**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**





**FORM
      10-QSB**





x
      QUARTERLY REPORT UNDER
      SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934


For
      the
      quarterly period ended March 31, 2007





OR





o
      TRANSITION REPORT UNDER
      SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934


For
      the
      transition period from _______ to _______





Commission
      File Number 0-16686





**VIOQUEST
      PHARMACEUTICALS, INC.**





(Exact
      name of small business issuer as specified in its charter)




Delaware
            58-1486040(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)





180
      Mount
      Airy Road, Suite 102, Basking Ridge, New Jersey 07920


(Address
      of Principal Executive Offices)





(908)
      766-4400


(Issuer’s
      telephone number, including area code)





(Former
      name, former address and former fiscal year, if changed from last
      report)





Check
      whether the issuer (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Exchange Act during the past 12 months (or for such shorter
      period that the registrant was required to file such reports), and (2) has
      been
      subject to such filing requirements for the past 90 days. Yes x No
o





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


Yes o No
x





As
      of May
      14, 2007 there were 54,621,119 shares of the issuer’s common stock, $0.001 par
      value, outstanding.





Traditional
      Small Business Disclosure Format (check one): Yes o No x





**Index**





Page**PART
                I**
            **FINANCIAL
                INFORMATION**Item
                1.
            Unaudited
                Condensed Consolidated Financial Statements
            1Item
                2.
            Management’s
                Discussion and Analysisor
                Plan of Operations
            9Item
                3.
            Controls
                and Procedures
            13**PART
                II**
            **OTHER
                INFORMATION**Item
              2.
            Unregistered
              Sales of Equity Securities and Use of Proceeds.
            14Item
                5.
            Other
                Information
            14Item
                6.
            Exhibits
            14Signatures
            15Index
                To Exhibits Filed With This Report
            16




**Forward-Looking
      Statements**





This
      Quarterly Report on Form 10-QSB contains statements that are not historical,
      but
      are forward-looking in nature, including statements regarding the expectations,
      beliefs, intentions or strategies regarding the future. In particular, the
      “Management’s Discussion and Analysis or Plan of Operations” section in Part I,
      Item 2 of this quarterly report includes forward-looking statements that reflect
      our current views with respect to future events and financial performance.
      We
      use words such as we “expect,” “plan,” “anticipate,” “believe,” “intend” and
      similar expressions to identify forward-looking statements. A number of
      important factors could, individually or in the aggregate, cause actual results
      to differ materially from those expressed or implied in any forward-looking
      statements. Such factors include, but are not limited to, the
      following:





·
            the
                possibility that the results of clinical trials will not be successful;


·
            the
                possibility that our development efforts relating to our product
                candidates, including LenoctaTM, VQD-002 and XyfidTM, will not be
                successful;


·
            the
                inability to obtain regulatory approval of our product
                candidates;


·
            our
                reliance on third-parties to develop our product
                candidates;


·
            our
                lack of experience in developing and commercializing pharmaceutical
                products;


·
            the
                possibility that our licenses to develop and commercialize our product
                candidates may be terminated;


·
            our
                ability to seek strategic alternatives for our subsidiary Chiral
                Quest,
                which may include a sale;


·
            our
                ability to obtain additional financing;


·
            our
                ability to protect our proprietary technology.





Other
      risks are described under the section entitled “Risk Factors” following Item 1
      in Part I of our Annual Report on Form 10-KSB for the year ended December 31,
      2006.







**PART
      I - FINANCIAL INFORMATION**





**Item
      1. Unaudited Condensed Consolidated Financial Statements.**





**VIOQUEST
      PHARMACEUTICALS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**AS
      OF MARCH 31, 2007 (UNAUDITED) AND DECEMBER 31, 2006**


**March
                  31, 2007**
                **(Unaudited)**
              
              **December
                  31, 2006**
                **(Note
                  1A)****ASSETS****CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              1,141,227
              
              $
              2,931,265Prepaid
                  clinical research costs
              
              
              255,957
              
              
              273,172Other
                  current assets
              
              
              269,748
              
              
              168,841Current
                  assets associated with discontinued operations
              
              
              824,128
              
              
              1,056,808Total
                  Current Assets
              
              
              2,491,060
              
              
              4,430,086**NON-CURRENT
                  ASSETS ASSOCIATED WITH DISCONTINUED OPERATIONS**
              
              
              1,284,331
              
              
              1,339,627**PROPERTY
                  AND EQUIPMENT, NET**
              
              
              37,796
              
              
              43,378**SECURITY
                  DEPOSITS**
              
              
              15,232
              
              
              15,232**TOTAL
                  ASSETS**
              
              $
              3,828,419
              
              $
              5,828,323**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES**Accounts
                  payable
              
              $
              1,790,861
              
              $
              1,031,458Accrued
                  expenses
              
              
              382,618
              
              
              425,915Note
                  payable - Paramount BioSciences, LLC
              
              
              189,623
              
              
              264,623****Current
                  liabilities associated with discontinued operations
              
              
              794,681
              
              
              1,265,568**TOTAL
                  LIABILITIES**
              
              
              3,157,783
              
              
              2,987,564**COMMITMENTS
                  AND CONTINGENCIES****STOCKHOLDERS'
                  EQUITY**Preferred
                  stock; $0.001 par value: 10,000,000 shares authorized, 0 shares
                  issued and
                  outstanding at March 31, 2007 and December 31, 2006
              
              
              -
              
              
              -Common
                  stock; $0.001 par value: 100,000,000 shares authorized at March
                  31, 2007
                  and December 31, 2006, 54,621,119 shares issued and outstanding
                  at March
                  31, 2007 and December 31, 2006
              
              
              54,621
              
              
              54,621Additional
                  paid-in capital
              
              
              31,674,824
              
              
              31,326,694Accumulated
                  deficit
              
              
              (31,058,809
              )
              
              (28,540,556
              )Total
                  Stockholders' Equity
              
              
              670,636
              
              
              2,840,759**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              
              $
              3,828,419
              
              $
              5,828,323





See
      accompanying notes to condensed consolidated financial statements.





1


**VIOQUEST
      PHARMACEUTICALS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**


**(UNAUDITED)**





**For
                the Three Months Ended March 31, 2007**
            
            **For
                the Three Months Ended March 31, 2006****REVENUE**
            
            -
            
            -**OPERATING
                EXPENSES**Research
                and development
            
            $
            1,368,811
            
            $
            289,646Selling,
                general and administrative
            
            
            911,344
            
            
            767,941Depreciation
            
            
            2,307
            
            
            1,414Total
                Operating Expenses
            
            
            2,282,462
            
            
            1,059,001**LOSS
                FROM OPERATIONS**
            
            
            (2,282,462
            )
            
            (1,059,001
            )**INTEREST
                INCOME, NET**
            
            
            25,684
            
            
            47,031**LOSS
                FROM CONTINUING OPERATIONS**
            
            
            (2,256,778
            )
            
            (1,011,970
            )**LOSS
                FROM DISCONTINUED OPERATIONS**
            
            
            (261,475
            )
            
            (849,777
            )**NET
                LOSS**
            
            $
            (2,518,253
            )
            $
            (1,861,747
            )**NET
                LOSS PER COMMON SHARE:****CONTINUING
                OPERATIONS**
            
            $
            (0.05
            )
            $
            (0.03
            )**DISCONTINUED
                OPERATIONS**
            
            
            (0.00
            )
            
            (0.02
            )**NET
                LOSS PER SHARE - BASIC AND DILUTED**
            
            $
            (0.05
            )
            $
            (0.05
            )**WEIGHTED
                AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED**
            
            
            46,056,724
            
            
            38,165,124





See
      accompanying notes to condensed consolidated financial statements.





2


**VIOQUEST
      PHARMACEUTICALS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007**


**(UNAUDITED)**





**Common
                Stock**
            
            **Additional**
              **Paid-In**
              **Capital**
            
            **Accumulated**
              **Deficit**
            
            **Total**
              **Stockholders’**
              **Equity****Shares**
            
            **Amount**Balance,
                January 1, 2007
            
            
            54,621,119
            
            $
            54,621
            
            $
            31,326,694
            
            $
            (28,540,556
            )
            $
            2,840,759Stock-based
                compensation to employees
            
            
            -
            
            
            -
            
            
            294,577
            
            
            -
            
            
            294,577Stock-based
                compensation to consultants and finder
            
            
            -
            
            
            -
            
            
            53,553
            
            
            -
            
            
            53,553Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (2,518,253
            )
            
            (2,518,253
            )Balance,
                March 31, 2007
            
            
            54,621,119
            
            $
            54,621
            
            $
            31,674,824
            
            $
            (31,058,809
            )
            $
            670,636




See
      accompanying notes to condensed consolidated financial statements.




3


**VIOQUEST
      PHARMACEUTICALS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**


**(UNAUDITED)**





**For
                the Three**
              **Months
                Ended**
              **March
                31, 2007**
            
            **For
                the Three**
              **Months
                Ended**
              **March
                31, 2006****CASH
                FLOWS FROM OPERATING ACTIVITIES:**Net
                loss
            
            $
            (2,518,253
            )
            $
            (1,861,747
            )Loss
                from discontinued operations
            
            
            261,475
            
            
            849,777Loss
                from continuing operations
            
            
            (2,256,778
            )
            
            (1,011,970
            )Adjustments
                to reconcile net loss from continuing operations to net cash used
                in
                continuing operating activities:Depreciation
            
            
            2,307
            
            
            1,414Stock-based
                compensation to employees
            
            
            221,771
            
            
            223,994Stock-based
                compensation to consultants and finder
            
            
            53,178
            
            
            -Changes
                in operating assets and liabilities:Prepaid
                clinical research costs
            
            
            17,215
            
            
            (86,812
            )Other
                assets
            
            
            (100,907
            )
            
            (19,076
            )Accounts
                payable
            
            
            759,403
            
            
            (25,693
            )Accrued
                expenses
            
            
            (43,297
            )
            
            (271,457
            )Net
                Cash Used in Continuing Operating Activities
            
            
            (1,347,108
            )
            
            (1,189,600
            )Net
                Cash Used in Discontinued Operating Activities
            
            
            (342,098
            )
            
            (1,536,177
            )****Net
                Cash Used in Operating Activities
            
            
            (1,689,206
            )
            
            (2,725,777
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES:**Payments
                for purchased equipment
            
            
            (2,277
            )
            
            (7,851
            )Net
                Cash Used in Continuing Investing Activities
            
            
            (2,277
            )
            
            (7,851
            )Net
                Cash Used in Discontinued Investing Activities
            
            
            (23,555
            )
            
            (6,566
            )Net
                Cash Used in Investing Activities
            
            
            (25,832
            )
            
            (14,417
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES:******Payment
                of note payable to Paramount BioSciences, LLC
            
            
            (75,000
            )
            
            -****Net
                Cash Used in Continuing Financing Activities
            
            
            (75,000
            )
            
            -**NET
                DECREASE IN CASH AND CASH EQUIVALENTS**
            
            
            (1,790,038
            )
            
            (2,740,194
            )**CASH
                AND CASH EQUIVALENTS - BEGINNING OF PERIOD**
            
            
            2,931,265
            
            
            6,021,399**CASH
                AND CASH EQUIVALENTS - END OF PERIOD**
            
            $
            1,141,227
            
            $
            3,281,205




See
      accompanying notes to condensed consolidated financial statements.





4
 
 **VIOQUEST
          PHARMACEUTICALS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
          31, 2007 (UNAUDITED)**


**NOTE
      1****SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES AND LIQUIDITY**





***(A)
      Basis of Presentation***





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with accounting principles generally accepted in the
      United States of America for interim financial information and the rules and
      regulations of the Securities and Exchange Commission. Accordingly, the
      financial statements do not include all information and footnotes required
      by
      accounting principles generally accepted in the United States of America for
      complete annual financial statements. In the opinion of management, the
      accompanying unaudited condensed consolidated financial statements reflect
      all
      adjustments, consisting of only normal recurring adjustments, considered
      necessary for a fair presentation. Interim operating results are not necessarily
      indicative of results that may be expected for the year ending December 31,
      2007
      or for any subsequent period. These unaudited condensed consolidated financial
      statements should be read in conjunction with the audited consolidated financial
      statements included in the Annual Report on Form 10-KSB of VioQuest
      Pharmaceuticals, Inc. for the year ended December 31, 2006. The accompanying
      condensed consolidated balance sheet as of December 31, 2006 has been derived
      from the audited balance sheet as of that date included in the Form 10-KSB.
      As
      used herein, the terms the “Company” or “VioQuest” refer to VioQuest
      Pharmaceuticals, Inc.





The
      accompanying consolidated financial statements include the accounts of VioQuest
      Pharmaceuticals, Inc. and its subsidiaries. All significant intercompany
      accounts and transactions have been eliminated in consolidation. The functional
      currency of Chiral Quest, Ltd., Jiashan, China, a wholly-owned, discontinued
      subsidiary of the Company, is the United States Dollar. As such, all transaction
      gains and losses are recorded in discontinued operations.





On
      September 29, 2006, the Company’s Board of Directors determined to seek
      strategic alternatives with respect to the Company’s Chiral Quest, Inc.
      subsidiary (“Chiral Quest”), which include a possible sale or other disposition
      of the operating assets of that business. Accordingly, the chiral products
      and
      services operations and the assets of Chiral Quest are presented in these
      financial statements as discontinued operations. Chiral Quest had accounted
      for
      all sales of the Company from its inception. The Company’s continuing
      operations, which have not generated any revenues, will focus on the remaining
      drug development operations of VioQuest Pharmaceuticals, Inc. and accordingly,
      the Company has only one segment. As a result of these reclassifications, the
      Company no longer provides segment reporting. No provision has been made to
      reduce the carrying amounts of the assets of the discontinued operations as
      they
      approximate their estimated net realizable values. See Note 2.





The
      balance sheet as of March 31, 2007 and December 31, 2006 and the statements
      of
      operations for the three months ended March 31, 2007 and 2006 include
      reclassifications to reflect discontinued operations.




***(B)
      Nature of Operations***




Since
      August 2004, the Company has focused on acquiring technologies for purposes
      of development and commercialization of pharmaceutical drug candidates for
      the
      treatment of oncology and antiviral diseases and disorders for which there
      are
      unmet medical needs. Since October 2005, the Company has held license rights
      to
      develop and commercialize its two oncology drug candidates, LenoctaTM or Sodium
      Stibogluconate, formerly VQD-001, an inhibitor of specific protein tyrosine
      phosphatases, and VQD-002 or Triciribine-Phosphate an inhibitor of activated
      Akt. The rights to these two oncology drug candidates, LenoctaTM and VQD-002, are
      governed by license agreements with The Cleveland Clinic Foundation and the
      University of South Florida Research Foundation, respectively. In March 2007,
      the Company acquired license rights to develop and commercialize XyfidTM an
      adjunctive therapy for a common and serious side effect of cancer chemotherapy.
      XyfidTM is governed by a license agreement with Assymetric Therapeutics, LLC and
      Onc Res, Inc., assigned by Fiordland Pharmaceuticals, Inc. See Note
      3.




***(C)
      Liquidity***





Since
      inception, the Company has incurred an accumulated deficit of $31,058,809,
      through March 31, 2007. For the three months ended March 31, 2007, the Company
      had losses from continuing operations of $2,256,778 and used $1,347,108 of
      cash
      in continuing operating activities.





Management
      expects the Company’s losses from continuing operations to increase over the
      next several years, due to the expansion of its drug development business,
      and
      related costs associated with the clinical development programs of LenoctaTM,
      VQD-002 and XfyidTM. These matters raise substantial doubt about the ability of
      the Company to continue as a going concern.




5


**VIOQUEST
        PHARMACEUTICALS, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 (UNAUDITED)**


The
      accompanying condensed consolidated financial statements have been prepared
      assuming that the Company will continue as a going concern. As of March 31,
      2007, the Company had a working capital deficiency of $666,723 and cash and
      cash
      equivalents of $1,141,227. The Company has incurred negative cash flow from
      operations since its inception. The Company has spent, and expects to continue
      to spend, substantial amounts in connection with executing its business
      strategy, including planned development efforts relating to the Company’s drug
      candidates, clinical trials and other research and development efforts.





Management
      anticipates that the Company’s capital resources will be adequate to fund its
      operations into the third quarter of 2007, which is based upon receiving
      $1,700,000 of gross proceeds in the second quarter of 2007 from the sale of
      its
      subsidiary, Chiral Quest, to Chiral Quest Acquisition Corp. (“CQAC”). In
      addition, CQAC will assume Chiral Quest’s current liabilities up to $1,300,000.
      The completion of the sale is predicated upon the approval of the proposed
      sale
      by the Company’s shareholders at the upcoming annual meeting, as well as other
      customary closing conditions and management cannot assure that the sale will
      be
      completed and that the consideration from the sale will be received. See Note
      5.
      Additional financing will be required during 2007 in order to continue to fund
      continuing operations. The other most likely sources of additional financing
      include the private sale of the Company’s equity or debt securities, including
      bridge loans to the Company from third party lenders. However, changes may
      occur
      that would consume available capital resources before that time. The Company’s
      working capital requirements will depend upon numerous factors, which include,
      the progress of its drug development and clinical programs, including associated
      costs relating to milestone payments, maintenance and license fees,
      manufacturing costs, patent costs, regulatory approvals, and the hiring of
      additional employees.





Additional
      capital that may be needed by the Company in the future may not be available
      on
      reasonable terms, or at all. If adequate financing is not available, the Company
      may be required to terminate or significantly curtail its operations, or enter
      into arrangements with collaborative partners or others that may require the
      Company to relinquish rights to certain of its technologies, or potential
      markets that the Company would not otherwise relinquish.





***(D)
      Stock-Based Compensation***





The
      Company issued options
      and warrants to purchase an aggregate of 1,010,000  shares
      of its common
      stock during
      the three months ended March 31, 2007.





Generally,
      stock options and warrants granted to employee and non-employee directors during
      the three months ended March 31, 2007 and 2006 vest as to 33% of the shares
      on
      the first, second and third anniversaries of the vesting commencement date.
      The
      exceptions to the vesting of shares over three years to employee and
      non-employee directors are comprised of the immediate vesting of 100,000
      warrants granted to a non-employee advisor as partial consideration for a
      finder’s fee for services relating to the Company’s acquisition of rights under
      a license agreement for XyfidTM, as well as certain technical analyses related to
      Xyfid, the immediate vesting of a stock option to purchase 3,334 shares of
      common stock granted to a non-employee scientific advisory board member during
      the first quarter of 2007, and a stock option to purchase 75,000 shares of
      common stock granted to a non-employee director in the first quarter of
      2006.




Following
      the vesting periods, options are exercisable until the earlier of 90 days after
      an employee’s employment with the Company terminates or the ten-year anniversary
      of the initial grant, subject to adjustment under certain conditions. The
      Company recorded total compensation charges in the three months ended March
      31,
      2007 and 2006 related to the fair value of continuing and discontinued employee
      and director stock option grants of $294,577 and $264,538 , respectively.





The
      Company used the Black-Scholes option pricing model to calculate the fair value
      of options and warrants granted under Statement
      of Financial Accounting Standards (“SFAS”) No. 123R Share-based Payment
      (“SFAS 123R”), during
      the three months ended March 31, 2007 and 2006. The key assumptions for this
      valuation method include the expected term of the option, stock price
      volatility, risk-free interest rate, dividend yield, exercise price, and
      forfeiture rate. Many of these assumptions are judgmental and highly sensitive
      in the determination of compensation expense. Under the assumptions indicated
      below, the weighted average fair values of the stock options issued at the
      dates
      of grant in the periods ended March 31, 2007 and 2006 were $0.51 and $0.80
      respectively.





6


**VIOQUEST
        PHARMACEUTICALS, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 (UNAUDITED)**





The
      table
      below indicates the key assumptions used in the valuation calculations for
      options granted in the three months ended March 31, 2007 and 2006:





Three
                Months Ended
              March
                31,2007
            
            2006Term
            
            
            7
                years
            
            
            7
                yearsVolatility
            
            
            232-233
            %
            
            210-214
            %Dividend
                yield
            
            
            0.0
            %
            
            0.0
            %Risk-free
                interest rate
            
            
            4.5-4.9
            %
            
            4.4-4.8
            %Forfeiture
                rate
            
            
            22
            %
            
            22
            %




The
      following table summarizes information about the Company’s stock options as of
      and for the three months ended March 31, 2007:





Number
                of Options
            
            Weighted
                Average Exercise Price
            
            Weighted
                Average Remaining Contractual Life (Years)
            
            Aggregate
                Intrinsic ValueBalance,
                January 1, 2007
            
            
            6,087,432
            
            $
            1.02Options
                granted
            
            
            1,010,000
            
            $
            0.53Options
                cancelled or exercised
            
            
            -
            
            
            -Options
                outstanding, March 31, 2007
            
            
            7,097,432
            
            $
            0.95
            
            
            6.9
            
            
            -Options
                exercisable, March 31, 2007
            
            
            3,482,158
            
            $
            1.11
            
            
            5.5
            
            
            -





As
      of
      March 31, 2007, there was $1,750,797 of unrecognized compensation costs related
      to stock options. These costs are expected to be recognized over a weighted
      average period of approximately 3 years.





As
      of
      March 31, 2007, an aggregate of 402,568 shares remained available for future
      grants and awards under the Company’s stock incentive plan, which covers stock
      options and restricted stock awards. The Company issues unissued shares to
      satisfy stock option exercises and restricted stock awards.





***(E)
      Loss Per Share***





Basic
      net
      loss per share is calculated by dividing net loss by the weighted-average number
      of common shares outstanding for each period presented excluding 8,564,395
      common shares held in escrow based upon clinical milestones of LenoctaTM and
      VQD-002, as a result of the acquisition of Greenwich Therapeutics, Inc. in
      2005.
      Diluted net loss per share is the same as basic net loss per share, since
      potentially dilutive shares from the assumed exercise of stock options and
      stock
      warrants would have had an antidilutive effect because the Company incurred
      a
      net loss during each period presented. At March 31, 2007, there were 31,304,586
      potentially dilutive shares excluded from the calculation, which was comprised
      of 15,942,759 shares of underlying warrants, 8,564,395 shares held in escrow,
      and 6,797,432 shares of underlying stock options, and at March 31, 2006, there
      were 27,094,367 shares excluded.





**NOTE
      2****DISCONTINUED
      OPERATIONS**





On
      September 29, 2006, the Company’s Board of Directors determined to seek
      strategic alternatives for the operations of its Chiral Quest subsidiary, which
      included a possible sale or other disposition of the operating assets of that
      business. On April 10, 2007, the Company entered into a definitive agreement
      to
      sell Chiral Quest. See Note 5. Accordingly, the business and assets of Chiral
      Quest are presented in these financial statements as discontinued operations.
      No
      provision has been made to reduce the carrying amounts of the assets of
      discontinued operations as they approximate their net realizable values. At
      March 31, 2007 and December 31, 2006, the current assets of discontinued
      operations totaled $824,128 and $1,056,808 respectively, which consisted of
      accounts receivable, inventories and prepaid expenses. At March 31, 2007 and
      December 31, 2006, the non-current assets of discontinued operations totaled
      $1,284,331 and $1,339,627, respectively, which consisted of fixed assets, net
      of
      accumulated depreciation, and patents, net of accumulated amortization, security
      deposits and prepaid rent. Current liabilities as of March 31, 2007 and December
      31, 2006 associated with discontinued operations totaled $794,681 and $1,265,568
      respectively, which consisted of accounts payable, accrued expenses, and
      deferred revenues. Revenues from discontinued operations for the three months
      ended March 31, 2007 totaled $803,784, and revenues for the three months ended
      March 31, 2006 totaled $598,876. Loss from discontinued operations for the
      three
      months ended March 31, 2007, which consisted of revenues less cost of goods
      sold, management and consulting fees, research and development, selling, general
      and administrative expenses and depreciation and amortization, totaled $261,475.
      Loss from discontinued operations for the three months ended March 31, 2006,
      which consisted of revenues less cost of goods sold, management and consulting
      fees, research and development, selling, general and administrative expenses,
      and depreciation and amortization, totaled $849,777.




7


**VIOQUEST
        PHARMACEUTICALS, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 (UNAUDITED)**


**NOTE
      3********LICENSE
      AGREEMENT**





On
      March
      29, 2007, the Company acquired exclusive license rights to XyfidTM, a
      pharmaceutical product candidate being developed for the treatment and
      prevention of Hand-Foot Syndrome (HFS), a common, often dose-limiting and
      potentially life-threatening complication of several chemotherapy drugs. In
      consideration for the rights under the license agreement, the Company paid
      to
      the licensor an aggregate $300,000 for license related fees, and $37,000 for
      patent prosecution costs. In addition, the Company paid to a third party finder
      a cash fee of $20,000 and a 5-year warrant to purchase 300,000 shares of the
      Company’s common stock at an exercise price of $0.50 per share. The right to
      purchase the shares under the warrant vests in three equal installments of
      100,000 each, with the first installment being immediately exercisable, and
      the
      remaining two installments vesting upon the achievement of certain clinical
      development and regulatory milestones relating to XyfidTM. The Company has
      recognized approximately $50,000 of expense in the first quarter of 2007 based
      upon the immediate vesting of the first 100,000 options. In consideration of
      the
      license, the Company is required to make payments upon the achievement of
      various clinical development and regulatory milestones, which total up to $6.2
      million in the aggregate. The license agreement further requires the Company
      to
      make payments of up to an additional $12.5 million in the aggregate upon the
      achievement of various commercialization and net sales milestones. The Company
      will also be obligated to pay a royalty on net sales of the licensed product.





**NOTE
      4********EMPLOYMENT
      AGREEMENT**





On
      February 1, 2007 the Company entered into an employment agreement with Edward
      C.
      Bradley, M.D., as its Chief Scientific Officer. The agreement is for an
      indefinite term beginning on February 1, 2007 and provides for an initial base
      salary of $330,000, plus an annual target bonus of up to 20% of base salary
      based upon his personal performance and an additional amount of up to 10% of
      base salary based upon Company performance. Pursuant to the employment
      agreement, Dr. Bradley received a stock option to purchase 700,000 shares of
      the
      Company’s common stock. The option vests in three equal annual installments,
      commencing in February 2008 and will be exercisable at a price per share equal
      to $0.55. The stock option had an approximate fair value of $363,000 at the
      date
      of grant which is being amortized over three years. The employment agreement
      also entitles Dr. Bradley to certain severance benefits. In the event that
      the
      Company terminates Dr. Bradley’s employment without cause, then Dr. Bradley is
      entitled to receive his then annualized base salary for a period of six months.
      If Dr. Bradley’s employment is terminated without cause, and within a year of a
      change of control, then Dr. Bradley is entitled to receive his then annualized
      base salary for a period of one year, and he is entitled to receive any bonuses
      he has earned at the time of his termination.




**NOTE
      5********SUBSEQUENT
      EVENT**





On
      April
      10, 2007, the Company entered into a stock purchase and sale agreement for
      the
      sale of its Chiral Quest subsidiary to Chiral Quest Acquisition Corp. (“CQAC”).
      Under the terms of the purchase agreement, in exchange for all of the
      outstanding capital stock of Chiral Quest, CQAC will pay the Company $1,700,000,
      plus assume liabilities of Chiral Quest in an amount up to $1,300,000. To the
      extent Chiral Quest’ s liabilities exceed $1,300,000 as of the closing of the
      transaction, the Company will be required to pay such excess amount to CQAC.
      The
      Company estimates that the net proceeds to be received from the sale of Chiral
      Quest will be $1,528,000, based upon the payments of retention bonuses to its
      employees of approximately $122,000 and legal and accounting fees of
      approximately $50,000. The completion of the sale is predicated upon the
      approval of the purchase agreement by the Company’s shareholders at the upcoming
      2007 annual meeting, as well as other customary closing conditions, and
      management cannot assure that the sale will be completed and that the
      consideration from the sale will be received.





8


**Item
      2.**  **Management’s
      Discussion and Analysis or Plan of Operations.**





**Overview**





Through
      our drug development business, we acquire, develop, and commercialize innovative
      products for the treatment of key unmet medical needs in cancer and
      immunological diseases. Through our acquisition of Greenwich Therapeutics,
      Inc.
      in October 2005, we obtained the rights to develop, manufacture, use,
      commercialize, lease, sell and/or sublicense LenoctaTM (sodium stibogluconate)
      and VQD-002 (triciribine phosphate) through license agreements with The
      Cleveland Clinic Foundation and the University of South Florida Research
      Foundation, respectively. We have initiated four Phase I/IIa clinical trials
      since acquiring the license rights to LenoctaTM and VQD-002. In March 2007, we
      obtained an exclusive, worldwide license to certain patents, relating to XyfidTM
from Fiordland Pharmaceuticals, Inc.





·
            ***LenoctaTM
                - Sodium Stibogluconate (SSG).***LenoctaTM is a pentavalent antimonial drug that has been in use for over 50
                years in parts of Africa and Asia for the treatment of leishmaniasis
                (a
                protozoan disease). According to the World Health Organization
                leishmaniasis currently threatens 350 million men, women, and children
                in
                88 countries around the world. This drug is currently being used
                to treat
                military personnel serving in parts of the world where leishmaniasis
                is
                prevalent. In collaboration with the U.S. Army, we are pursuing
                development of LenoctaTM in the treatment of leishmaniasis and anticipate
                filing a new drug application, or NDA, with the U.S. Food and Drug
                Administration, or FDA, in the second half of 2007. In December 2006,
                LenoctaTM received orphan drug designation by the FDA for the treatment of
                leishmaniasis. In addition to the treatment for leishmaniasis,
                several preclinical studies, especially those conducted at the Cleveland
                Clinic, have showed that LenoctaTM is an inhibitor of multiple protein
                tyrosine phosphatases (PTPases), specifically the SRC homology PTPase
                (SHP-1 & SHP-2) and PTB-1B. These intracellular enzymes are involved
                in signaling pathways of many receptor-linked tyrosine kinases which
                are
                involved in growth, proliferation and differentiation of cancer cells.
                Inhibition of these enzymes with LenoctaTM can trigger apoptosis, or cell
                death, of cancerous tumors. This cytotoxic effect, coupled with its
                potential ability to enhance the body’s immune system, through improved
                cytokine signaling and t-cell formation, suggest that LenoctaTM has
                potential as an anti-cancer agent. It is well known that one major
                mechanism of regulating the proliferation, growth and apoptosis of
                cancer
                cells involves activation of cellular pathways, especially protein
                tyrosine kinase pathways; the Jak/Stat pathway is a particularly
                important
                protein tyrosine kinase pathway. It is also known that interferon
                and
                other cytokines exert their anti-cancer effects via the Jak/Stat
                pathway.
                We filed with the FDA an IND for LenoctaTM, which the FDA accepted in
                August 2006, allowing us to commence clinical trials of LenoctaTM. LenoctaTM
                is currently being evaluated in combination with IFNa-2b
                in a 24-patient investigator-sponsored Phase I clinical trial at
                the
                Cleveland Clinic Taussig Cancer Center in refractory solid tumors,
                lymphoma and myeloma. We are also currently evaluating the safety,
                tolerability and activity of LenoctaTM in a separate, company-sponsored
                study of up to a 54-patient Phase I/IIa clinical trial at M.D. Anderson
                Cancer Center in patients with advanced malignancies and solid tumors
                that
                have been non-responsive in previous cytokine
                therapy.




·
            ***VQD-002
                - Triciribine-Phosphate (TCN-P).***VQD-002,
                a nucleoside analog, was previously advanced into clinical trials
                by the
                National Cancer Institute in the 1980s and early 1990s, and showed
                compelling anti-cancer activities. More recently, investigators at
                the
                Moffitt Cancer Center of the University of South Florida were able
                to
                demonstrate from preclinical studies that VQD-002’s mechanism of action is
                the inhibition of Akt phosphorylation (protein kinase - B), which
                is found
                to be over activated and over-expressed in various malignancies including
                breast, ovarian, colorectal, and pancreatic and leukemias. Clinically,
                the
                over expression of phosphorylated Akt is associated with poor prognosis,
                resistance to chemotherapy and shortened survival time of cancer
                patients.
                We filed with the FDA an IND relating to VQD-002, which was accepted
                in
                April 2006. Pursuant to this IND, we are currently evaluating the
                safety,
                tolerability and activity of VQD-002 and its ability to reduce Akt
                phosphorylaion in two Phase I/IIa clinical trials, including one
                at the
                Moffitt Cancer Center in up to 42 patients with hyper-activated,
                phosphorylated Akt in colorectal, pancreatic, breast and ovarian
                tumors
                and a second clinical trial, with up to 40 patients, at the M.D.
                Anderson
                Cancer Center in hematological tumors, with particular attention
                in
                leukemia.





·
            ***XyfidTM.*********XyfidTM
                is a topical, adjunctive therapy which has shown early clinical promise
                in
                the treatment and prevention of Hand-Foot Syndrome (HFS), a common,
                often
                dose-limiting and potentially life-threatening complication of several
                drug regimens, commonly used in the treatment of patients with breast,
                colon, and other cancers.  HFS, also known as palmar-plantar
                erythrodysesthesia syndrome (PPES), is commonly seen in patients
                receiving
                capecitabine (XelodaTM) and has been associated with other
                fluoropyrimidines (5-FU) and anthracyclines. In addition, HFS is
                being
                seen in patients receiving some of the newer tyrosine kinase class
                of
                therapies sorafenib (NexavarTM). Incidence of HFS can be as high as 50% in
                patients receiving initial chemotherapy with higher dose regimens
                of
                capecitabine.




To
      date,
      we have not received approval for the sale of any drug candidates in any market
      and, therefore, have not generated any revenues from our drug candidates. The
      successful development of our product candidates is highly uncertain. Product
      development costs and timelines can vary significantly for each product
      candidate and are difficult to accurately predict. Various laws and regulations
      also govern or influence the manufacturing, safety, labeling, storage, record
      keeping and marketing of each product. The lengthy process of seeking these
      approvals, and the subsequent compliance with applicable statutes and
      regulations, require the expenditure of substantial resources. Any failure
      by us
      to obtain, or any delay in obtaining, regulatory approvals could materially
      adversely affect our business.




9





Developing
      pharmaceutical products is a lengthy and very expensive process. Assuming we
      do
      not encounter any unforeseen safety issues during the course of developing
      our
      product candidates, we do not expect to complete the development of a product
      candidate until approximately 2007 for the treatment of leishmaniasis, 2009
      for XyfidTM, and 2010
      for oncology indications of VQD-002 and then 2011for oncology indications of LenoctaTM, if ever.
      In addition, as we continue the development of our product candidates, our
      research and development expenses will further increase. To the extent we are
      successful in acquiring additional product candidates for our development
      pipeline, our need to finance further research and development will continue
      to
      increase. Accordingly, our success depends not only on the safety and efficacy
      of our product candidates, but also on our ability to finance the development
      of
      these product candidates. Our major sources of working capital have been
      proceeds from various private financings, primarily private sales of our common
      stock and other equity securities.





Research
      and development expenses consist primarily of salaries and related personnel
      costs, fees paid to consultants and outside service providers for clinical
      development, legal expenses resulting from intellectual property protection,
      business development and organizational affairs and other expenses relating
      to
      the acquiring, design, development, testing, and enhancement of our product
      candidates, including milestone payments for licensed technology. We expense
      our
      research and development costs as they are incurred.




**Results
      of Operations - For the Three Months Ended March 31, 2007 vs. March 31, 2006**





**Continuing
      Operations:**





The
      Company has had no revenues from its continuing operations through March 31,
      2007.





Research
      and development, (“R&D”), expenses for the three months ended March 31, 2007
      were $1,368,811 as compared to $289,646 during the three months ended March
      31,
      2006. R&D consists of clinical development costs, milestone license fees,
      maintenance fees paid to our licensing institutions, outside manufacturing
      costs, outside clinical research organization costs, in addition to regulatory
      and patent filing costs associated to our two oncology compounds LenoctaTM and
      VQD-002 currently in clinical trials, in addition to the license acquisition
      costs of XyfidTM
in
      March 2007 .
      The
      increase in R&D expenses for the three months ended March 31, 2007 is
      primarily attributed to the license acquisition for XyfidTM of approximately
      $435,000, which consists of license fees, patent costs, stock options issued,
      finder’s fee, and diligence analysis costs. The Company also incurred clinical
      development costs for its oncology drug candidate’s VQD-002 of approximately
      $478,000 and LenoctaTM
      of approximately $457,000 .
      Our
      R&D increase for the first quarter 2007 also consists of outside regulatory
      and legal fees of approximately $137,000, employee costs of approximately
      $155,000, outside clinical research organization costs of approximately $376,000
      and outside manufacturing costs of approximately $13,000, which have been
      allocated to each of our three pharmaceutical product candidates. For the
      remainder of the year, and going forward, we expect R&D spending related to
      our existing product candidates LenoctaTM, VQD-002
      and XyfidTM to increase as we expand our clinical trials.





Selling,
      general and administrative (“SG&A”) expenses for the three months ended
      March 31, 2007 were $911,344 as compared to $767,941 during the three months
      ended March 31, 2006. This increase in SG&A expenses was due in part to the
      impact of expensing employee and director stock options in accordance with
      SFAS
      123R of approximately $222,000, additional spending on conference expenses,
      increased travel expenses for new business development opportunities and higher
      administrative expenses associated with having more employees including our
      Chief Scientific Officer hired in February 2007, our Vice President of Clinical
      Operations and Regulatory Affairs hired in October 2006, in addition to other
      related employee costs such as increased insurance, and employer payroll taxes
      and increased rent expense as a result of expanding our leased corporate
      headquarters facility in Basking Ridge, New Jersey in November 2006.





Depreciation
      expense for the three months ended March 31, 2007 were $2,307 as compared to
      $1,414 during the three months ended March 31, 2006. This increase was primarily
      related to the fixed asset purchases for office and computer equipment for
      our
      leased corporate headquarters facility, in Basking Ridge, New Jersey.





Interest
      income, net of interest expense for the three months ended March 31, 2007 was
      $25,684 as compared to $47,031 for the three months ended March 31, 2006.
      Interest income received during the three months ended March 31, 2007 was
      approximately $28,000, which was offset by interest expense of approximately
      $3,000 for the repayment of the final one third amount of debt owed, of
      approximately $189,000 to Paramount BioSciences, LLC, which was assumed as
      part
      of the October 2005 acquisition of Greenwich Therapeutics.





Our
      loss
      from continuing operations for the three months ended March 31, 2007 was
      $2,256,778 as compared to $1,011,970 for the three months ended March 31, 2006.
      The increased loss from continuing operations for the three months ended March
      31, 2007 as compared to the three months ended March 31, 2006 was attributable
      to higher SG&A expenses, due in part to the impact of expensing employee and
      director stock options of approximately $222,000 in accordance with SFAS 123R,
      additional spending on conference expenses, increased travel expenses for new
      business development opportunities and higher administrative expenses associated
      with having more employees which include the Chief Scientific Officer hired
      in
      February 2007, the Vice President of Clinical Operations and Regulatory Affairs
      hired in October 2006, in addition to other related employee costs such as
      increased insurance, and employer payroll taxes and increased rent expense
      for
      the expansion of space for our leased corporate headquarter facility in Basking
      Ridge, New Jersey. Increased R&D expenses also contributed to the higher
      loss from continuing operations for the three months ended March 31,
      2007 as
      compared to the three months ended March
      31, 2006 ,
      which
      were related to our drug development costs, including, outside clinical research
      organization and manufacturing costs, maintenance and licensing fees provided
      to
      the institutions we licensed LenoctaTM and
      VQD-002 from, in addition to other clinical development costs for the LenoctaTM and
      VQD-002 programs. Additionally, R&D expense increased as a result of
      acquiring the worldwide license to certain patents for XyfidTM in March
      2007. We expect losses to continue in the next year from the costs associated
      with the drug development process related to developing our drug candidates.




10





**Discontinued
      Operations:**





Our
      loss
      from discontinued operations for the three months ended March 31, 2007 was
      $261,475 as compared to $849,777 for the three months ended March 31, 2006.
      The
      decreased loss from discontinued operations for the three months ended March
      31,
      2007 as compared to March 31, 2006 was primarily attributable to increased
      revenues in addition to lower employee costs as a result of reductions in
      headcount in our Monmouth Junction, New Jersey facility in the fourth quarter
      of
      2006.




**Liquidity
      and Capital Resources**





In
      August
      2004, we decided to focus on acquiring technologies for purposes
      of development and commercialization of pharmaceutical drug candidates for
      the
      treatment of oncology and antiviral diseases and disorders for which there
      are
      unmet medical needs. In accordance with this business plan, in October 2005,
      we
      acquired Greenwich Therapeutics, Inc., a privately-held New York-based
      biotechnology company that held exclusive rights to develop and commercialize
      two oncology drug candidates - LenoctaTM ,
      and
      VQD-002. The rights to these two oncology drug candidates are governed by
      license agreements with The Cleveland Clinic Foundation and the University
      of
      South Florida Research Foundation, respectively. As a result of the Company’s
      acquisition of Greenwich Therapeutics, we hold exclusive rights to develop,
      manufacture, use, commercialize, lease, sell and/or sublicense LenoctaTM and
      VQD-002. In March 2007, we acquired license rights to develop and commercialize XyfidTM
an
      adjunctive therapy for a common and serious side effect of cancer chemotherapy.
      Our rights to XyfidTM are governed by a license agreement with Assymetric
      Therapeutics, LLC and Onc Res, Inc., as assigned to us by Fiordland
      Pharmaceuticals, Inc., an entity affiliated with Dr. Rosenwald, who is a
      significant stockholder of our company.





As
      a
      result of acquiring the license rights to LenoctaTM ,
      VQD-002 and XyfidTM, we
      immediately undertook funding their development, which has significantly
      increased our expected cash expenditures and will continue to increase our
      expenditures over the next 12 months and thereafter. The completion of
      development of LenoctaTM, VQD-002
      and XyfidTM ,
      all of
      which are only in early stages of clinical development, is a very lengthy and
      expensive process. Until such development is complete and the FDA (or the
      comparable regulatory authorities of other countries) approves LenoctaTM, VQD-002,
      or XyfidTM for
      sale, we will not be able to sell these products.





Since
      inception, we have incurred an accumulated deficit of $31,058,809 through March
      31, 2007. For the three months ended March 31, 2007, we had losses from
      continuing operations of $2, 256,778,
      and used $1,347,108 in cash from continuing operating activities. As of March
      31, 2007, we had a working capital deficiency of $666,723 and cash and cash
      equivalents of $1,141,227. Management expects our losses to increase over the
      next several years, due to the expansion of its drug development business,
      costs
      associated with the clinical development of LenoctaTM, VQD-002
      and XyfidTM .
      These
      matters raise substantial doubt about our ability to continue as a going
      concern.





Management
      anticipates that the Company’s capital resources will be adequate to fund its
      operations into the third quarter of 2007, which is based upon our ability
      to
      complete our proposed sale of our Chiral Quest subsidiary to CQAC for aggregate
      gross proceeds of $1,700,000 during the second quarter of 2007. In addition,
      CQAC will assume the current liabilities of Chiral Quest in an amount up to
      $1,300,000. The Company estimates that the net proceeds to be received from
      the
      sale of Chiral Quest will be $1,528,000, based upon the payments of retention
      bonuses to its employees of approximately $122,000 and legal and accounting
      fees
      of approximately $50,000. The completion of the sale is predicated upon the
      approval of the purchase agreement by the Company’s shareholders at the upcoming
      annual meeting, as well as other customary closing conditions and management
      cannot assure that the sale will be completed and that the consideration from
      the sale will be received. See Note 5.





Additional
      financing will be required during 2007 in order to continue to fund continuing
      operations. The other most likely sources of additional financing include the
      private sale of the Company’s equity or debt securities, or bridge loans to the
      Company from third party lenders. However, changes may occur that would consume
      available capital resources before that time. The Company’s working capital
      requirements will depend upon numerous factors, which include, the progress
      of
      its drug development and clinical programs, including associated costs relating
      to milestone payments, maintenance and license fees, manufacturing costs, patent
      costs, regulatory approvals, and the hiring of additional employees.




11





Our
      net
      cash used in continuing operating activities for the three months ended March
      31, 2007 was $1,347,108. Our net cash used in operating activities primarily
      resulted from a net loss of $2,518,253 offset by a loss from discontinued
      operations of $261,475, non-cash items consisting of the impact of expensing
      employee and director stock options in accordance with SFAS 123R of $221,771,
      the impact of expensing scientific advisory board member consultants’ options
      and non-employee finder’s fee options related to the license acquisition of XyfidTM in
      accordance with Emerging Issues Task Force (“EITF”) 96-18 for $53,178, and
      depreciation of $2,307.  Other uses of cash in continuing operating
      activities include a decrease in prepaid clinical research organization costs
      of
      $17,215 attributed to our two oncology compounds' development, offset by an
      increase in other assets of $100,907. Additional increases in cash from
      continuing operations included an increase in accounts payable of $759,403
      offset by a decrease of accrued expenses of $43,297, which was attributed to
      clinical development costs, legal, accounting fees, in addition to accrued
      compensation.





Our
      net
      cash used in continuing investing activities for the three months ended March
      31, 2007 totaled $2,277, which resulted from capital expenditures which were
      attributable to the purchases of computer and office equipment for the Basking
      Ridge, New Jersey facility.





Our
      net
      cash used in continuing financing activities for the three months ended March
      31, 2007 resulted in a partial repayment of debt for $75,000 owed to Paramount
      BioSciences, LLC, with an outstanding debt balance of $189,623 to be paid in
      the
      first half of 2007, which was attributable to the acquisition of Greenwich
      Therapeutics, Inc. in 2005.





As
      part
      of our plan for additional employees, we anticipate hiring additional full-time
      employees in the medical, clinical and finance functions. In addition, we intend
      to and will continue to use senior advisors, consultants, clinical research
      organizations and third parties to perform certain aspects of our product’s
      development, manufacturing, clinical and preclinical development, and regulatory
      and quality assurance functions.





At
      our
      current and desired pace of clinical development of our two products, currently
      in Phase I/IIa clinical trials, over the next 12 months we expect to spend
      approximately $6.0 million on clinical trials and research and development
      (including milestone payments that we expect to be triggered under the license
      agreements relating to our product candidates, maintenance fees payments that
      we
      are obligated to pay to the institutions we licensed our two oncology compounds
      from, salaries and consulting fees, pre-clinical and laboratory studies),
      approximately $130,000 on facilities, rent and other facilities costs, and
      approximately $2.7 million on general corporate and working capital.
      Additionally, we have an outstanding
      debt balance of $189,623 and approximately $19,000 of accrued interest through
      March 31, 2007, payable to Paramount. The Company plans to satisfy the final
      portion of debt and accrued interest by the end of the first half of 2007.





Our
      working capital requirements will depend upon numerous factors. For example,
      with respect to our drug development business, our working capital requirements
      will depend on, among other factors, the progress of our drug development and
      clinical programs, including associated costs relating to milestone payments,
      license fees, manufacturing costs, regulatory approvals, and the hiring of
      additional employees. Additional
      capital that we may need in the future may not be available on reasonable terms,
      or at all. If adequate financing is not available, we may be required to
      terminate or significantly curtail our operations, or enter into arrangements
      with collaborative partners or others that may require us to relinquish rights
      to certain of our technologies, or potential markets that we would not otherwise
      relinquish.





12




**Item
      3. Controls and Procedures.**





As
      of
      March 31, 2007, the Company carried out an evaluation, under the supervision
      and
      with the participation of the Company’s Chief Executive Officer and Chief
      Financial Officer, of the effectiveness of the design and operation of our
      disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
      of the Securities Exchange Act of 1934, as amended). Based upon that evaluation,
      the Chief Executive Officer and Chief Financial Officer concluded that as of
      that date the Company’s disclosure controls and procedures were effective in
      alerting them on a timely basis to material information required to be disclosed
      in the Company’s periodic reports to the Securities and Exchange Commission.
      During the three months ended March 31, 2007, there was no change in the
      Company’s internal control over financial reporting that materially affected, or
      is reasonably likely to materially affect, the Company’s internal control over
      financial reporting.





13


**PART
      II - OTHER INFORMATION**





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





On
      March
      29, 2007, in connection with the Company’s acquisition of its interest in the
      Amended and Restated License Agreement dated December 29, 2006 (the “License
      Agreement”), among, Onc Res, Inc., Assymetric Therapeutics, LLC, Fiordland and
      Stason Pharmaceuticals, Inc., which the Company previously disclosed in its
      Current Report on Form 8-K filed April 4, 2007, the Company issued to an advisor
      that rendered services in connection with such transaction a five-year warrant
      to purchase 300,000 shares of the Company’s common stock at an exercise price
      equal to $0.50 per share. The right to purchase the shares under the warrant
      vest in three equal installments of 100,000 shares each. The first installment
      is immediately exercisable and the remaining two installments vest upon the
      achievement of certain clinical development and regulatory milestones relating
      to Xyfid, which is the subject of the License Agreement. In issuing the warrant,
      the Company relied upon the exemption from the registration requirements of
      the
      Securities Act of 1933 provided by Section 4(2) thereof since the issuance
      was
      made to one person, no general solicitation was used by the Company and the
      issuance did not otherwise involve a public offering.





**Item
      5. Other Information.**





In
      February 2007, the Company’s Board of Directors adopted an amendment to the
      Company’s 2003 Stock Option Plan increasing the number of shares of common stock
      authorized for issuance thereunder from 6,500,000 to 7,500,000. The amendment
      will be submitted to the Company’s stockholders for ratification at its 2007
      annual meeting, which is scheduled for May 24, 2007.





**Item
      6. Exhibits**





Exhibit
                No.
            
            Description10.1
            
            Letter
                Agreement between VioQuest Pharmaceuticals, Inc. and Edward C. Bradley,
                dated January 31, 2007 (incorporated by reference to Exhibit 10.1
                of the
                Company’s Form 8-K filed February 6, 2007.10.2
            
            Amended
                and Restated License Agreement dated December 29, 2006 (the “License
                Agreement”), among, Onc Res, Inc., Assymetric Therapeutics, LLC, Fiordland
                Pharmaceuticals, Inc. and Stason Pharmaceuticals, Inc., as assigned
                to the
                Company on March 29, 2007.*31.1
            
            Certification
                of Chief Executive Officer31.2
            
            Certification
                of Chief Financial Officer32.1
            
            Certifications
                of Chief Executive and Chief Financial Officer pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002.







*
            Confidentialtreatment has been requested as to certain omitted portions of this
                exhibits pursuant to Rule 24b-2 of the Exchange
                Act.





14





**SIGNATURES**





In
      accordance with the requirements of the Exchange Act of 1934, the registrant
      caused this report to be signed on its behalf by the undersigned, thereunto
      duly
      authorized.


VIOQUEST
                PHARMACEUTICALS, INC.Date:
                May 14, 2007
            By:
            /s/
                Daniel GreenleafDaniel
                Greenleaf
              President
                & Chief Executive Officer


Date:
                    May 14, 2007
              By:
              /s/
                    Brian LenzBrian
                    Lenz
                  Chief
                    Financial Officer




15




**INDEX
      TO EXHIBITS FILED WITH THIS REPORT**




Exhibit
                No.
            
            Description10.2
            
            Amended
                and Restated License Agreement dated December 29, 2006 (the “License
                Agreement”), among, Onc Res, Inc., Assymetric Therapeutics, LLC, Fiordland
                Pharmaceuticals, Inc. and Stason Pharmaceuticals, Inc., as assigned
                to the
                Company on March 29, 2007.*31.1
            
            Certification
                of Chief Executive Officer31.2
            
            Certification
                of Chief Financial Officer32.1
            
            Certifications
                of Chief Executive and Chief Financial Officer pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002.







* Confidential
      treatment has been requested as to certain omitted portions of this exhibits
      pursuant to Rule 24b-2 of the Exchange Act.





16