**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 September 30, 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 oNo
x





As
      of
      November 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 Analysis or
                Plan of Operations
            11Item
                3A(T).
            Controls
                and Procedures
            16**PART
                II**
            **OTHER
                INFORMATION**Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            17Item
                5.
            Other
                Information
            17Item
                6.
            Exhibits
            19Signatures
            19Index
                To Exhibits Filed With This Report
            20




**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 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 SEPTEMBER 30, 2007 (UNAUDITED) AND DECEMBER 31, 2006**


**September 30, 2007**
                **(Unaudited)**
              
              **December 31, 2006**
                **(Note 1A)****ASSETS****CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              2,456,639
              
              $
              2,931,265Prepaid
                  clinical research costs
              
              
              299,960
              
              
              273,172Deferred
                  financing costs
              
              
              536,371
              
              
              -Other
                  current assets
              
              
              111,011
              
              
              168,841Current
                  assets associated with discontinued operations
              
              
              -
              
              
              2,396,435Total
                  Current Assets
              
              
              3,403,981
              
              
              5,769,713**PROPERTY
                  AND EQUIPMENT, NET**
              
              
              37,466
              
              
              43,378**SECURITY
                  DEPOSITS**
              
              
              15,232
              
              
              15,232**TOTAL
                  ASSETS**
              
              $
              3,456,679
              
              $
              5,828,323**LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIENCY)****CURRENT
                  LIABILITIES**Accounts
                  payable
              
              $
              2,032,514
              
              $
              1,031,458Accrued
                  compensation and related taxes
              
              
              299,434
              
              
              245,475Other
                  accrued expenses
              
              
              708,462
              
              
              180,440Note
                  payable - Paramount BioSciences, LLC
              
              
              -
              
              
              264,623Convertible
                  notes, net of unamortized debt discount of $1,223,451
              
              
              2,550,549
              
              
              -Current
                  liabilities associated with discontinued operations
              
              
              -
              
              
              1,265,568**TOTAL
                  LIABILITIES**
              
              
              5,590,959
              
              
              2,987,564**COMMITMENTS
                  AND CONTINGENCIES****STOCKHOLDERS'
                  EQUITY (DEFICIENCY)**Preferred
                  stock; $0.001 par value: 10,000,000 shares authorized, 0 shares
                  issued and
                  outstanding at September 30, 2007 and December 31, 2006
              
              
              -
              
              
              -Common
                  stock; $0.001 par value: 100,000,000 shares authorized at September
                  30,
                  2007 and December 31, 2006, 54,621,119 shares issued and outstanding
                  at
                  September 30, 2007 and December 31, 2006
              
              
              54,621
              
              
              54,621Additional
                  paid-in capital
              
              
              34,223,939
              
              
              31,326,694Accumulated
                  deficit
              
              
              (36,412,840
              )
              
              (28,540,556
              )Total
                  Stockholders' Equity (Deficiency)
              
              
              (2,134,280
              )
              
              2,840,759**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)**
              
              $
              3,456,679
              
              $
              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 AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006**


**(UNAUDITED)**





**For the Three**
              **Months Ended**
              **September 30,**
              **2007**
            
            **For the Three**
              **Months Ended**
              **September 30,**
              **2006**
            
            **For the Nine**
              **Months Ended**
              **September 30,**
              **2007**
            
            **For the Nine**
              **Months Ended**
              **September 30,**
              **2006****OPERATING
                EXPENSES**Research
                and development
            
            $
            1,473,937
            
            $
            273,876
            
            $
            3,793,592
            
            $
            933,599Selling,
                general and administrative
            
            
            1,199,182
            
            
            673,495
            
            
            3,305,232
            
            
            2,348,030Total
                Operating Expenses
            
            
            2,673,119
            
            
            947,371
            
            
            7,098,824
            
            
            3,281,629**LOSS
                FROM OPERATIONS**
            
            
            (2,673,119
            )
            
            (947,371
            )
            
            (7,098,824
            )
            
            (3,281,629
            )**INTEREST
                (EXPENSE) / INCOME, NET**
            
            
            (542,360
            )
            
            36,246
            
            
            (510,285
            )
            
            85,361**LOSS
                FROM CONTINUING OPERATIONS**
            
            
            (3,215,479
            )
            
            (911,125
            )
            
            (7,609,109
            )
            
            (3,196,268
            )**DISCONTINUED
                OPERATIONS**Loss
                from discontinued operations
            
            
            (104,722
            )
            
            (973,892
            )
            
            (701,619
            )
            
            (2,368,847
            )Gain
                on sale of business
            
            
            438,444
            
            
            -
            
            
            438,444
            
            
            -**INCOME
                / (LOSS) FROM DISCONTINUED OPERATIONS**
            
            
            333,722
            
            
            (973,892
            )
            
            (263,175
            )
            
            (2,368,847
            )**NET
                LOSS**
            
            $
            (2,881,757
            )
            $
            (1,885,017
            )
            $
            (7,872,284
            )
            $
            (5,565,115
            )**NET
                INCOME (LOSS) PER COMMON SHARE:****CONTINUING
                OPERATIONS**
            
            $
            (0.07
            )
            $
            (0.02
            )
            $
            (0.17
            )
            $
            (0.08
            )**DISCONTINUED
                OPERATIONS**
            
            
            0.01
            
            
            (0.03
            )
            
            (0.00
            )
            
            (0.07
            )**NET
                LOSS PER SHARE – BASIC AND DILUTED**
            
            $
            (0.06
            )
            $
            (0.05
            )
            $
            (0.17
            )
            $
            (0.15
            )**WEIGHTED
                AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED**
            
            
            46,056,724
            
            
            38,165,124
            
            
            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
      (DEFICIENCY)**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**


**(UNAUDITED)**




TotalStockholders'Common Stock
              
              Additional
              
              Accumulated
              
              EquityShares
              
              Amount
              
              Paid-In Capital
              
              Deficit
              
              (Deficiency)Balance,
                  January 1, 2007
              
              
              54,621,119
              
              $
              54,621
              
              $
              31,326,694
              
              $
              (28,540,556
              )
              $
              2,840,759Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              (7,872,284
              )
              
              (7,872,284
              )Fair
                  value of beneficial conversion feature and warrants issued in conjunction
                  with convertible notes
              
              
              
              
              
              
              
              
              1,963,512
              
              
              
              
              
              1,963,512Stock-based
                  compensation to employees
              
              
              
              
              
              
              
              
              868,016
              
              
              
              
              
              868,016Stock-based
                  compensation to consultants and finder
              
              
              
              
              
              
              
              
              65,717
              
              
              
              
              
              65,717Balance,
                  September 30, 2007
              
              
              54,621,119
              
              $
              54,621
              
              $
              34,223,939
              
              $
              (36,412,840
              )
              $
              (2,134,280
              )


See
      accompanying notes to condensed consolidated financial
      statements.


3


**VIOQUEST
      PHARMACEUTICALS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006**


**(UNAUDITED)**


**For the Nine**
                **Months Ended**
                **September 30, 2007**
              
              **For the Nine**
                **Months Ended**
                **September 30, 2006****CASH
                  FLOWS FROM OPERATING ACTIVITIES:**Net
                  loss
              
              $
              (7,872,284
              )
              $
              (5,565,115
              )Loss
                  from discontinued operations
              
              
              263,175
              
              
              2,368,847Loss
                  from continuing operations
              
              
              (7,609,109
              )
              
              (3,196,268
              )Adjustments
                  to reconcile loss from continuing operations to net cash used in
                  continuing operating activities:Depreciation
              
              
              6,499
              
              
              3,804Stock-based
                  compensation to employees
              
              
              830,021
              
              
              589,673Stock-based
                  compensation to consultants and finder
              
              
              62,632
              
              
              33,119Amortization
                  of debt discount and deferred financing fees
              
              
              562,986
              
              
              -Changes
                  in operating assets and liabilities:Prepaid
                  clinical research costs
              
              
              (26,788
              )
              
              (180,238
              )Other
                  assets
              
              
              57,830
              
              
              (79,109
              )Accounts
                  payable
              
              
              1,001,056
              
              
              336,967Accrued
                  expenses
              
              
              581,981
              
              
              86,014Net
                  Cash Used in Continuing Operating Activities
              
              
              (4,532,892
              )
              
              (2,406,038
              )Discontinued
                  Operating Activities:Gain
                  on sale of business
              
              
              (438,444
              )
              
              -Cash
                  used in discontinued operating activities
              
              
              (348,809
              )
              
              (2,633,511
              )Net
                  Cash Used in Operating Activities
              
              
              (5,320,145
              )
              
              (5,039,549
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES:**Payments
                  for purchased equipment
              
              
              (5,127
              )
              
              (14,987
              )Net
                  Cash Used in Continuing Investing Activities
              
              
              (5,127
              )
              
              (14,987
              )Discontinued
                  Investing Activities:Proceeds
                  from sale of business
              
              
              1,727,263
              
              
              -Other
                  cash used in discontinued investing activities
              
              
              (26,698
              )
              
              (143,734
              )Net
                  Cash Provided By / (Used in) Investing Activities
              
              
              1,695,438
              
              
              (158,721
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES:**Debt
                  activity:Proceeds
                  from issuance of convertible notes with warrants, net of cash costs
                  of
                  $285,296
              
              
              3,414,704
              
              
              -Repayment
                  of note payable
              
              
              (264,623
              )
              
              -Net
                  Cash Provided By Continuing Financing Activities
              
              
              3,150,081
              
              
              -**NET
                  DECREASE IN CASH AND CASH EQUIVALENTS**
              
              
              (474,626
              )
              
              (5,198,270
              )**CASH
                  AND CASH EQUIVALENTS – BEGINNING OF PERIOD**
              
              
              2,931,265
              
              
              6,021,399**CASH
                  AND CASH EQUIVALENTS – END OF PERIOD**
              
              $
              2,456,639
              
              $
              823,129**Supplemental
                  Schedule of Non-Cash Investing and Financing
                  Activities:**Value
                  of warrants issued to the placement agent in connection with issuances
                  of
                  convertible notes
              
              $
              429,866
              
              $
              -Value
                  of beneficial conversion feature related to convertible
                  notes
              
              $
              803,823
              
              $
              -





See
      accompanying notes to condensed consolidated financial
      statements.


4




**VIOQUEST
        PHARMACEUTICALS, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 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 current and former subsidiaries. All significant
      intercompany accounts and transactions have been eliminated in consolidation.
      The functional currency of Chiral Quest, Ltd., Jiashan, China, formerly a
      wholly-owned, discontinued subsidiary of the Company, was the United States
      Dollar. As such, all transaction gains and losses were 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 included 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. On July 16, 2007, the Company
      completed the sale of Chiral Quest to Chiral Quest Acquisition Corp. (“CQAC”)
      for total cash consideration of approximately $1,700,000. As a result of this
      transaction, the Company reported a gain of $438,444, which is included in
      its
      loss from discontinued operations for the three and nine months ended September
      30, 2007. 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. See Note 2 for a complete discussion on discontinued
      operations.





The
      consolidated balance sheets as of December 31, 2006 and the consolidated
      statements of operations for the three and nine months ended September 30,
      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 infectious diseases 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 (Sodium
      Stibogluconate), formerly VQD-001, an inhibitor of specific protein tyrosine
      phosphatases, and VQD-002 (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 the treatment and prevention of Hand-Foot Syndrome
      (“HFS”), a common and serious side effect of cancer chemotherapy. The Company’s
      rights to XyfidTM are governed by a license agreement with Asymmetric
      Therapeutics, LLC and Onc Res, Inc., as assigned to the Company by Fiordland
      Pharmaceuticals, Inc. See Note 3.




***(C)
      Liquidity***





Since
      inception, the Company has incurred an accumulated deficit of $36,412,840
      through September 30, 2007. For the three and nine months ended September 30,
      2007, the Company had losses from continuing operations of $3,215,479 and $7,609,109,
      respectively, and used $4,532,892 of cash in continuing operating activities
      for
      the nine months ended September 30, 2007.




5




**VIOQUEST
          PHARMACEUTICALS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
          30, 2007 (UNAUDITED)**




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 XyfidTM. These matters raise substantial doubt about the ability of
      the Company to continue as a going concern. The
      accompanying condensed consolidated financial statements have been prepared
      assuming that the Company will continue as a going concern. As of September
      30,
      2007, the Company had a working capital deficiency of $2,186,978 and cash and
      cash equivalents of $2,456,639. The Company has incurred negative cash flow
      from
      operating activities 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.





On
      July
      16, 2007 the Company completed the sale of Chiral Quest, which resulted in gross
      proceeds to the Company of approximately $1,700,000, as well as the assumption
      by the purchaser of approximately $807,000 of liabilities. See Note 2. On June
      29, 2007 and July 3, 2007, the Company also received gross proceeds of
      $3,700,000 from the sale of 8% convertible promissory notes. See Note 6. The
      Company’s cash and cash equivalents at September 30, 2007 reflect the remaining
      cash proceeds to the Company from those transactions. Management anticipates
      that the Company’s remaining cash balances will be adequate to fund its
      operations through the end of the fiscal year 2007. However, changes may occur
      that would consume available capital resources before that time.





Management
      also expects that additional financing will be required within the first quarter
      of 2008 to fund continuing operations. The 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. 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 1,112,040 and 5,322, 711
      shares of its common
      stock during
      the three and nine months ended September 30, 2007, respectively.





Generally,
      stock options and warrants granted to employees and non-employee directors
      during the three and nine months ended September 30, 2007 and 2006 vest as
      to
      33% of the shares on each of the first, second and third anniversaries of the
      grant date. The exceptions to the vesting of shares over three years for options
      granted to employees and non-employee directors were stock options to purchase
      150,000 shares of common stock granted to a non-employee director in the first
      quarter of 2006, of which 75,000 vested immediately and 75,000 vested on the
      first anniversary of the grant date, and stock options to purchase 400,000
      shares of common stock granted to four non-employee directors in the third
      quarter of 2007, of which 33% vested immediately and 33% of the shares vest
      on
      each of the first and second anniversaries of the grant date.





Stock
      options and warrants granted to parties other than employees and non-employee
      directors vest over individually agreed upon terms. The Company issued 3,636,711
      warrants that vested immediately to investors and placement agents that
      participated in the June 29, 2007 and July 3, 2007 financings relating to the
      issuance and sale of 8% convertible promissory notes. See Note 6.





During
      July 2007, the Company also issued 100,000 warrants that vested immediately
      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 XyfidTM. During
      September 2007, the Company also issued 3,334 stock options that vested
      immediately to a non-employee scientific advisory board member.




6




**VIOQUEST
          PHARMACEUTICALS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
          30, 2007 (UNAUDITED)**


Following
      the vesting periods, options are exercisable until the earlier of 90 days after
      an employee’s employment with the Company
      terminates or the tenth anniversary of the initial grant, subject to adjustment
      under certain conditions. The
      Company recorded total compensation charges in the three and nine months ended
      September 30, 2007 related to the fair value of continuing and discontinued
      employee and non-employee director stock option grants of $239,524 and $858,819,
      respectively.





The
      Company uses 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”) .
      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
      set forth below, the weighted average fair values of the stock options issued
      at
      the dates of grant in the three and nine months ended September 30, 2007 were
      $0.38 and $0.48, respectively.





The
      table
      below sets forth the key assumptions used in the valuation calculations for
      options granted in the three and nine months ended September 30, 2007 and
      2006:





Three Months Ended
              September 30,
            
            Nine Months Ended
              September 30,2007
            
            2006
            
            2007
            
            2006Term
            
            
            7
                years
            
            
            7
                years
            
            
            7
                years
            
            
            7
                yearsVolatility
            
            
            240-259
            %
            
            217
            %
            
            232-259
            %
            
            210-217
            %Dividend
                yield
            
            
            0.0
            %
            
            0.0
            %
            
            0.0
            %
            
            0.0
            %Risk-free
                interest rate
            
            
            4-5
            %
            
            5
            %
            
            4-5
            %
            
            4.4-5
            %Forfeiture
                rate
            
            
            22
            %
            
            25
            %
            
            22
            %
            
            22-25
            %




The
      following table summarizes information about the Company’s stock options as of
      and for the nine months ended September 30, 2007:





Number of
              Options
            
            Weighted
              Average
              Exercise Price
            
            Weighted Average
              Remaining Contractual
              Life (Years)
            
            Aggregate
              Intrinsic ValueBalance,
                January 1, 2007
            
            
            5,384,807
            
            $
            0.99Granted
            
            
            1,386,000
            
            $
            0.50Exercised
            
            
            -
            
            
            -Forfeited
                or expired
            
            
            (1,229,918
            )
            $
            1.20Outstanding
                at September 30, 2007
            
            
            5,540,889
            
            $
            0.80
            
            
            7.50
            
            
            -Exercisable
                at September 30, 2007
            
            
            2,223,791
            
            $
            0.96
            
            
            7.00
            
            
            -





Upon
      the
      sale of Chiral Quest, all of the unvested options held by Chiral Quest employees
      were forfeited. The expired unvested options have been considered in our
      determination of the forfeiture rate.





As
      of
      September 30, 2007, there was $791,594 of unrecognized compensation costs
      related to stock options. These costs are expected to be recognized over a
      weighted average period of approximately 1.75 years.





As
      of
      September 30, 2007, an aggregate of 1,959,111 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)
      Warrants Issued With Convertible Debt***





The
      Company accounts for the value of warrants and the intrinsic value of beneficial
      conversion rights arising from the issuance of convertible debt instruments
      with
      nondetachable conversion rights that are in-the-money at the commitment date
      pursuant to the consensuses for EITF Issue No. 98-5, EITF Issue No. 00-19 and
      EITF Issue No. 00-27. Such values are determined by allocating an appropriate
      portion of the proceeds received from the debt instruments to the debt and
      warrants based on their relative fair value. The fair value allocated to the
      warrants is recorded as additional paid-in capital and as debt discount, which
      is charged to interest expense over the term of the debt instrument. The
      intrinsic value of the beneficial conversion rights at the commitment date
      may
      also be recorded as additional paid-in capital and debt discount as of that
      date
      or, if the terms of the debt instrument are contingently adjustable, may only
      be
      recorded if a triggering event occurs and the contingency is
      resolved.


7




**VIOQUEST
          PHARMACEUTICALS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
          30, 2007 (UNAUDITED)**


***(F)
      Net 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 to be released based upon the achievement of
      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
      September 30, 2007, there were 34,367,379 potentially dilutive shares excluded
      from the calculation, which was comprised of 20,262,095 warrants, 8,564,395  shares
      held in escrow ,
      and
      5,540,889 stock options. At September 30, 2006, there were 26,852,366 shares
      excluded.





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





As
      explained in Note 1, the Company determined that it would dispose of Chiral
      Quest on September 29, 2006 and accordingly, the operations and assets of Chrial
      Quest have been presented in these financial statements as discontinued
      operations. On July 16, 2007, the Company completed the sale of Chiral Quest
      to
      CQAC for total cash consideration of approximately $1,700,000. As a result
      of
      this transaction, the Company reported a gain of $438,444 in the third quarter
      of 2007, which is included in its loss from discontinued operations for the
      three and nine months ended September 30, 2007.





At
      July
      16, 2007 and December 31, 2006, the total assets of discontinued operations
      was
      $ 1,898,702 and
      $2,396,435 respectively, which consisted of accounts receivable, inventories,
      prepaid expenses, fixed assets, net of accumulated depreciation, patents, net
      of
      accumulated amortization, security deposits and prepaid rent. Total liabilities
      as of July 16, 2007 and December 31, 2006 associated with discontinued
      operations totaled $806,644 and $1,265,568 respectively, which consisted of
      accounts payable, accrued expenses and deferred revenues. The gain on sale
      of
      Chiral Quest was $438,444. Retention bonuses of $106,761 and accrued severance
      of $90,000 paid to certain Chiral Quest employees have been offset against
      the
      gain on sale. Revenues from discontinued operations for the three months ended
      September 30, 2007 were immaterial and for the nine months ended September
      30,
      2007 were $1,484,584 and revenues for the three and nine months ended September
      30, 2006 totaled $857,320 and $1,456,196, respectively. Loss from discontinued
      operations (which excludes the gain on sale of Chiral Quest) for the three
      and
      nine months ended September 30, 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
      $104,722 and $701,619, respectively. Loss from discontinued operations for
      the
      three and nine months ended September 30, 2006, totaled $410,900 and $1,260,677,
      respectively.





On
      July
      16, 2007, the Company entered into a sublease agreement with CQAC that will
      expire on May 30, 2008 to lease its office and laboratory space, which was
      utilized by Chiral Quest before it was sold to CQAC. CQAC, the subtenant, agreed
      to make all payments of base rent and additional rent totaling approximately
      $28,000 per month for a total commitment of $224,000 remaining on the sublease
      agreement payable directly to the landlord. If CQAC were to default on payment
      during the sublease agreement’s term, the Company would be obligated to provide
      payment on behalf of CQAC through the remainder of the original lease term,
      and
      the Company will have the right to cancel and terminate the sublease with CQAC
      upon five days notice to subtenant. As of September 30, 2007, CQAC has fully
      complied with the sublease agreement with the Company.





**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 HFS, a common, often dose-limiting and potentially
      life-threatening complication of several chemotherapy drugs. The Company’s rights
      to
      XyfidTM are governed by a license agreement with Asymmetric Therapeutics, LLC and
      Onc Res, Inc., as assigned to the Company by Fiordland Pharmaceuticals, Inc.,
      an
      entity affiliated with Dr. Lindsay A. Rosenwald, who is a substantial
      stockholder of the Company. 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 five-year warrants 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 warrants 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 recognized
      approximately $50,000 of expense in the first quarter of 2007 when the first
      100,000 warrants vested. 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.


8




**VIOQUEST
          PHARMACEUTICALS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
          30, 2007 (UNAUDITED)**


**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 stock options to purchase 700,000 shares of
      the
      Company’s common stock. The options vest in three equal annual installments,
      commencing in February 2008 and will be exercisable at a price per share equal
      to $0.55. The stock options had an approximate fair value of $363,000 at the
      date of grant based on the Black-Scholes option pricing model, 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** **** **NOTE
      PAYABLE**





On
      October 18, 2005, as a result of the Company’s acquisition of Greenwich
      Therapeutics, Inc. (“Greenwich”), a New York-based biotechnology company, the
      Company assumed outstanding indebtedness of Greenwich of $823,869, all of which
      was payable to Paramount BioSciences, LLC (“Paramount BioSciences”), an
      affiliate of Paramount BioCapital, Inc. (“Paramount”), pursuant to a promissory
      note dated October 17, 2005. Dr. Lindsay A. Rosenwald is the Chairman, CEO
      and
      sole stockholder of Paramount and a substantial stockholder of the Company.
      On
      July 17, 2007, the Company paid the outstanding balance under the promissory
      note.





**NOTE
      6** **** **CONVERTIBLE
      NOTES**





On
      June
      29, 2007 and July 3, 2007, the Company issued and sold a series of 8%
      convertible promissory notes (the “Bridge Notes”) in the aggregate principal
      amount of $3,700,000 with a term of one year from the date of final closing.
      Investors may, at any time during the term, elect to convert all unpaid
      principal plus any accrued but unpaid interest thereon on the Bridge Notes
      into
      shares of the Company’s common stock. In the event that the investors do not
      elect to convert the Bridge Notes, all unpaid principal plus any accrued
      interest automatically convert into the Company’s common stock upon the
      completion of an equity financing or series of related equity financings by
      the
      Company resulting in aggregate gross cash proceeds to the Company of at least
      $7,000,000. If the Bridge Notes and accrued interest are not converted into
      shares of the Company’s common stock, all unpaid principal plus any accrued
      interest shall be due and payable on the first anniversary of the final
      closing.





The
      face
      value of the Bridge Notes issued on June 29, 2007 and July 3, 2007, was
      $2,967,500 and $732,500, respectively. The Company incurred commissions and
      related costs in association with the Bridge Notes of $245,450 and $50,750
      (as
      explained below) for the June 29, 2007 and July 3, 2007 closings, respectively.
      The Company also issued to investors five-year warrants (“Bridge Warrants”) to
      purchase an aggregate of approximately 2,430,000 (1,950,000 and 480,000 for
      the
      June 29, 2007 and July 3, 2007 closings, respectively) shares of the Company’s
      common stock at an exercise price of $0.40 per share, which had a fair value
      of
      $736,935 and $172,301 as of June 29, 2007 and July 3, 2007, respectively. The
      Company allocated proceeds from the sale to the Bridge Warrants of $590,334
      and
      $139,489 as of June 29, 2007 and July 3, 2007, respectively, based on their
      relative fair values to the fair value of the Bridge Notes, which was recorded
      as a discount to the Bridge Notes. Gross proceeds allocated to the Bridge Notes
      were $2,377,166 for the June 29, 2007 issuances, and $593,011 for the July
      3,
      2007 issuances. The discount associated with the value of the warrants will
      be
      amortized to interest expense over the term of the Bridge Notes.





As
      a
      result of the allocation of proceeds to the Bridge Warrants, the Bridge Notes
      contained a Beneficial Conversion Feature (“BCF”) of $590,334 for the June 29,
      2007 closing, and $139,489 for the July 3, 2007 closing, which were attributable
      to an effective conversion price for the Company’s common stock that was less
      than the market values on the dates of issuance. Additional BCF’s are recorded
      as convertible interest is accrued. These amounts are recorded as additional
      debt discount and additional paid-in capital, which reduces the initial carrying
      value of the Bridge Notes. The discount associated with the BCF will also be
      amortized to interest expense over the term of the Bridge
      Notes.


9




**VIOQUEST
          PHARMACEUTICALS, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
          30, 2007 (UNAUDITED)**
  The
          following table summarizes information about the Bridge Notes and debt
          discount
          as of September 30, 2007:





Face
                value of convertible notes
            
            $
            3,700,000Accrued
                but unpaid interest
            
            
            74,000Gross
                value of convertible notes
            
            
            3,774,000Debt
                discount, Bridge Warrants
            
            
            729,823BCF,
                Bridge Warrants
            
            
            729,823BCF,
                convertible interest
            
            
            74,000Less:
                Amortization of debt discount
            
            
            (310,195
            )Unamortized
                debt discount
            
            $
            1,223,451Convertible
                notes, net of unamortized debt discount
            
            
            2,550,549





In
      connection with the Bridge Notes, the Company issued five-year warrants to
      placement agents to purchase an aggregate of 1,202,500 shares of common stock,
      which are exercisable at a price of $0.42 per share. Based on the Black-Scholes
      option pricing model, the warrants had a fair value of $356,425 for the June
      29,
      2007 closing and $73,441 for the July 3, 2007 closing. Additionally, the
      Company incurred commissions of $205,450, a non-accountable expense allowance
      of
      $24,271 to the placement agents and escrow fees of $5,000 for the June 29,
      2007
      closing and commissions of $50,575 for the July 3, 2007 closing. The Company
      engaged Paramount as one of its placements agents. Dr. Lindsay A. Rosenwald
      is
      the Chairman, CEO and sole stockholder of Paramount and a substantial
      stockholder of the Company. Stephen C. Rocamboli, the Company’s chairman, was
      employed by Paramount at the time of the Company’s engagement. Of the total
      consideration provided to the placement agents, the Company issued warrants
      to
      Paramount to purchase 450,000 shares of common stock and paid commissions of
      approximately $119,700. The fair value of the warrants, commissions and fees
      totaling $591,146 for the June 29, 2007 closing and $124,016 for the July 3,
      2007 closing have been recognized as deferred financing costs, which will be
      amortized to interest expense over the term of the Bridge Notes.





The
      following table summarizes information about the deferred financing costs as
      of
      September 30, 2007:





Deferred
                financing costs
            
            $
            715,162Less:
                Accumulated amortization
            
            
            (178,791
            )Deferred
                financing costs, net
            
            $
            536,371





The
      following assumptions were used for the Black-Scholes calculations for the
      warrants related to the Bridge Notes:





Term
            
            
            5
                yearsVolatility
            
            
            240
            %Dividend
                yield
            
            
            0.0
            %Risk-free
                interest rate
            
            
            4.9-5.0
            %




**NOTE
      7 SUBSEQUENT EVENT**




On
        November 14, 2007, the Company and Daniel Greenleaf, the Company’s former
        President and Chief Executive Officer, entered into a Separation and Release
        Agreement (the “Separation Agreement”). Pursuant to the Separation Agreement,
        the parties mutually agreed that Mr. Greenleaf’s employment with the Company
        terminated as of November 9, 2007, and that Mr. Greenleaf resigned from all
        positions as officer and director of the Company. The Separation Agreement
        provides for the following compensation to be paid to Mr. Greenleaf following
        his separation from the Company: (i) Mr. Greenleaf will receive his annualized
        base salary of $360,000 through November 15, 2007; (ii) Mr. Greenleaf will
        receive his annualized base salary of $360,000 for a period of 6 months
        commencing on or about May 10, 2008; (iii) Mr. Greenleaf will receive a lump
        sum
        payment of $70,000 payable on or before March 31, 2008; and (iv) the Company
        will reimburse Mr. Greenleaf for health insurance for a period of up to 12
        months. Under the Separation Agreement, the parties agreed to release each
        other
        from certain legal claims, known or unknown, as of the date of the agreement,
        and the Company also released Mr. Greenleaf from the covenant not to compete
        contained in his employment agreement with the Company dated February 1,
        2005.
 
 On
        November 11, 2007, the Company and Michael D. Becker entered into an Employment
        Agreement (the “Employment Agreement”) pursuant to which Mr. Becker will serve
        as the Company’s President and Chief Executive Officer, effective November 21,
        2007. Mr. Becker was also appointed to the Company’s Board of Directors
        effective as of such date. The Employment Agreement provides for a term of
        4
        years. Under the Employment Agreement, Mr. Becker is entitled to an annualized
        base salary of $358,400, plus cash bonuses based upon the Company receiving
        gross proceeds from the sale of its securities in addition to obtaining certain
        market capitalization milestones.


10




In
      addition, the Employment Agreement provides that the
      Company will grant to Mr. Becker two stock options pursuant to the Company’s
      2003 Stock Option Plan. The first stock option grant will provide Mr. Becker
      with the right to purchase 5,013,343 shares of the Company’s common stock at a
      price equal to the closing sale price of the common stock on November 21, 2007
      (the “Initial Option”). The Initial Option will have a 10-year term and will
      vest in four equal annual installments commencing on the first anniversary
      of
      Mr. Becker’s employment commencement date, or November 21, 2008. The second
      option will provide Mr. Becker with the right to purchase 856,440 shares of
      the
      Company’s common stock at a price equal to the closing sale price of the common
      stock on November 21, 2007 (the “Merger Option” and together with the Initial
      Option, the “Stock Options”). The Merger Option will also have a 10-year term
      and will vest in four equal annual installments commencing on the first
      anniversary of Mr. Becker’s commencement date; however, to the extent vested,
      Mr. Becker is only able to exercise the Merger Option to the extent the
      8,564,395 shares held in escrow in accordance with the terms of our acquisition
      of Greenwich Therapeutics, Inc. are released.


On
        November 12, 2007, the Company appointed Brian Lenz, currently its Chief
        Financial Officer, to serve as its interim Chief Executive Officer until
        the
        effective date of Mr. Becker’s appointment.




**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).***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
                U.S. 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 first half of 2008. 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 allowed 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 solid tumors. In October 2007, we
                completed
                patient enrollment in our Phase I clinical trials. Recently, data
                was
                presented from our Phase I open-label dose escalation trial where
                a total
                of 17 patients were enrolled at the M.D. Anderson center, which were
                comprised of 4 melanoma, 3 colon, 4 pancreas, 1 neuroendocrine, 1
                ovarian,
                2 head and neck adenocarcinoma, 1 head and neck squamous cell and
                1
                mesothelioma. One patient with melanoma achieved stable disease after
                two
                cycles of treatment. Asymptomatic hypokalemia was the only dose limiting
                toxicity (DLT) observed. In addition to reaching the maximum tolerated
                dose (MTD), dose dependent activities were observed in protocol-specified
                surrogate biomarkers in both cellular and humoral immunologic functions.
                Further analysis of the data showed an increase in pharmacodynamic
                activities as demonstrated by an increase in the activities of natural
                killer, CD8 and type II dendritic cells. During the fourth quarter
                of
                2007, we expect to initiate Phase II clinical
                trials.




·
            ***VQD-002
                (Triciribine-Phosphate).***VQD-002,
                a nucleoside, was previously advanced into clinical trials by the
                National
                Cancer Institute in the 1980s and early 1990s, and showed 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 lymphoma 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 allowed
                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. In the second half of 2007, we expect to complete patient
                enrollment in our Phase I clinical trials and expect to initiate
                Phase II
                clinical trials. Recently, the Company provided data from its Phase
                I dose
                escalation study of VQD-002 at the H. Lee Moffitt Cancer Center in
                Tampa,
                FL where 13 patients with advanced solid tumors refractory to standard
                therapy and whose tumors had high-levels of p-Akt were enrolled to
                date
                and 8 patients were evaluable for response. The data showed that
                VQD-002
                was well-tolerated when administered on a weekly schedule. One patient
                with melanoma achieved stable disease for 8 months. No drug related
                toxicities were observed. The study had three dosing cohorts in which
                patients were dosed intravenously weekly over one hour on days 1,
                8 and
                15, every 28 days at doses of 15, 25 and 35 mg/m2.
                At the 35mg/m2 dose, Akt modulation was observed in two out of three
                patients evaluable, and there was a reduction of Akt IHC scores from
                +2 to
                0 and +2 to +1. Additionally, one patient at the 15mg/m2 and one
                patient
                dosed at 25mg/m2 experienced stable disease for three months. Over
                the
                next several months, we expect to initiate Phase II combination clinical
                trials.


11





·
            ***XyfidTM.***XyfidTM
                is a topical, adjunctive therapy which has shown early clinical promise
                in
                the treatment and prevention of Hand-Foot Syndrome, or 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, is commonly seen in patients receiving
                capecitabine (XelodaTM) and has been associated with other
                fluoropyrimidines 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.
                In the first half of 2008, we expect to initiate Phase II clinical
                trials.





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.





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 2008 for the treatment of leishmaniasis, 2010
      for XyfidTM, and 2011
      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 significantly 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 September 30, 2007 vs. September
      30, 2006**





**Continuing
      Operations:**





The
      Company has had no revenues from its continuing operations through September
      30,
      2007.





Research
      and development, or R&D, expenses for the three months ended September 30,
      2007 were $1,473,937 as compared to $273,876 during the three months ended
      September 30, 2006. R&D expense consists of clinical development costs,
      milestone license fees, maintenance fees paid to our licensing institutions,
      outside manufacturing costs, outside clinical research organization costs,
      regulatory and patent filing costs associated with our three oncology compounds, LenoctaTM, VQD-002
      and XyfidTM .
      The
      increase in R&D expenses for the three months ended September 30, 2007 is
      primarily attributable to the increased clinical development costs related
      to
      our oncology drug candidates: VQD-002, Lenocta TM and
      Xyfid TM of
      approximately $720,000, $656,000 and $98,000, respectively. Our R&D expense
      for the third quarter 2007 is primarily composed of outside clinical research
      organization costs of approximately $683,000, outside regulatory and legal
      fees
      of approximately $281,000 and employee costs of approximately $264,000, 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 continue increasing as we expand our clinical trials.





Selling,
      general and administrative, or SG&A, expenses for the three months ended
      September 30, 2007 were $1,199,182 as compared to $673,495 during the three
      months ended September 30, 2006. This increase in SG&A expenses was
      primarily due to an increase in legal fees related to the sale of Chiral Quest
      and the issuance of the Bridge Notes, additional payroll for new employees
      and
      bonus accruals, employee and non-employee director stock option expense in
      accordance with SFAS 123R and increased investor relations
      costs.


12





Interest
      expense, net of interest income for the three months ended September 30, 2007
      was $542,360 as compared to interest income, net of interest expense for the
      three months ended September 30, 2006 of $36,246. Interest expense for the
      three
      months ended September 30, 2007 was primarily composed of interest on the Bridge
      Notes of approximately $563,000, which was offset by interest income of
      approximately $21,000.





Our
      loss
      from continuing operations for the three months ended September 30, 2007 was
      $3,215,479 as compared to $911,125 for the three months ended September 30,
      2006. The increased loss from continuing operations for the three months ended
      September 30, 2007 as compared to the three months ended September 30, 2006
      was
      attributable primarily to increased R&D expenses, which were related to our
      drug development costs, including increased patient enrollment compared to
      the
      three months ended September 30, 2006, increased 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. SG&A expenses also contributed to the increased net loss for the three
      months ended September 30, 2007 as compared to the three months ended September
      30, 2006, primarily due to an increase in legal fees, additional payroll for
      new
      employees and bonus accruals, employee and non-employee director stock option
      expense in accordance with SFAS 123R and increased investor relations
      costs.





**Discontinued
      Operations:**





Our
      income from discontinued operations for the three months ended September 30,
      2007 was $333,722, as compared to a loss of $973,892 for the three months ended
      September 30, 2006. The gain from discontinued operations was due to the sale
      of
      Chiral Quest to Chiral Quest Acquisition Corp. for total cash consideration
      of
      approximately $1,700,000. As a result of this transaction, the Company reported
      a gain on sale of $438,444. The gain was offset by operating expenses of
      approximately $105,000 incurred through the sale date.





**Results
      of Operations – For the Nine Months Ended September 30, 2007 vs. September
      30, 2006**





**Continuing
      Operations:**





The
      Company has had no revenues from its continuing operations through September
      30,
      2007.





R&D
      expenses for the nine months ended September 30, 2007 were $3,793,592 as
      compared to $933,599 during the nine months ended September 30, 2006. R&D
      expense consists of clinical development costs, milestone license fees,
      maintenance fees paid to our licensing institutions, outside manufacturing
      costs, outside clinical research organization costs, 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
      Company incurred clinical development costs for its oncology drug candidates
      VQD-002 of approximately $1,694,000, LenoctaTM
      of approximately $1,539,000 and XyfidTM of approximately $560,000 .
      The
      increase in R&D expenses for the nine months ended September 30, 2007 is
      primarily attributable to the increased clinical development costs related
      to
      our clinical trials and the license acquisition costs for XyfidTM of
      approximately $435,000, which consists of license fees, patent costs, stock
      options issued as part of a finder’s fee, and diligence analysis costs.
      Additionally, the increased R&D expense for the nine months ended September
      30, 2007 is attributable to outside clinical research organization costs of
      approximately $1,230,000, employee costs of approximately $630,000, outside
      regulatory and legal fees of approximately $596,000 and outside manufacturing
      costs of approximately $29,000, 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 continue increasing as we expand our clinical trials.





SG&A
      expenses for the nine months ended September 30, 2007 were $3,305,232 as
      compared to $2,348,030 during the nine months ended September 30, 2006. This
      increase in SG&A expenses was primarily due to an increase in legal fees
      related to the sale of Chiral Quest and the issuance of the Bridge Notes,
      additional payroll for new employees, recruiting fees and bonus accruals,
      employee and non-employee director stock option expense in accordance with
      SFAS
      123R, increased investor relations costs and higher auditing fees.





Interest
      expense, net of interest income for the nine months ended September 30, 2007
      was
      $510,285 as compared Interest income, net of interest expense for the nine
      months ended September 30, 2006 of $85,361. Interest expense for the nine months
      ended September 30, 2007 was primarily composed of interest expense of
      approximately $563,000 for the Bridge Notes and approximately $5,000 for the
      debt owed to Paramount BioSciences, which was repaid on July 17, 2007. Interest
      expense was offset by interest income of approximately $53,000.


13





Our
      loss
      from continuing operations for the nine months ended September 30, 2007 was
      $7,609,109 as compared to $3,196,268 for the nine months ended September 30,
      2006. The increased loss from continuing operations for the nine months ended
      September 30, 2007 as compared to the nine months ended September 30, 2006
      was
      attributable to higher R&D costs related to our drug development efforts,
      including outside clinical research organization and manufacturing costs,
      maintenance and licensing fees provided to the institutions we licensed LenoctaTM and
      VQD-002 from and acquiring the worldwide license to certain patents for XyfidTM in March
      2007, in addition to other clinical development costs for the LenoctaTM, VQD-002
      and Xyfid TM programs. Additionally, SG&A expense increased as a result of legal fees,
      additional payroll for new employees, recruiting fees and bonus accruals,
      employee and non-employee director stock option expense in accordance with
      SFAS
      123R, increased investor relations costs and higher auditing fees.





**Discontinued
      Operations:**





Our
      loss
      from discontinued operations for the nine months ended September 30, 2007 was
      $263,175 as compared to $2,368,847 for the nine months ended September 30,
      2006.
      The decreased loss from discontinued operations for the nine months ended
      September 30, 2007 as compared to September 30, 2006 was primarily attributable
      to the sale of Chiral Quest to Chiral Quest Acquisition Corp. for total cash
      consideration of approximately $1,700,000. As a result of this transaction,
      the
      Company reported a gain on sale of $438,444.




**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 our 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 Asymmetric
      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 $36,412,840 through
      September 30, 2007. For the three and nine months ended September 30, 2007,
      we
      had losses from continuing operations of $3,215,479 and $7,609,109,
      respectively, and used $4,532,892 in cash from continuing operating activities.
      As of September 30, 2007, we had a working capital deficiency of $2,186,978
      and
      cash and cash equivalents of $2,456,639. 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.





We
      anticipate that our capital resources will be adequate to fund our operations
      through the end of the fiscal year 2007. Additional financing will be required
      within the first quarter of 2008 in order to continue to fund continuing
      operations. The other most likely sources of additional financing include the
      private sale of our equity or debt securities. However, changes may occur that
      would consume available capital resources before that time. Our working capital
      requirements will depend upon numerous factors, which include, the progress
      of
      our 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.





Our
      net
      cash used in continuing operating activities for the nine months ended September
      30, 2007 was $4,532,892. Our net cash used in continuing operating activities
      primarily resulted from a net loss of $7,872,284 offset by a loss from
      discontinued operations of $263,175, non-cash items consisting of the impact
      of
      expensing employee and director stock options in accordance with SFAS 123R
      of
      $830,021, 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 $62,632,
      amortization of the discount on our bridge note of 562,986 and depreciation
      of
      $6,499. Other uses of cash in continuing operating activities include a decrease
      in other assets of $57,830, offset by an increase in prepaid clinical research
      organization costs of $26,788 attributed to our three oncology compounds’
development. Additional increases in cash from continuing operations included
      an
      increase in accounts payable of $1,001,056 and accrued expenses of $581,981,
      which was attributed to clinical development costs, professional fees and
      compensation.


14





Our
      net
      cash used in continuing investing activities for the nine months ended September
      30, 2007 totaled $5,127, 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 provided by continuing financing activities for the nine months ended
      September 30, 2007 was $3,150,081, which was primarily attributed to a series
      of
      notes issued to investors for $3,414,704, net of placement agents’ commissions
      and other related costs associated with issuing the such notes, in addition
      to
      the repayment of debt for $264,623 owed to Paramount BioSciences, 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 business development 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 products’ 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 $14.3 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 $159,000 on facilities, rent and other facilities costs, and
      approximately $3.1 million on general corporate and working
      capital.





On
      June
      29, 2007 and July 3, 2007 we issued a series of convertible promissory notes
      resulting in aggregate gross proceeds of $3.7 million. We also issued to
      investors five-year warrants to purchase an aggregate of approximately 2.43
      million shares of the Company’s common stock at an exercise price of $0.40 per
      share. Based upon the Black-Scholes option pricing model, the investor warrants
      are estimated to be valued at approximately $909,000. In connection with the
      offering, we engaged Paramount as one of our placements agents. Dr. Lindsay
      A.
      Rosenwald is the Chairman, CEO and sole stockholder of Paramount and a
      substantial stockholder of the Company. Stephen C. Rocamboli, a director of
      the
      Company, was employed by Paramount at the time of the Company’s engagement. In
      consideration for the placement agents’ services, we paid an aggregate of
      approximately $256,000 in commissions to the placement agents in connection
      with
      the offering, of which $119,700 was paid to Paramount. We also paid to placement
      agents approximately $24,000 as a non-accountable expense allowance. In
      addition, we issued placement agents five-year warrants to purchase an aggregate
      of approximately 1.2 million shares of common stock, of which 450,000 shares
      of
      common stock were issued to Paramount, which are exercisable at a price of
      $0.42
      per share. Based upon the Black-Scholes option pricing model, the placement
      agents’ warrants are estimated to be valued at approximately
      $430,000.





On
      July
      16, 2007, we completed the sale of our discontinued operations Chiral Quest,
      Inc., and received $1.7 million in gross proceeds, of which we recognized
      $197,000 in accrued compensation costs related to a severance agreement and
      retention bonuses payable to certain key employees. Additionally, the purchaser
      assumed liabilities in the aggregate amount of approximately $807,000 pursuant
      to the purchase agreement.





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.


15


**Item
      3A(T). Controls and Procedures.**





As
      of
      September 30, 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 September 30, 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.


16




**PART
      II – OTHER INFORMATION**





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





The
      Company held a Special Meeting of Stockholders at the Somerset Hills Hotel,
      200
      Liberty Corner Road in Warren, New Jersey on September 12, 2007. The sole
      purpose of the meeting was to consider a proposal to amend the Company’s
      certificate of incorporation to increase the number of shares of common stock
      authorized for issuance from 100 million to 200 million. At the meeting, the
      stockholders approved such amendment. There were 30,195,999 shares cast for
      the
      proposal; 1,023,817 shares cast against the proposal; and 15,896 shares
      abstained.





**Item
      5. Other Information**




*Assignment
      of Chiral Quest
      Lease*





In
      connection with the sale of the Company’s Chiral Quest Subsidiary, on July 16,
      2007, the Company entered into a sublease agreement with Chiral Quest
      Acquisition Corp. (“CQAC”), which purchased Chiral Quest, to lease office and
      laboratory space in Monmouth Junction, New Jersey used in Chiral Quest’s
      business. The sublease agreement provides for a term that will expire on May
      30,
      2008. CQAC agreed to make all payments of base rent and additional rent that
      the
      Company is obligated to pay under its lease agreement for such space. CQAC’s
      total commitment as of July 16, 2007 under the sublease agreement was $224,000,
      or approximately $28,000 per month. If CQAC were to default on payment during
      the sublease agreement’s term, the Company would be obligated to provide payment
      to its landlord on behalf of CQAC through the remainder of the original lease
      term, and the Company will have the right to cancel and terminate the sublease
      with CQAC upon 5 days notice to subtenant. To date, CQAC has fully complied
      with
      the sublease agreement with the Company.


***Separation
        Agreement with Former Chief Executive Officer***
 
 On
        November 14, 2007, the Company and Daniel Greenleaf, the Company’s former
        President & Chief Executive Officer, entered into a Separation and Release
        Agreement (the “Separation Agreement”). Pursuant to the Separation Agreement,
        the parties mutually agreed that Mr. Greenleaf’s employment with the Company
        terminated as of November 9, 2007, and that Mr. Greenleaf resigned from all
        positions as officer and director of the Company. The Separation Agreement
        provides for the following compensation to be paid to Mr. Greenleaf: (i)
        Mr.
        Greenleaf will receive his annualized base salary of $360,000 through November
        15, 2007; (ii) Mr. Greenleaf will receive his annualized base salary of $360,000
        for a period of 6 months commencing on or about May 10, 2008; (iii) Mr.
        Greenleaf will receive a lump sum payment of $70,000 payable on or before
        March
        31, 2008; and (iv) the Company will reimburse Mr. Greenleaf for health insurance
        for a period of up to 12 months. Under the Separation Agreement, the parties
        agreed to release each other from certain legal claims, known or unknown,
        as of
        the date of the agreement, and the Company also released Mr. Greenleaf from
        the
        covenant not to compete contained in his employment agreement with the Company
        dated February 1, 2005.
 
 ***Appointment
        of President and Chief Executive Officer***
 
 On
        November 11, 2007, the Company and Michael D. Becker entered into an Employment
        Agreement (the “Employment Agreement”) pursuant to which Mr. Becker will serve
        as the Company’s President and Chief Executive Officer, effective November 21,
        2007. Mr. Becker was also appointed to the Company’s Board of Directors
        effective as of such date. The Employment Agreement provides for a term of
        4
        years.
 
 Under
        the
        Employment Agreement, Mr. Becker is entitled to an annualized base salary
        of
        $358,400, plus cash bonuses payable as follows:
 
 ·
              A
                  bonus of $150,000 payable when the Company receives gross proceeds
                  from
                  the sale of its securities in one or a series of related
                  transactions;
  ·
              A
                  bonus of $125,000 payable when the Company’s aggregate market
                  capitalization (determined by multiplying the closing sale price
                  of the
                  Company’s common stock by the number of shares issues and outstanding at
                  a
                  given time) exceeds $125 million for a period of 15 consecutive
                  trading
                  days.
  ·
              A
                  bonus of $500,000 payable when the Company’s aggregate market
                  capitalization (determined by multiplying the closing sale price
                  of the
                  Company’s common stock by the number of shares issues and outstanding at
                  a
                  given time) exceeds $250 million for a period of 15 consecutive
                  trading
                  days.
  ·
              A
                  bonus of $1,000,000 payable when the Company’s aggregate market
                  capitalization (determined by multiplying the closing sale price
                  of the
                  Company’s common stock by the number of shares issues and outstanding at
                  a
                  given time) exceeds $500 million for a period of 15 consecutive
                  trading
                  days.
  ·
              A
                  bonus of $2,000,000 payable when the Company’s aggregate market
                  capitalization (determined by multiplying the closing sale price
                  of the
                  Company’s common stock by the number of shares issues and outstanding at
                  a
                  given time) exceeds $1 billion for a period of 15 consecutive trading
                  days.
 
 17
  In
        addition, the Employment Agreement provides that the Company will grant to
        Mr.
        Becker two stock options pursuant to the Company’s 2003 Stock Option Plan. The
        first stock option grant will provide Mr. Becker with the right to purchase
        5,013,343 shares of the Company’s common stock at a price equal to the closing
        sale price of the common stock on November 21, 2007 (the “Initial Option”). The
        Initial Option will have a 10-year term and will vest in four equal annual
        installments commencing on the first anniversary of Mr. Becker’s employment
        commencement date, or November 21, 2008. The second option will provide Mr.
        Becker with the right to purchase 856,440 shares of the Company’s common stock
        at a price equal to the closing sale price of the common stock on November
        21,
        2007 (the “Merger Option” and together with the Initial Option, the “Stock
        Options”). The Merger Option will also have a 10-year term and will vest in four
        equal annual installments commencing on the first anniversary of Mr. Becker’s
        commencement date. However, the Merger Option is only exercisable to the
        extent
        that the shares of the Company’s common stock currently held in an escrow
        account in favor of the former stockholders of Greenwich Therapeutics, Inc.
        in
        connection with the Company’s October 2005 acquisition of Greenwich are released
        from escrow. The Employment Agreement further provides that Mr. Becker will
        be
        eligible to receive additional stock options beginning on the second anniversary
        of the agreement, in the discretion of the Board.
  Notwithstanding
        the 4-year term of the Employment Agreement, either party has the right to
        terminate the agreement and Mr. Becker’s employment sooner. In the event the
        Company terminates his employment upon a “change of control” or for a reason
        other than for “cause” or Mr. Becker’s death or disability, or if Mr. Becker
        terminates his employment for “good reason,” then the Company will continue pay
        to Mr. Becker his base salary and will provide health insurance coverage
        for a
        period of 12 months. In addition, the unvested portions of the Stock Options
        that are scheduled to vest on the next anniversary date of Mr. Becker’s
        employment shall accelerate and be deemed vested as of the termination date
        and
        shall remain exercisable for a period of 90 days. However, to the extent
        any
        portion of the Merger Option has not become exercisable because all or a
        portion
        of the Greenwich escrowed shares have not been released from escrow, then
        the
        Merger Option, or any such portion, will be forfeited. Notwithstanding the
        foregoing, if Mr. Becker’s employment is terminated by the Company in connection
        with specified change of control transactions, then all Stock Options shall
        accelerate and be deemed vested as of such termination date.
  If
        the
        Company terminates Mr. Becker’s employment for “cause” or if Mr. Becker
        terminates his employment for a reason other that “good reason,” then the
        Company is only obligated to pay to Mr. Becker his accrued and unpaid base
        salary through the date of termination. If Mr. Becker’s employment is terminated
        as a result of his death or disability, then the Company will also pay to
        Mr.
        Becker or his estate his annualized base salary for a period of 6 months
        and
        will provide health insurance for a period of 12 months from such
        termination.
  The
        term
“cause” under the Employment Agreement means the following conduct or actions
        taken by Mr. Becker: (i) his willful and repeated failure or refusal to perform
        his material duties or obligations; (ii) any willful, intentional or grossly
        negligent act having the effect of injuring, in a material way (whether
        financial or otherwise), the Company’s business or reputation; (iii) willful
        misconduct by in respect of his material duties or obligations; (iv) his
        indictment of any felony involving a crime of moral turpitude; (v) the
        determination by the Company that Mr. Becker engaged in material harassment
        or
        discrimination prohibited by law; (vi) any misappropriation or embezzlement
        of
        the Company’s property; (vii) a breach of the non-solicitation, non-competition,
        invention assignment and confidentiality provisions of the Employment Agreement;
        or (viii) a material breach of any other material provision of the Employment
        Agreement that is not cured within 30 days after written notice thereof is
        given
        by the Company.
  The
        term
“change of control” under the Employment Agreement means any of the following:
        (A) the direct or indirect acquisition by a person in one or a series of
        related
        transactions of Company securities representing more than 50% of its combined
        voting power; (B) a merger, consolidation, reorganization or share exchange
        involving the Company, or the sale of all or substantially all of the Company’s
        assets, unless the beneficial owners of the Company’s securities immediately
        prior to such transaction continue to hold more than 50% of the combined
        voting
        power of the then-outstanding securities.
  The
        term
“good reason” means (1) a material reduction by the Company of Mr. Becker’s
        compensation or benefits; (2) a material reduction or change in Mr. Becker’s
        duties, responsibilities or position; (3) a material breach by the Company
        of
        any material term of the Employment Agreement; or (4) a relocation of the
        principal place of employment by more than 50 miles without Mr. Becker’s
        consent.
  The
        employment Agreement also provides for customary covenants that preclude
        Mr.
        Becker from disclosing the Company’s confidential information, require him to
        assign certain inventions to the Company, restrict his ability to compete
        with
        the Company during his employment and for a 12-month period thereafter, and
        prohibit Mr. Becker from soliciting Company employees to leave the Company’s
        employ during the 12-month period following his employment
        termination.
  Prior
        to
        joining the Company, from December 2002 to November 2007, Mr. Becker, age
        38,
        served as President and Chief Executive Officer and a director of Cytogen
        Corporation, a publicly-held biotechnology company based in Princeton, New
        Jersey. Mr. Becker joined Cytogen in April 2001 and served in
        positions of increasing responsibility, including Chief Executive Officer
        of its
        AxCell Biosciences subsidiary and Vice President, Business Development and
        Industry Relations. Prior to Cytogen, Mr. Becker was employed by Wayne
        Hummer Investments LLC, a Chicago-based regional brokerage firm, from
        July 1996 to April 2001, where he held senior positions as a
        biotechnology analyst, investment executive and portfolio manager in addition
        to
        participating in sales management activities. From October 1998 to
        April 2001, Mr. Becker also served on the board of directors for the
        Chicago Biotech Network, a nonprofit trade association for the biotechnology
        industry in Illinois. Mr. Becker attended DePaul University in Chicago,
        Illinois. In January 2007, Mr. Becker was named Chairman of the
        Biotechnology Council of New Jersey, Inc. Mr. Becker is a member of
        the Governing Body of Biotechnology Industry Organization’s (BIO) Emerging
        Companies Section.
  18
 
 ***Interim
        Appointment of Chief Executive Officer***
 
 On
        November 12, 2007, the Company appointed Brian Lenz, currently its Chief
        Financial Officer, to serve as its interim Chief Executive Officer until
        the
        effective date of Mr. Becker’s appointment.
 
 ***Amendment
        to 2003 Stock Option Plan***
  On
        November 12, 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
        available for issuance thereunder from 7,500,000 to 13,500,000
        shares.
  **Item
        6. Exhibits**





Exhibit No.
            
            Description4.1
            
            Form
                of senior convertible promissory note issued by VioQuest Pharmaceuticals,
                Inc. on June 29, 2007 and July 3, 2007 (incorporated by reference
                to
                Exhibit 4.1 of the Company’s Form 8-K filed July 6, 2007)4.2
            
            Form
                of warrant issued to investors by VioQuest Pharmaceuticals, Inc.
                on June
                29, 2007 and July 3, 2007 (incorporated by reference to Exhibit 4.1
                of the
                Company’s Form 8-K filed July 6, 2007)10.1
            
            Form
                of Note and Warrant Purchase Agreement between VioQuest Pharmaceuticals
                and various investors accepted as of June 29, 2007 and July 3, 2007
                (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed
                July 6, 2007)10.2
            
            Sublease
                dated July 16, 2007 between the Company and Chiral Quest Acquisition
                Corp.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




**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:
                November 14, 2007
            By:
            /s/
                Brian LenzBrian
                Lenz
              Interim
                Chief Executive Officer and Chief
              Financial
                Officer




19


**INDEX
      TO EXHIBITS FILED WITH THIS REPORT**




Exhibit
                No.
            
            Description10.2
            
            Sublease
                dated July 16, 2007 between the Company and Chiral Quest Acquisition
                Corp.31.1
            
            Certification
                of Interim Chief Executive Officer and Chief Financial
                Officer32.1
            
            Certifications
                of Chief Executive and Chief Financial Officer pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002




20