to record amortization of the CLIMB technology of
$347,000 and $87,000 in 2008 and 2009, respectively.

In
June 2006, we entered into an agreement with Wyeth to terminate the European distribution of Nipent by Wyeth and transition distribution to SuperGen (see Note 8 below). We paid
Wyeth $2.1 million, which was recorded as Prepaid distribution and marketing rights, and amortized it as a reduction of product revenue over 10 months, which corresponded to the
termination acceleration period of June 2006 through March 2007. This payment was fully amortized by March 31, 2007.

Intangible
assets with finite useful lives are amortized over their respective useful lives. The carrying amounts of these intangible assets are reviewed whenever events or changes in
circumstances indicate that the carrying value of the asset may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of the asset to the future
undiscounted cash flows the asset is expected to generate. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair
value of the impaired asset.

Derivative Financial Instruments

We had issued warrants for common stock of another entity in connection with issuances of convertible debt. These warrants were considered to be a derivative
financial instrument in accordance with Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," and were recorded at fair value. The
changes in the fair value of the derivative financial instruments were recognized in current earnings in each reporting period. The value of the derivative was zero at December 31, 2006,
because the warrants associated with the derivative expired on that date.

Major Customers

As noted above, we ceased selling products in the United States in August 2006 and Europe in April 2007. Our major customers included a number of buying groups.
During 2006 and 2005, some of these customers individually comprised greater than 10% of our total product revenue and/or greater than 10% of our trade accounts receivable balances, as follows:

Percentage of product
revenue by customer for
years ended December 31,

Percentage of accounts
receivable by customer
as of December 31,2007

2006

2005

2007

2006Customer A

*

29
%
19
%
*

*Customer B

*

11

*

*

*Customer C

*

10

14

*

*Customer D

*

*

28

*

10
%Customer E

*

*

*

*

62Customer F

*

*

11

*

*


---



F-10

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1.    Summary of Significant Accounting Policies (Continued)



Net Income (Loss) per Common Share

Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of common shares outstanding for the period,
without consideration of potential common shares. Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding for the
period and dilutive potential common shares for the period determined using the treasury-stock method. For purposes of this calculation, options to purchase stock and warrants are considered to be
potential common shares and are only included in the calculation of diluted net income (loss) per share when their effect is dilutive.

The
following table is a reconciliation of the denominator used in the calculation of basic and diluted net income (loss) per common share (in thousands):

Year ended December 31,2007

2006

2005Weighted-average common shares outstanding used in calculation of basic net income (loss) per share

56,868

53,439

51,309Dilutive stock options and warrants

433



Weighted-average common shares outstanding used in calculation of diluted net income (loss) per share

57,301

53,439

51,309Outstanding stock options and warrants not included in dilutive net income (loss) per share as they had an antidilutive effect

7,035

11,674

13,474


Long-lived Assets

We evaluate long-lived assets, other than goodwill, for impairment whenever events or changes in circumstances indicate that the carrying value of an
asset may not be recoverable based on expected undiscounted cash flows attributable to that asset. The amount of any impairment is measured as the difference between the carrying value and the fair
value of the impaired asset. No such impairment has been recorded through December 31, 2007. As of December 31, 2007 and 2006 99% and 98%, respectively, of our long-lived
assets were located in the U.S.

Cumulative Effect Adjustment for UK Tax Liability Upon Adoption of SAB 108

During the third quarter of 2006 a previously unrecorded United Kingdom ("UK") payroll related liability was identified. We estimated this liability aggregated
$966,000, related to withholding and other personal income tax, penalties and interest involving a former SuperGen employee who was a United States citizen and worked in the UK. The liability
originated during the years 2002  2006 and was identified as a result of disclosures made by a UK employee to our auditors. We determined that $795,000 of the liability
related to periods prior to 2006. The following table illustrates the amount of the error that originated in each of the years between 2002 and 2005 (in thousands):

Year Ended December 31,2005

2004

2003

2002Net loss, as reported

$
(14,482
)
$
(46,860
)
$
(53,470
)
$
(49,471
)Amount of understatement


(181
)

(308
)

(205
)

(101
)Error as a percent of net loss


1.2
%

0.7
%

0.4
%

0.2
%


F-11

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1.    Summary of Significant Accounting Policies (Continued)

We
adopted the provisions of Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements" ("SAB 108") in September 2006. Prior to the adoption of SAB 108, we quantified misstatements based on the amount of the error originating in the current year statement of
operations ("rollover approach"). SAB 108 requires that in addition to considering the amount of the error originating in the current year statement of operations, the misstatement existing at
each balance sheet date should also be considered, irrespective of the period of origin of the error ("iron curtain approach"). We do not believe that any of the amounts included in the table above
are material to the periods in which they originated using the rollover approach. However, using the iron curtain method upon adoption of SAB 108, we have determined that the quantitative
cumulative error aggregating approximately $795,000 that existed as of December 31, 2005 is material to the 2005 financial statements. As permitted when first applying the guidance in
SAB 108, prior periods were not restated. The cumulative effect of the initial application of SAB 108 for quantification and correction of the error is included in the accumulated
deficit as of December 31, 2006 in the accompanying balance sheet. The impact of this cumulative effect adjustment is an increase to accrued payroll and employee benefits of $795,000 and an
increase to accumulated deficit of $795,000 as of January 1, 2006. The following table illustrates the effect of the cumulative effect adjustment recorded as of January 1, 2006 (in
thousands):

Accrued payroll
and employee
benefits

Accumulated
deficitBalance as of December 31, 2005, as reported

$
2,269

$
(348,010
)Cumulative effect adjustment for adoption of SAB 108


795


(795
)Balance as of January 1, 2006, as adjusted

$
3,064

$
(348,805
)


We
paid the $966,000 tax liability in December 2006. Of the $171,000 expense that originated during 2006, $135,000 is included in selling, general and administrative expense and $36,000
is included in the foreign currency transaction adjustment for the year ended December 31, 2006. We paid an additional $84,000 related to this tax liability in June 2007, which is included in
selling, general and administrative expense in the year ended December 31, 2007.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements"
("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This statement clarifies how to
measure fair value as permitted under other accounting pronouncements but does not require any new fair value measurements. However, for some entities, the application of this statement will change
current practice. We were required to adopt SFAS 157 as of January 1, 2008. We are currently evaluating the impact of SFAS 157 and have not yet determined the effect on our
earnings or financial position.

F-12

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1.    Summary of Significant Accounting Policies (Continued)

In
December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (Revised 2007), "Business Combinations" ("SFAS 141R"). SFAS 141R establishes
principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any
non-controlling interest in the acquired business. SFAS 141R also provides guidance for recognizing and measuring the goodwill acquired in the
business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R
is effective for business combinations in fiscal years beginning on or after December 15, 2008. Earlier adoption is prohibited. We will adopt SFAS 141R beginning January 1, 2009,
as required. We do not anticipate that the adoption of SFAS 141R will currently have a material impact on our consolidated financial statements but will impact any business combination
beginning in 2009.

In
February 2007, the FASB issued Statement No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS 159"). SFAS 159 permits entities
to choose to measure many financial instruments, and certain other items, at fair value. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons
between entities that choose different measurement attributes for similar types of assets and liabilities. The provisions of SFAS 159 are effective for fiscal years beginning after
November 15, 2007. We will adopt SFAS 159 during its fiscal year ending December 31, 2008. The adoption of SFAS 159 in our first fiscal quarter of 2008 did not have a
material impact on our consolidated financial statements as we did not elect the fair value option for any financial assets or liabilities.

In
June 2007, the Emerging Issues Task Force ("EITF") reached a consensus on EITF No. 07-03, Accounting for Nonrefundable Advance Payments for Goods or Services to Be
Used in Future Research and Development Activities. EITF 07-03 specifies the timing of expense recognition for nonrefundable advance payments for goods or services that will be used
or rendered for research and development activities. EITF 07-03 is effective for fiscal years beginning after December 15, 2007, and early adoption is not permitted. As a
result, EITF 07-03 is effective for the Company as of January 1, 2008. EITF 07-03 will not have a material impact on our financial position or results of
operations.

F-13

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    Available-for-Sale Securities

The following is a summary of available-for-sale securities (in thousands):

|                                                   |       | Amortized
Cost |        | Gross
Unrealized
Gains |   | Gross
Unrealized
Losses |       | Fair
Value
|-------------------------------------------------- | ----- | -------------- | ------ | ---------------------- | - | ----------------------- | ----- | ----------
|At December 31, 2007                               |       |                |        |                        |   |                         |       |           
|U.S. corporate debt securities                     |       | $              | 18,561 |                        | $ | 1                       |       | $         
|Debt securities issued by U.S. government agencies |       |                | 62,425 |                        |   | 21                      |       |           
|Marketable equity securities                       |       |                | 5,781  |                        |   |                        |       |           
|                                                   |       |                |        |                        |   |                         |       |           
|                                                   | Total |                | $      | 86,767                 |   | $                       | 22    |           
|                                                   |       |                |        |                        |   |                         |       |           
|At December 31, 2006                               |       |                |        |                        |   |                         |       |           
|U.S. corporate debt securities                     |       | $              | 64,023 |                        | $ | 9                       |       | $         
|Marketable equity securities                       |       |                | 5,846  |                        |   | 1,917                   |       |           
|                                                   |       |                |        |                        |   |                         |       |           
|                                                   | Total |                | $      | 69,869                 |   | $                       | 1,926 |           
|                                                   |       |                |        |                        |   |                         |       |           

The
available-for-sale securities are classified on the balance sheet as follows (in thousands):

|                                                           |       | Amortized
Cost |        | Gross
Unrealized
Gains |   | Gross
Unrealized
Losses |       | Fair
Value
|---------------------------------------------------------- | ----- | -------------- | ------ | ---------------------- | - | ----------------------- | ----- | ----------
|At December 31, 2007                                       |       |                |        |                        |   |                         |       |           
|Amounts included in cash and cash equivalents              |       | $              | 71,611 |                        | $ | 21                      |       | $         
|Marketable securities, current                             |       |                | 9,375  |                        |   | 1                       |       |           
|Marketable securities, non-current                         |       |                | 5,781  |                        |   |                        |       |           
|                                                           |       |                |        |                        |   |                         |       |           
|                                                           | Total |                | $      | 86,767                 |   | $                       | 22    |           
|                                                           |       |                |        |                        |   |                         |       |           
|At December 31, 2006                                       |       |                |        |                        |   |                         |       |           
|Amounts included in cash and cash equivalents              |       | $              | 64,023 |                        | $ | 9                       |       | $         
|Amounts included in investment in stock of related parties |       |                | 120    |                        |   | 39                      |       |           
|Amounts included in restricted cash and investments        |       |                | 5,602  |                        |   | 1,821                   |       |           
|Marketable securities, non-current                         |       |                | 124    |                        |   | 57                      |       |           
|                                                           |       |                |        |                        |   |                         |       |           
|                                                           | Total |                | $      | 69,869                 |   | $                       | 1,926 |           
|                                                           |       |                |        |                        |   |                         |       |           

Available-for-sale
securities at December 31, by contractual maturity, are shown below (in thousands):

Fair Value2007

2006Debt securities due in one year or less

$
81,005

$
64,031Marketable equity securities


3,419


7,761Total

$
84,424

$
71,792


F-14

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    Available-for-Sale Securities (Continued)

Realized
gains and losses on the sale of available-for-sale securities for the years ended December 31, 2007, 2006, and 2005 were not material.

During
the year ended December 31, 2007, we recorded write-downs of $65,000 related to the other than temporary declines in the values of two of our equity investments. During the
year ended December 31, 2005, we recorded a write-down of $11,000 related to the other than temporary decline in the value of one of our equity investments. We had no such
write-downs in 2006.

We
evaluate investments with unrealized losses to determine if the losses are other than temporary. The gross unrealized losses as of December 31, 2007 are primarily due to a
decline in the share price of our investment in the stock of AVI BioPharma, Inc. as of December 31, 2007. We have determined that the gross unrealized losses at December 31, 2007
are temporary. In making this determination, we considered the financial condition and near-term prospects of the issuers, the magnitude of the losses compared to the investments' cost,
the length of time the investments have been in an unrealized loss position, and our ability and intent to hold the investments for a reasonable period of time sufficient for a recovery of fair value.
Investments with unrealized losses have been in an unrealized loss position for less than a year. The investment in the stock of AVI BioPharma, Inc. had been in an unrealized loss position for
less than a month as of December 31, 2007. It is reasonably possible that we will determine that the unrealized loss related to AVI is other than temporary in the near term.

3.    Stockholders' Equity

Warrants

At December 31, 2007, warrants to purchase the following shares of our common stock were outstanding and exercisable:

Number of
Shares

Exercise
Price

Issue
Date

Expiration
Date1,997,500

5.00

2003

20081,135,000

10.00

2004

20093,132,500


Stock Reserved for Future Issuance

At December 31, 2007, we have reserved shares of common stock for future issuance as follows:

Stock options outstanding

7,286,806Stock options available for grant

1,627,009Warrants to purchase common stock

3,132,500Shares available for Employee Stock Purchase Plan

37,98512,084,300


F-15

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4.    Stock-Based Compensation

Effective January 1, 2006, we adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123(R), "Share-Based
Payment" ("SFAS 123R"), using the modified-prospective-transition method. Under this transition method, stock-based compensation cost related to employees and directors recognized for the years
ended December 31, 2006 and 2007 included: (a) compensation cost for all stock-based payments granted, but not yet vested as of January 1, 2006, based on the
grant-date fair value estimated in accordance with the original provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation"
("SFAS 123"), and (b) compensation cost for all stock-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance
with the provisions of SFAS 123R. Such amounts have been reduced by our estimate of forfeitures of all unvested awards. Results for prior periods were been restated. Prior to January 1,
2006, we used the intrinsic-value method of accounting for stock-based awards granted to employees and directors in accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees" and its interpretations. Accordingly, we generally did not recognize compensation cost in our financial statements prior to January 1, 2006 for awards granted to employees and
directors because these awards generally had exercise prices equal to the fair value of the underlying security at the time the stock option was granted.

Stock Option Plans.We have 12,263,000 shares of common stock authorized for issuance upon the grant of incentive stock
options or nonstatutory stock options to employees, directors, and consultants under our stock option plans, including our 2003 Stock Plan and 1996 Directors' Stock Option Plan. The number of shares
to be purchased, their price, and the terms of payment are determined by our Board of Directors, provided that the exercise price for incentive stock options cannot be less than the fair market value
on the date of grant. The options granted generally expire ten years after the date of grant and become exercisable at such times and under such conditions as determined by the Board of Directors
(generally over a four or five year period).

Employee Stock Purchase Plan.We also have an employee stock purchase plan ("ESPP") that allows eligible employees to
purchase common stock at a price per share equal to 85% of the lower of the fair market value of the common stock at the beginning or end of each six month period during the term of the ESPP. The
current offering period began November 15, 2007 and is scheduled to end on May 14, 2008. Under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25"), we were not required to recognize stock-based compensation expense for the cost of shares issued under the Company's ESPP. Upon adoption of SFAS 123R, we began
recording stock-based compensation expense related to the ESPP.

We
recognized $4,269,000 and $3,373,000 in stock-based compensation expense for the years ended December 31, 2007 and 2006, respectively.

The
fair value of each stock award is estimated on the grant date using the Black-Scholes option-pricing model based on the assumptions noted in the following table:

Year ended December 312007

2006

2005Risk-free interest rate

4.65
%
4.74
%
4.19
%Dividend yield





Expected volatility

0.615

0.660

0.814Expected life (in years)

5.21

5.18

5.00


F-16

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4.    Stock-Based Compensation (Continued)

Upon
the adoption of SFAS 123R in 2006, we changed our method of computing expected volatility to include a blend of historical volatility and implied volatility of our common
stock based on the period of time corresponding to the expected life of the stock options. We could not rely exclusively on implied volatility because options on SuperGen stock with remaining terms of
greater than one year are not regularly traded in the market. In prior years, we calculated the fair value of stock awards using only historical volatility dating back to 1996. The expected life of
stock options granted is based exclusively on historical data and represents the weighted average period of time that stock options granted are expected to be outstanding. The expected life is applied
to one group as a whole as we do not expect substantially different exercise or post-vesting termination behavior among our employee and director population. The risk-free
interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected life assumption. The dividend yield is zero as we do not expect to pay any
dividends in the foreseeable future.

We
are using the straight-line attribution method to recognize stock-based compensation expense. The amount of stock-based compensation recognized during a period is based on
the value of the portion of the awards that are ultimately expected to vest. SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods
if actual forfeitures differ from those estimates. We used an estimated forfeiture rate of 9.63% in 2007 and 12.02% in 2006. The term "forfeitures" is distinct from "cancellations" or "expirations"
and represents only the unvested portion of the surrendered option. The forfeiture rate is re-evaluated annually and is adjusted as necessary. Ultimately, the actual expense recognized
over the vesting period will only be for those shares that vest.

F-17

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4.    Stock-Based Compensation (Continued)

A
summary of the Company's stock option activity as of December 31, 2007, is presented below:

|                                                |  | Options
Outstanding |   | Weighted
Average
Exercise
Price |       | Weighted
Average
Remaining
Contractual
Term |      | Aggregate
Intrinsic
Value
|----------------------------------------------- |  | ------------------- | - | ------------------------------- | ----- | ------------------------------------------- | ---- | -------------------------
|Balance at January 1, 2005                      |  | 6,502,052           |   | $                               | 9.64  |                                             |      |                          
|Granted                                         |  | 868,650             |   |                                 | 5.46  |                                             |      |                          
|Exercised                                       |  | (273,080            | ) |                                 | 3.38  |                                             |      |                          
|Forfeited                                       |  | (547,897            | ) |                                 | 12.90 |                                             |      |                          
|                                                |  |                     |   |                                 |       |                                             |      |                          
|Balance at December 31, 2005                    |  | 6,549,725           |   |                                 | 9.07  |                                             |      |                          
|Granted                                         |  | 993,089             |   |                                 | 4.92  |                                             |      |                          
|Exercised                                       |  | (129,760            | ) |                                 | 4.69  |                                             |      |                          
|Forfeited                                       |  | (165,187            | ) |                                 | 5.94  |                                             |      |                          
|Expired                                         |  | (632,714            | ) |                                 | 7.64  |                                             |      |                          
|                                                |  |                     |   |                                 |       |                                             |      |                          
|Balance at December 31, 2006                    |  | 6,615,153           |   |                                 | 8.75  |                                             |      |                          
|Granted                                         |  | 2,221,665           |   |                                 | 5.26  |                                             |      |                          
|Exercised                                       |  | (270,526            | ) |                                 | 3.79  |                                             |      |                          
|Forfeited                                       |  | (196,788            | ) |                                 | 5.47  |                                             |      |                          
|Expired                                         |  | (1,082,698          | ) |                                 | 11.75 |                                             |      |                          
|                                                |  |                     |   |                                 |       |                                             |      |                          
|Balance at December 31, 2007                    |  | 7,286,806           |   | $                               | 7.52  |                                             | 6.63 |                          
|                                                |  |                     |   |                                 |       |                                             |      |                          
|Vested or expected to vest at December 31, 2007 |  | 6,766,925           |   | $                               | 7.57  |                                             | 6.52 |                          
|                                                |  |                     |   |                                 |       |                                             |      |                          
|Exercisable at December 31, 2007                |  | 4,981,713           |   | $                               | 7.90  |                                             | 5.88 |                          
|                                                |  |                     |   |                                 |       |                                             |      |                          

|
|

Year ended December 31,2007

2006Weighted average grant-date fair value of options granted

$
3.00

$
2.91Intrinsic value of options exercised (i.e. difference between the market price at exercise and the price paid to exercise the options)


510,000


59,000Cash received from exercise of options


1,018,000


608,000


As
of December 31, 2007, there was $4,224,000 of total unrecognized compensation cost related to unvested stock-based awards. This cost is expected to be recognized over a
weighted average period of 2.25 years. We expect approximately 1,785,000 of unvested options to vest at some point in the future. Options expected to vest is calculated by applying an estimated
forfeiture rate to the unvested options.

The
following table illustrates the effect on net loss and net loss per share had we applied the fair value recognition provisions of SFAS 123R in the year ended
December 31, 2005. For purposes of this

F-18

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4.    Stock-Based Compensation (Continued)

pro-forma
disclosure, the value of the options is estimated using a Black-Scholes option-pricing model and amortized to expense over the options' vesting periods (in thousands, except per
share amounts):

Year Ended
December 31,
2005Net loss, as reported

$
(14,482
)Add: Stock-based employee compensation expense included in thedetermination of net loss, as reported


268Deduct: Stock-based employee compensation expense that would havebeen included in the determination of net loss if the fair value method had been applied to all awards


(6,116
)Pro forma net loss

$
(20,330
)Basic and diluted net loss per common share:As reported

$
(0.28
)Pro forma

$
(0.40
)


During
the year ended December 31, 2005, we recorded non cash charges of $268,000 for stock compensation related to the modification and acceleration of vesting of options
associated with the change in status or departure of certain Company management.

5.    License and Stock Purchase Agreements with MGI PHARMA, Inc.

In August 2004, we entered into three agreements with MGI PHARMA, Inc., a Minnesota corporation ("MGI"): (1) a license agreement relating to
Dacogen (decitabine), (2) a common stock purchase agreement, and (3) an investor rights agreement. The agreements became effective on September 21, 2004. Dacogen is
an anti-cancer therapeutic which has been approved by the United States Food and Drug Administration ("FDA") for the treatment of patients with myelodysplastic syndrome ("MDS").

Pursuant
to the terms of the license agreement, MGI received exclusive worldwide rights to the development, commercialization and distribution of Dacogen for all indications. We are
entitled to receive royalties from MGI on all sales of licensed product worldwide. The license agreement will expire, on a country-by-country and licensed
product-by-licensed product basis on the later to occur of (a) twenty years after the first commercial sale of the applicable licensed product in the respective country
or (b) the expiration, termination, invalidation or abandonment of the patent rights covering the respective licensed product, or the manufacture or use thereof, in the respective country.
Either we or MGI may terminate the license agreement for the non-payment by the other of any payment obligations under the agreement, or for any uncured material breach of the agreement.
In addition, we have the right to terminate the agreement if (i) MGI is acquired by an entity that is not deemed an "equivalent" pharmaceutical company or (ii) MGI becomes insolvent.
None of the payments made pursuant to the agreement are refundable, except in the case of overpayment.

In
accordance with the stock purchase agreement, we issued 4,000,000 shares of our common stock to MGI at $10.00 per share, for aggregate proceeds totaling $40,000,000. We paid the
placement agent $3,200,000 in cash and issued the placement agent a warrant exercisable for 400,000 shares of our common stock at an exercise price of $10.00 per share. We calculated the fair value of
the warrant to

F-19

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5.    License and Stock Purchase Agreements with MGI PHARMA, Inc. (Continued)

be
$1,436,000. We allocated the aggregate proceeds and related costs of the placement agent fee and warrant valuation between equity, for the portion attributable to the stock purchase agreement, and
deferred revenue, for the portion attributable to the license agreement. Therefore, we allocated $23,662,000, the fair value of 4,000,000 shares of our common stock at the time of the transaction, net
of related offering costs, to equity, and allocated $12,625,000 to deferred revenue. The deferred revenue was amortized to license revenue over 15 months, which was the period of time in which
our development obligations for Dacogen transferred to MGI. During the year ended December 31, 2005, we recognized deferred revenue of $9,905,000. The deferred revenue was fully recognized at
December 31, 2005.

Under
the terms of the license agreement, MGI was obligated to reimburse us for certain development and allocated overhead costs of Dacogen until we received marketing authorization.
During the years ended December 31, 2006 and 2005, we recognized $93,000 and $3,448,000, respectively, of development revenue relating to reimbursement under this agreement. No development
revenue was recorded during the year ended December 31, 2007.

In
May 2006, the FDA approved Dacogen for the treatment of patients with MDS and MGI commenced commercial sales of Dacogen in the United States. In accordance with our license agreement
with MGI, we received a milestone payment of $20.0 million in the second quarter of 2006. MGI is required to pay us royalties starting at 20% and escalating to a maximum of 30% of net Dacogen
sales within 45 days after the end of each calendar quarter. We recognize royalty revenue on a cash basis when we receive it from MGI because we do not have sufficient ability to accurately
estimate Dacogen sales. During the years ended December 31, 2007 and 2006, we recorded royalty revenue of $22,333,000 and $3,427,000, respectively.

In
July 2006, MGI executed an agreement to sublicense Dacogen to Cilag GmbH, a Johnson & Johnson company (also known as Janssen-Cilag), granting exclusive development and
commercialization rights in all territories outside North America. In accordance with our license agreement with MGI, we are entitled to receive 50% of any payments MGI receives as a result of any
sublicenses. We received $5.0 million, 50% of the $10 million upfront payment MGI received, and, as a result of both the original agreement with MGI and this sublicense with
Cilag GmbH, may receive up to $17.5 million in future milestone payments as they are achieved for Dacogen sales globally. Janssen-Cilag companies will be responsible for conducting
regulatory and commercial activities related to Dacogen in all territories outside North America, while MGI retains all commercialization rights and responsibility for all activities in the United
States, Canada and Mexico. MGI became a wholly-owned subsidiary of Eisai Corporation of North America in January 2008.

6.    Acquisition of Montigen Pharmaceuticals, Inc.

On April 4, 2006, we completed our acquisition of Montigen, a privately-held oncology-focused drug discovery and development company
headquartered in Salt Lake City, Utah. Montigen's assets included its research and development team, a proprietary drug discovery technology platform and optimization process, CLIMB, and
late-stage pre-clinical compounds targeting Aurora-A Kinase and members of the Tyrosine Kinase receptor family.

F-20

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6.    Acquisition of Montigen Pharmaceuticals, Inc. (Continued)

Pursuant to the terms of the agreement, we paid the Montigen stockholders a total of $17.9 million upon the closing of the transaction in cash and shares
of SuperGen common stock. The acquisition of Montigen was accounted for as an acquisition of assets rather than as a business combination in accordance with the criteria outlined in EITF
No. 98-3, Determining Whether a Non-monetary Transaction Involves Receipt of Productive Assets or of a Business. Montigen was a development stage company that was
focused on developing a business and had not commenced its principal business operations. It also lacked the necessary elements of a business because it did not have completed products. The results of
operations of Montigen since April 4, 2006
have been included in our consolidated financial statements and primarily consist of research and development expenses.

The
aggregate purchase price of Montigen was $18,127,000, which included cash paid of $8,988,000, the issuance of 1,625,626 shares of SuperGen common stock valued at $8,948,000 in total,
and $191,000 in direct transaction costs. The purchase price was allocated on April 4, 2006 as follows (in thousands):

Net tangible assets

$
532Assembled workforce


235CLIMB technology platform


1,042Acquired in-process research and development


16,318Total

$
18,127


The
$532,000 of net tangible assets included $486,000 in cash, prepaids and other current assets of $37,000, $405,000 of fixed assets, and $396,000 of assumed liabilities. The values
assigned to assembled workforce and CLIMB technology platform are being amortized over three years, the estimated useful lives of the assets. The accumulated amortization of the assembled workforce
and CLIMB technology was $137,000 and $608,000, respectively, at December 31, 2007.

The
value assigned to acquired in-process research and development represented the fair value of Montigen's incomplete research and development programs that had not yet
reached technological feasibility and had no alternative future use as of the acquisition date. A summary of these compounds is as follows (in thousands):

Adjusted
Fair ValueCompound 1 (MP-470)Tyrosine Kinase inhibitor

$
1,091Compound 2 (MP-529/235)Aurora-A Kinase inhibitor


15,227Total Acquired in-process research and development

$
16,318


The
value of the acquired in-process research and development was determined by estimating the future net cash flows for the two compounds between 2006 and 2029 using a
present value risk adjusted discount rate of 26%. This discount rate is a significant assumption and is based on our estimated weighted average cost of capital adjusted upward for the risks associated
with the projects acquired. The projected cash flows from the acquired projects were based on estimates of revenues and operating profits related to the projects considering the stage of development
of each potential product acquired, the time and resources needed to complete the development and approval of each product, the life of each potential commercialized product and associated risks
including the inherent difficulties and

F-21

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SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6.    Acquisition of Montigen Pharmaceuticals, Inc. (Continued)

uncertainties
in developing a drug compound, including obtaining FDA and other regulatory approvals, and risks related to the viability of and potential alternative treatments in any future target
markets. The entire value of acquired in-process research and development of $16,318,000 was charged to expense in 2006.

The
acquisition agreement also required us to pay the former Montigen stockholders an additional $22.0 million in shares of SuperGen common stock, contingent upon the achievement
of specific regulatory milestones. In April 2007, the first Montigen compound, MP-470, received clearance from the FDA to begin Phase I clinical trials, triggering the first
contingent milestone payment to the former Montigen stockholders of $10.0 million, which we paid through the issuance of 1,477,000 shares of our common stock. The calculation of the number of
shares used for the payment was based on the average closing price of our stock on the five days preceding the payment. This payment has been recorded as additional acquired in-process
research and development expense in 2007. The remaining $12.0 million in future contingent regulatory milestone payments that may become payable to the former Montigen stockholders will also be
recorded as additional acquired in-process research and development expense when and if the related milestones are achieved.

7.    Asset Acquisition Agreement with Mayne Pharma

Sale of North American Rights

On August 22, 2006, we executed an Asset Acquisition Agreement with Mayne Pharma (USA), Inc. ("Mayne"), pursuant to which Mayne acquired the North
American rights to our products Nipent and SurfaceSafe® cleaning system. We received cash proceeds of $13,395,000, which represented the purchase price per the agreement, reduced by a
number of adjustments and holdbacks, as follows (in thousands):

Purchase price per agreement

$
21,095Less:

Mitomycin reduction


(1,140
)Supply holdback


(5,000
)Indemnification holdback


(1,000
)Net asset adjustment


(445
)Channel inventory adjustment


(115
)Initial cash proceeds

$
13,395


The
mitomycin reduction represented a reduction in the proposed purchase price for the mitomycin product line that was originally to be sold as part of the transaction but was removed
during the final negotiations. The net asset adjustment reflected the difference in value of the net assets acquired in the agreement from the initial negotiation date to the final closing date. The
channel inventory adjustment represented the difference between the value of inventory in the supply chain at the negotiation date and the final closing date.

The
supply holdback was retained by Mayne until the following three events occurred: (1) the qualification of an FDA approved manufacturer of Nipent, (2) the execution of a
commercial supply agreement between Mayne and the approved manufacturer, and (3) acceptance of the first delivery under the commercial supply agreement. All of these events successfully
occurred in 2007 and we received the $5.0 million supply holdback payment in December 2007.

F-22

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7.    Asset Acquisition Agreement with Mayne Pharma (Continued)

The
indemnification holdback was to be held by Mayne for 18 months to cover any potential claims. We received the $1.0 million indemnification holdback in February 2008.

In
addition to the initial payment and holdbacks, we were entitled to receive annual deferred payments totaling $14,140,000 over the next five years based on achievement of specific
annual sales targets by Mayne. A portion of these annual deferred payments could be accelerated under certain circumstances, including a change of control at Mayne. In February 2007, such a change of
control occurred when Mayne was acquired by Hospira, Inc. As a result, we received an accelerated milestone payment of $10,312,000 from Mayne. In September 2007, we also received the first
annual sales milestone payment of $1,828,000.

In
conjunction with the Asset Acquisition Agreement with Mayne, we also entered into certain related agreements including the following:



We
have a number of additional obligations under the Asset Acquisition Agreement, including the following:



F-23

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7.    Asset Acquisition Agreement with Mayne Pharma (Continued)



Sale of Remaining Worldwide Rights

On April 2, 2007, we closed another transaction with Mayne completing the sale of the remaining worldwide rights for Nipent for total consideration of up
to $8.3 million. We received an initial up-front payment of $3,750,000, plus an additional $389,000 for the carrying value of the remaining Nipent inventory. The balance of the
purchase price is guaranteed and payable in five installments over a five year period on the anniversary of the closing date, except for $1.25 million in holdbacks. The holdbacks consist of a
$1.0 million supply holdback, which was related to the North American $5.0 million holdback, and a $250,000 indemnification holdback that will be retained by Mayne for 18 months.
We received the $1.0 million supply holdback in December 2007.

Recognition of Gain on Sale of Products

From the initial cash proceeds from the North American transaction of $13,395,000, the accelerated milestone payment of $10,312,000, and $4,012,000 in net
proceeds from the sale of the remaining worldwide rights, we deducted the value of net assets delivered to Mayne, including inventory, prepaid expenses, and manufacturing equipment, certain legal
fees, and the reimbursement of alternative supply costs, and initially deferred amounts for additional alternative supply reimbursements and price protection exposure. This resulted in an initial net
gain of $24,601,000, which was recognized during the quarter ended June 30, 2007. This initial gain recognized included proceeds received in prior periods related to the sale of the North
American rights to Nipent that were previously recorded on the balance sheet as a deferred gain until Mayne entered into a supply agreement with an FDA approved manufacturing site during the quarter
ended June 30, 2007, and as a result, we were able to estimate our price protection exposure. The remaining balance of the deferred gain on sale of products of $600,000 at December 31,
2007 consists solely of the estimated price protection exposure.

F-24

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7.    Asset Acquisition Agreement with Mayne Pharma (Continued)

The
sales milestone payment of $1,828,000 received in August 2007, and the supply holdback payments of $5,000,000 and $1,000,000 received in December 2007 were also recorded as a gain on
sale of products during the year ended December 31, 2007.

Due
to the Company's determination that the Nipent operations sold to Mayne did not represent a separate component of the Company and the Company's continuing involvement with the Nipent
operations, resulting from entering into the related agreements and the additional obligations as described above, the Company has reflected activities related to the Nipent and Surface Safe
businesses in operating activities for all periods presented.

8.    Nipent Marketing and Distribution Rights

Termination of Agreements with Abbott Laboratories

In December 1999, we entered into a Nipent distribution agreement with Abbott Laboratories ("Abbott"). Beginning March 1, 2000, Abbott became the exclusive
U.S. distributor of Nipent for a period of five years. Under this agreement, Abbott made a $5 million cash payment to the Company in January 2000. This amount was included in deferred revenue
and was being amortized to distribution revenue ratably over 60 months through December 2002.

In
March 2003, we entered into an agreement with Abbott that allowed us to terminate the Nipent distribution agreement, for a stated fee that decreased over time to $1,500,000 at March
2005. As part of the agreement, we paid Abbott $500,000 for this right to terminate the Nipent distribution agreement at our option. The $500,000 was recorded as a reduction of the deferred revenue we
initially received from Abbott for the distribution rights and we stopped amortizing the remaining balance of deferred revenue, which was $1,667,000 at that time. In February 2005, we exercised our
option and paid Abbott $1,500,000 to terminate the Nipent distribution agreement. This amount was charged against deferred revenue. The remaining balance in deferred revenue of $167,000 was recorded
as distribution agreement revenue in the year ended December 31, 2005. We had no similar revenue in the years ended December 31, 2006 or 2007.

Pfizer Marketing Rights

In February 2004, we entered into a Purchase and Sale Agreement with Pfizer Inc. to acquire European marketing rights for Nipent. We paid Pfizer $1,000,000
under this agreement and recorded this amount as Prepaid distribution and marketing rights. This amount was amortized over 31 months, the estimated life of the benefit period, to cost of
product revenue. During the years ended December 31, 2006 and 2005, we recorded amortization of $290,000 and $387,000, respectively. No amortization was recorded during the year ended
December 31, 2007 as the amount was fully amortized at December 31, 2006.

Wyeth Distribution Rights

On June 1, 2006, we entered into an agreement with Wyeth to terminate the European distribution of Nipent by Wyeth and transition distribution to SuperGen.
In connection with the execution of the amended agreement, we paid Wyeth $2.1 million in consideration for the acceleration of the transfer of the Nipent European distribution rights and the
net profit amounts to be paid by Wyeth as described below. The original distribution and supply agreement with Wyeth would have terminated on its own

F-25

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8.    Nipent Marketing and Distribution Rights (Continued)

terms
at no cost to SuperGen over a period of time, varying by country, through March 2007. Under the amended agreement, distribution rights transitioned for most countries, except Spain and France,
on December 1, 2006. Spain and France transitioned in February 2007.

During
the transition period, we continued to ship vials of Nipent to Wyeth for sale and distribution in various countries in Europe. On a monthly basis, Wyeth remitted to SuperGen an
additional amount, defined in the amended and restated supply agreement as the "net profit," based on Wyeth's sales of Nipent. The net profit was computed as Wyeth's invoiced net sales, less the
product acquisition cost from SuperGen, less 5% transfer fee and less 5% distribution fee. Recurring remittances to SuperGen could be adjusted by any Wyeth invoiced trade receivable that was overdue
by 60 days or more. At the time distribution rights transferred, we repurchased the unsold inventory held by Wyeth with a shelf life greater than 12 months.

We
recorded the initial $2.1 million payment to Wyeth as Prepaid distribution and marketing rights, and amortized it as a reduction of product revenue over 10 months, which
corresponded to the termination acceleration period of June 2006 through March 2007. The payment was fully amortized at March 31, 2007. We recognized the revenue, and related cost of revenue,
when the vials were delivered to the end customer by Wyeth. We determined that Wyeth's ability to collect from the end customer was reasonably assured. During the years ended December 31, 2007
and 2006, we recorded $257,000 and $1,535,000, respectively, of net profit from Wyeth, which was included in net product revenue.

9.    Acquisition and Transfer Agreements

Sale of Products to Intas Pharmaceuticals

In April 2007, we sold the rights to anticancer agents mitomycin and paclitaxel to Intas Pharmaceuticals Ltd. for an aggregate purchase price of
$1.2 million. We also sold related inventory with the transaction for $146,000. In May 2007, we sold the rights to generic etoposide to Intas for $70,000. After deducting inventory costs and
other fees, we recognized a net gain on sale of products of $1,248,000 during the year ended December 31, 2007 relating to the sale of these non-core assets.

Daunorubicin Transfer Agreement

We received approval of an Abbreviated New Drug Application ("ANDA") for generic daunorubicin in 2001. In April 2005, we executed a transfer agreement with
American Pharmaceutical Partners, Inc. whereby we transferred the ANDA and all rights, title, and interest in the product for $590,000. We recorded this amount as other revenue during the year
ended December 31, 2005.

Peregrine PharmaceuticalsVEGF License

In February 2001, we completed a transaction to license a platform drug-targeting technology known as Vascular Targeting Agent from Peregrine
Pharmaceuticals ("Peregrine"), formerly known as Techniclone Corp. The licensed technology is specifically related to Vascular Endothelial Growth Factor ("VEGF"). The agreement required an
up-front payment of $600,000, which included the acquisition of 150,000 shares of Peregrine. These shares are carried as part of Marketable Securitiesnon-current.

F-26

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9.    Acquisition and Transfer Agreements (Continued)

The
terms of the agreement require that we pay milestone payments and royalties to Peregrine based on the net revenues of any drugs commercialized using the VEGF technology. These
payments could ultimately total $8 million. No milestone or royalty payments have been made under the agreement to date. In addition, we are required to pay Peregrine an annual license fee
until the first filing of an Investigational New Drug Application ("IND") utilizing the licensed patents. During the years ended
December 31, 2007, 2006 and 2005, we paid Peregrine license fees of $125,000, $100,000 and $200,000, respectively, in cash in connection with this agreement. The annual license fees paid to
Peregrine have been charged to Research and development expense.

In
August 2006, we sublicensed the VEGF technology to Targa Therapeutics Corp. ("Targa"). In connection with this sublicense, Targa has agreed to develop and commercialize the VEGF
technology and will pay us an annual payment equal to the annual license fee due to Peregrine under our original license agreement. In addition, upon the achievement of milestones under the original
license agreement, Targa has agreed to reimburse us an amount equal to such milestone payments. We received reimbursement of $100,000 from Targa during the year ended December 31, 2007 that was
recorded to research and development expense. Targa has also agreed to reimburse us for royalties due to Peregrine on licensed product sales, provided that Peregrine reduced the royalty rates in
writing. In February 2007, we amended our license agreement with Peregrine to reduce these royalty rates.

10.    Convertible Debt Financing Derivative Liability and Collateral

In June 2003, we closed a private placement transaction in which we issued Senior Convertible Notes ("June Notes") in the aggregate principal amount of
$21.25 million. In connection with the issuance of the June Notes, we issued to the note holders warrants to purchase 2,634,211 shares of common stock in AVI BioPharma, Inc. that we own
("AVI Shares") at an exercise price of $5.00 per share. The warrants represented a derivative under SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," that must be
recorded at fair value. Changes in the fair value of the derivative have been recognized in earnings. During the years ended December 31, 2006, and 2005, we recorded changes in the value of
this derivative of $1,817,000, and $(211,000), respectively. There were no similar charges during the year ended December 31, 2007 as the warrants expired on December 31, 2006.

During
the year ended December 31, 2006, one of the warrant holders exercised warrants to purchase 300,000 shares. As part of this transaction, we received $1,500,000 in cash and
transferred 300,000 of the AVI Shares to the warrant holder. We recognized a gain on disposition of the shares of $780,000, representing the difference between our carrying value of the shares and the
proceeds we received.

In
connection with the issuance of the warrants to acquire the AVI Shares, the AVI Shares had been pledged into a collateral account. At December 31, 2006, the fair value of the
pledged 2,334,211 AVI Shares were included in the accompanying consolidated balance sheet under non-current Restricted cash and investments, with an additional 50,000 unrestricted shares
of AVI included in
Investment in stock of related parties. As noted above, the warrants expired on December 31, 2006, and the 2,334,211 pledged shares were released from the collateral account. At
December 31, 2007, all 2,384,211 AVI Shares are included in Marketable securities, non-current, as AVI is no longer considered a related party. We reflect temporary changes in the
value of these shares as part of accumulated other comprehensive income or loss in stockholders' equity.

F-27

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11.    Related Party Transactions

KineMed, Inc.

In November 2001, we made an equity investment of $150,000 to acquire 100,000 shares of Series A Convertible Preferred stock of KineMed, Inc., a
start-up biotech company. In March 2003, we made an additional equity investment of $30,000 to acquire an additional 15,000 shares. The president and chief executive officer of KineMed is
a former director of SuperGen. Our current president and chief executive officer is a member of the board of directors of KineMed. We accounted for this investment under the cost method as our
ownership was less than 20% of KineMed's outstanding shares. During 2005, we determined that the value of this investment was impaired due to the uncertain viability of KineMed as a going concern. As
a result, the entire cost of the investment of $180,000 was charged to Selling, general, and administrative expense in 2005.

AVI BioPharma, Inc.

In December 1999, we entered into an agreement with AVI BioPharma, Inc. At the time, the chief executive officer of AVI was a member of our Board of
Directors. He later resigned from our Board in
May 2002. The former president and chief executive officer of SuperGen was a member of the Board of Directors of AVI through March 2004. Under the terms of the agreement, we acquired one million
shares of AVI common stock, which amounted to approximately 7.5% of AVI's outstanding common stock, for $2.5 million cash and 100,000 shares of our common stock at $28.25 per share. We also
acquired exclusive negotiating rights for the United States market for Avicine, AVI's proprietary cancer vaccine.

In
July 2000, we finalized an agreement with AVI to obtain the U.S. marketing rights for Avicine. We issued 347,826 shares of our common stock along with $5 million in cash to AVI
as payment for our investment, in exchange for 1,684,211 shares of AVI common stock. As part of this agreement, we obtained the right of first discussion to all of AVI's oncology compounds and an
option to acquire up to 1,665,478 shares of AVI's common stock, subject to anti-dilution provisions, for $35.625 per share. This option is exercisable for a three-year period
commencing on the earlier of the date the FDA accepts the NDA submitted for Avicine or the date on which the closing price of AVI's common stock exceeds the option exercise price. We have accounted
for the investment in AVI as an investment in equity securities that are available-for-sale as our ownership is less than 20% of AVI's outstanding shares. See Note 10
above regarding the balance sheet classification of our investment in the AVI Shares.

Avicine
will require significant additional expenditures to complete the clinical development necessary to gain marketing approval from the FDA and equivalent foreign regulatory
agencies. As part of this agreement, we are obligated to make additional payments to AVI based on successful achievement of developmental, regulatory approval, and commercialization milestones over
the next several years that could total $80 million. In 2003 and 2002, we recorded a total of $565,000 in research and development expenses for Avicine. At December 31, 2007 and 2006,
this amount was still payable and is presented on the balance sheet as Payable to AVI BioPharma, Inc.

Quark Biotech, Inc.

Our current president and chief executive officer is a former director and our former president and chief executive officer is currently a director and both are
stockholders of Quark Biotech, Inc. ("QBI"), a privately-held development stage biotechnology company. In June 1997, we made an equity

F-28

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SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11.    Related Party Transactions (Continued)

investment
of $500,000 in QBI's preferred stock, which represented less than 1% of the company's outstanding shares as of December 31, 2001. Our investment in QBI is carried at cost and was
recorded as Investment in stock of related parties as of December 31, 2006. QBI is no longer considered a related party, and at December 31, 2007 the investment is included in Other
assets.

12.    Commitments and Contingencies

We lease our primary administrative facility under a 10 year non-cancellable operating lease, which may be renewed for an additional
five-year period. The terms of the lease require us to establish and maintain two irrevocable and unconditional letters of credit to secure our obligations under the lease. The financial
institution issuing the letters of credit requires us to collateralize our potential obligations under the lease by assigning to the institution approximately $2.5 million in certificates of
deposit. The certificates of deposit are included in the balance sheet under Restricted cash and investments. Upon achievement of certain milestones and the passage of time, the amounts of the letters
of credit are subject to reduction or elimination. In August 2007, we subleased a portion of our primary administrative facility under a non-cancellable lease that terminates at the same
time as our master lease.

Future
minimum rentals and sublease income under all operating leases with terms greater than one year are as follows (in thousands):

Year ending December 31,

Minimum
rental
obligations

Sublease
Income2008

$
2,552

$
2252009


2,604


2322010


2,429


2192011


271


2012 and thereafter


114


$
7,970

$
676


Rent
expense was $2,272,000 in 2007, $2,077,000 in 2006, and $2,014,000 in 2005. These amounts are net of sublease income of $108,000 in 2007, $146,000 in 2006, and $326,000 in 2005.

As
noted in Note 6 above, we will pay the former Montigen stockholders an additional $12.0 million in shares of SuperGen common stock, contingent upon achievement of
specific regulatory milestones.

We
have entered into technology license agreements allowing us access to certain technologies. These agreements generally require royalty payments based upon the sale of approved
products incorporating the technology under license. No sales of such products have occurred as of December 31, 2007.

We
have also entered into manufacturing and service agreements for certain manufacturing services, the supply of research materials and the performance of specified research studies.
These agreements require payments based upon the performance of the manufacturing entity, delivery of the research materials or the completion of the studies. There are no material commitments for
such payments as of December 31, 2007.

F-29

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SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13.    Income Taxes

For financial reporting purposes, our net income (loss) included the following components (in thousands):

Year ended December 31,2007

2006

2005Pre-tax income (loss):United States

$
13,908

$
(14,396
)
$
(11,312
)Foreign


(416
)

(1,516
)

(3,170
)$
13,492

$
(15,912
)
$
(14,482
)


Income
tax expense consisted of the following components (in thousands):

Year ended December 31,2007

2006

2005Current:Federal

$
325

$
427

State


86


148

Total current


411


575

Deferred







Total provision for income taxes

$
411

$
575




The
difference between the income tax expense (benefit) and the amount computed by applying the federal statutory income tax rate to income (loss) from continuing operations before
income taxes is as follows (in thousands):

Year ended December 31,2007

2006

2005Income tax expense (benefit) at federal statutory rate

$
4,722

$
(5,535
)
$
(5,070
)State taxes (net of federal)


1,335


516


(790
)Unbenefitted foreign losses


145


531


1,109Acquired in-process research and development


3,489


5,711


Non-deductible deferred compensation


337


423


True up of basis of investments








(1,944
)Credits


(1,396
)

(920
)

(900
)Expired losses


1,726





461Stock compensation








85Other


(241
)

65


85Change in valuation allowance


(9,706
)

(216
)

6,964Total

$
411

$
575

$



F-30

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13.    Income Taxes (Continued)

Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of our deferred tax assets are as follows (in thousands):

December 31,2007

2006Deferred Tax Assets:Net operating loss carryforwards

$
101,055

$
108,533Purchased in-process technology


3,909


4,583Research and development credit carryforwards


14,799


13,398Capitalized research and development


3,537


4,572Investments


6,722


6,013Deferred revenue


243


4,712Other


5,368


3,528135,633


145,339Valuation allowance


(135,633
)

(145,339
)Net Deferred Tax Assets

$


$



Realization
of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully
offset by a valuation
allowance. The valuation allowance decreased by $9,706,000 during the year ended December 31, 2007, and increased by $313,000 and $6,964,000 during the years ended December 31, 2006 and
2005, respectively. Approximately $7,348,000 of the valuation allowance for deferred tax assets relates to excess tax benefits of stock option deductions that, when recognized, will be allocated
directly to additional paid-in capital.

As
of December 31, 2007, we have net operating loss carryforwards for federal income tax purposes of approximately $267,654,000 which expire in the years 2011 through 2026, and
federal research and development credit carryforwards of approximately $8,670,000, which expire in the years 2008 through 2027.

As
of December 31, 2007, we also have net operating loss carryforwards for state income tax purposes of approximately $139,910,000, which expire in various years through 2025, and
state research and development tax credits of approximately $8,268,000, which do not expire.

Utilization
of our net operating loss carryforwards may be subject to substantial annual limitations due to ownership change limitations provided by the Internal Revenue Code and similar
state provisions. Such an annual limitation could result in the expiration of the net operating losses before utilization.

In
July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"), an interpretation of SFAS 109, "Accounting for
Income Taxes." FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with SFAS 109. The interpretation applies
to all tax positions accounted for in accordance with SFAS 109 and requires a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax
position taken, or expected to be taken, in an income

F-31

---



SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13.    Income Taxes (Continued)

tax
return. Subsequent recognition, derecognition, and measurement is based on management's best judgment given the facts, circumstances, and information available at the reporting date.

We
adopted the provisions of FIN 48 on January 1, 2007. There was no impact on our consolidated financial position, results of operations and cash flows as a result of
adoption. We have no unrecognized tax benefits, as described in FIN 48, as of December 31, 2007. Also, there are no accrued amounts for interest and penalties.

Our
policy is to recognize interest and penalties related to income taxes as a component of income tax expense. No interest and penalties expenses are recognized in the statement of
operations in the current year. We do not expect any unrecognized tax benefits to be recognized within the next twelve months. We are subject to income tax examinations for U.S. Federal incomes taxes
and state income
taxes from 1992 forward due to net operating losses in tax years 1992 through 2005. We are subject to tax examinations in the United Kingdom from 2001 forward. We do not anticipate that total
unrecognized tax benefits will significantly change prior to December 31, 2008.

14.    Employee Benefit Plans

401(k) Profit Sharing Plan

We have adopted a 401(k) Profit Sharing Plan (the "401(k) Plan") for all eligible employees with a minimum of two months of service. We may be obligated to make
contributions to the plan to comply with statutory requirements. Voluntary employee contributions to the 401(k) Plan may be matched by the Company, up to 3% of each participant's annual compensation.
Our expense relating to contributions made to employee accounts under the 401(k) Plan was approximately $187,000 in 2007, $206,000 in 2006, and $212,000 in 2005.

Employee Stock Purchase Plan

In 1998 we established the 1998 Employee Stock Purchase Plan, and a total of 500,000 shares of Common Stock are reserved for issuance under the plan. Employees
participating in the ESPP are granted the right to purchase shares of common stock at a price per share that is the lower of 85% of the fair market value of a share of Common Stock on the first day of
an offering period, or 85% of the fair market value of a share of Common Stock on the last day of that offering period.

In
2007, we issued 16,998 and 27,231 shares through the ESPP at $4.58 and $3.40, respectively. In 2006, we issued 21,938 and 23,101 shares through the ESPP at $3.93 and $3.77,
respectively. In 2005, we issued 26,980 and 24,580 shares through the ESPP at $3.98 and $3.95, respectively. As of December 31, 2007, 37,985 shares are reserved for future issuance under the
ESPP.

F-32

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SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15.    Quarterly Financial Data (Unaudited)

Following is a summary of the quarterly results of operations for the years ended December 31, 2007 and 2006:

|                                              |  | Quarter Ended |        
|--------------------------------------------- |  | ------------- | -------
|
|
|2007                                          |  |               |        
|Net product revenue                           |  | $             | 621    
|Cost of product revenue                       |  |               | 221    
|Net income (loss)                             |  |               | (3,329 
|Basic and diluted net income (loss) per share |  |               | (0.06  
|2006                                          |  |               |        
|Net product revenue                           |  | $             | 2,884  
|Cost of product revenue                       |  |               | 548    
|Net income (loss)                             |  |               | (12,188
|Basic and diluted net income (loss) per share |  |               | (0.24  

F-33

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report on
Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on this 17th day of March 2008.

| |  |                |  |                                                                                       
| |  | -------------- |  | --------------------------------------------------------------------------------------
| |  | SUPERGEN, INC.
| |  | By:            |  | /s/JAMES S. J. MANUSOJames S.J. Manuso Chief Executive Officer, President and Director

POWER OF ATTORNEY

We, the undersigned officers and directors of SuperGen, Inc. hereby constitute and appoint James S.J. Manuso and Michael Molkentin, and each of them
individually, our true and lawful attorney-in-fact, with full power of substitution, to sign for us and in our names in the capacities indicated below any amendments to this
Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant
to the requirements of the Securities Exchange Act of 1934, this Report on Form 10-K has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

|Signature                                     |  | Title                                                                         |  | Date          
|--------------------------------------------- |  | ----------------------------------------------------------------------------- |  | --------------
|                                              |  |                                                                               |  |               
|/s/JAMES S.J. MANUSO(James S.J. Manuso)       |  | Chief Executive Officer, President and Director
(Principal Executive Officer) |  | March 17, 2008
|/s/MICHAEL MOLKENTIN(Michael Molkentin)       |  | Chief Financial Officer
(Principal Financial and Accounting Officer)          |  | March 17, 2008
|/s/CHARLES J. CASAMENTO(Charles J. Casamento) |  | Director                                                                      |  | March 17, 2008
|/s/THOMAS V. GIRARDI(Thomas V. Girardi)       |  | Director                                                                      |  | March 17, 2008
|/s/ALLAN R. GOLDBERG(Allan R. Goldberg)       |  | Director                                                                      |  | March 17, 2008
|/s/WALTER J. LACK(Walter J. Lack)             |  | Director                                                                      |  | March 17, 2008
|/s/MICHAEL D. YOUNG(Michael D. Young)         |  | Director                                                                      |  | March 17, 2008

S-1

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