##### 



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-Q
   þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    September 30, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF
    THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number
    000-51169
  ASPREVA PHARMACEUTICALS
    CORPORATION
 (Exact name of registrant as
    specified in its charter)
   British Columbia, Canada

98-0435540(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   1203  4464 Markham Street,
 Victoria, British Columbia,
 Canada V8Z 7X8
 (Address of principal executive office)
  (250) 744-2488
 (Registrants telephone number, including area code)
   þ o
  Rule 12b-2
  þ o o
  Rule 12b-2 o þ




---



##### 



ASPREVA
    PHARMACEUTICALS CORPORATIONFORM 10-Q
    For the Quarterly Period Ended September 30, 2007
  TABLE OF
    CONTENTS
   
 PagePART I  FINANCIAL
    INFORMATIONItem 1.


Financial Statements (unaudited)


3Consolidated Balance Sheets 
    September 30, 2007 and December 31, 2006


3Consolidated Statements of Income 
    Three and Nine-month periods ended September 30, 2007 and
    2006


4Consolidated Statements of Cash Flows 
    Three and Nine-month periods ended September 30, 2007 and
    2006


5Notes to Consolidated Financial Statements


6Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


15Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


27Item 4.


Controls and Procedures


28PART II  OTHER
    INFORMATIONItem 1.


Legal Proceedings


29Item 1A.


Risk Factors


29Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


44Item 3.


Defaults Upon Senior Securities


44Item 4.


Submission of Matters to a Vote of Security
    Holders


44Item 5.


Other Information


44Item 6.


Exhibits


44SIGNATURE


45   2




---



##### 



PART I 
    FINANCIAL INFORMATION
  Item 1.
    FINANCIAL
    STATEMENTS  ASPREVA
    PHARMACEUTICALS CORPORATION
    CONSOLIDATED BALANCE SHEETS
    (In thousands of U.S. dollars)
    (Unaudited)
  September 30,


December 31,2007


2006ASSETSCurrentCash and cash equivalents

$
27,843


$
49,217Restricted cash






731Marketable securities (Note 3)


325,320



210,678Accounts receivable


70,776



57,426Prepaid expenses


505



394Deferred income tax asset


2,750



2,142Foreign currency contracts (Note 8)


1,283



298Total current assets


428,477



320,886Property and equipment, net


4,356



4,736Deferred income tax asset


1,817



1,435TOTAL ASSETS

$
434,650


$
327,057LIABILITIES AND SHAREHOLDERS EQUITYCurrentAccounts payable

$
11,154


$
14,279Income taxes payable


11,258



11,769Accrued liabilities


11,418



8,604Foreign currency contracts (Note 8)


5,900



1,695Unearned royalty advance


6,854



6,559Current portion under capital leases


131



329Current portion of deferred lease inducement


157



130Deferred income tax liability


952



742Total current liabilities


47,824



44,107Long-term portion under capital leases


16



91Long-term portion of deferred lease inducement


308



391Deferred income tax liability


1,065



830Total liabilities


49,213



45,419Commitments and contingencies (Notes 7, 12 and 18)Shareholders equity (Note 6)Common sharesAuthorized: unlimitedIssued and outstanding


151,771



150,815September 30, 2007  35,213,511December 31, 2006  35,159,619Additional paid-in capital


18,999



13,049Retained earnings


216,501



118,625Accumulated other comprehensive loss


(1,834
)


(851
)Total shareholders equity


385,437



281,638TOTAL LIABILITIES AND SHAREHOLDERS EQUITY

$
434,650


$
327,057    3




---



##### 



ASPREVA
    PHARMACEUTICALS CORPORATION
    CONSOLIDATED STATEMENTS OF INCOME
    (In thousands of U.S. dollars, except per share amounts)
    (Unaudited)
  Three Months Ended


Nine Months EndedSeptember 30


September 302007


2006


2007


2006Royalty revenue(Note 2)

$
62,302


$
47,943


$
185,351


$
162,316ExpensesResearch and development (Notes 15 and 16)


8,933



12,357



36,745



34,389Global service fee (Note 17)


20,000







20,000



Marketing, general and administrative (Note 16)


11,204



9,969



30,216



26,83340,137



22,326



86,961



61,222Operating income


22,165



25,617



98,390



101,094Other income (expense)Foreign exchange gain (loss)


(410
)


354



1



1,123Interest and other income


4,554



2,904



11,237



6,526Total other income


4,144



3,258



11,238



7,649Income before income taxes


26,309



28,875



109,628



108,743Income tax expense (Note 9)


2,989



3,475



11,752



10,634Net income

$
23,320


$
25,400


$
97,876


$
98,109Net income per common share(Note 5)Basic

$
0.66


$
0.73


$
2.78


$
2.83Diluted

$
0.65


$
0.71


$
2.74


$
2.73    4




---



##### 



ASPREVA
    PHARMACEUTICALS CORPORATION
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands of U.S. dollars)
    (Unaudited)
  Three Months Ended


Nine Months EndedSeptember 30


September 302007


2006


2007


2006Operating ActivitiesNet income for the period

$
23,320


$
25,400


$
97,876


$
98,109Adjustment to reconcile net income to cash provided by operating
    activities:Depreciation and amortization (Note 15)


308



192



3,681



464Deferred taxes


2,421



1,328



2,031



2,028Stock-based compensation


987



2,830



6,451



6,044Net change in non-cash working capital items related to
    operations:Accounts receivable


(4,651
)


2,553



(13,988
)


(5,100
)Prepaid expenses


164



190



(111
)


(733
)Restricted cash


809



(4
)


731



(44
)Accounts payable


3



(966
)


(2,832
)


1,791Income taxes payable


1,815



2,455



(511
)


8,322Accrued liabilities


1,434



1,109



2,814



2,384Net cash flows from operating activities


26,610



35,087



96,142



113,265Investing ActivitiesPurchases of marketable securities


(105,257
)


(92,380
)


(356,849
)


(246,273
)Redemptions of marketable securities


54,817



51,507



242,540



145,757Purchase of property and equipment


(267
)


(1,316
)


(3,356
)


(1,645
)Net cash flows used in investing activities


(50,707
)


(42,189
)


(117,665
)


(102,161
)Financing ActivitiesIssuance of common shares


187



1,214



421



3,169Payments on capital lease obligations


(69
)


(109
)


(272
)


(328
)Net cash flows from financing activities


118



1,105



149



2,841Net increase (decrease) in cash and cash equivalents


(23,979
)


(5,997
)


(21,374
)


13,945Cash and cash equivalents, beginning of the period


51,822



34,701



49,217



14,759Cash and cash equivalents, end of the period

$
27,843


$
28,704


$
27,843


$
28,704See Note 10 for supplemental cash flow information    5




---



##### 



ASPREVA
    PHARMACEUTICALS CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
  (all tabular
    amounts in thousands of U.S. dollars other than share or per
    share data or unless otherwise stated)
    September 30, 2007
  1.
    Nature of
    Business and Basis of Presentation      Form 10-Q Regulation S-X. Form 10-K
    2.
    Significant
    Accounting Policies  Form 10-K Accounting for
    Uncertainty in Income Taxes  an interpretation of
    FASB Statement No. 109
  Income
    Taxes
  Accounting for
    Income Taxes
  Revenue
    Recognition
   6




---



##### 



ASPREVA
    PHARMACEUTICALS CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Revenue Recognition and/or
      Derivative
    Instruments
    Accounting for Derivative Instruments and
    Hedging Activities
     7




---



##### 



ASPREVA
    PHARMACEUTICALS CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    3.
    Marketable
    Securities  Available
    for sale debt securities
  ApproximateGross


Gross


MarketAccrued


Unrealized


Unrealized


and CarryingCost


Interest


Gains


Losses


ValueSeptember 30, 2007

$
319,967


$
4,122


$
1,441


$
(210
)

$
325,320December 31, 2006

$
208,762


$
1,820


$
153


$
(57
)

$
210,678   4.
    Stock-Based
    Compensation    Three Months Ended


Nine Months EndedSeptember 30


September 302007


2006


2007


2006Expected stock price volatility


70
%


70
%


70
%


70
%Average risk-free interest rate


4
%


4
%


4
%


4
%Expected option life in years


5.0



5.0



5.0



5.0Dividend yield


0
%


0
%


0
%


0
%     Three Months Ended


Nine Months EndedSeptember 30


September 302007


2006


2007


2006Research and development expense

$
(19
)

$
991


$
2,190


$
2,116Marketing, general and administrative expense


1,006



1,839



4,261



3,928Total stock-based compensation

$
987


$
2,830


$
6,451


$
6,044  8




---



##### 



ASPREVA
    PHARMACEUTICALS CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Number ofOptioned


WeightedCommon


AverageShares


Exercise PriceExercisable in Canadian dollarsOutstanding at December 31, 2006


2,011,371


$
17.92Options granted


694,100



23.35Options forfeited


(38,258
)


14.47Options exercised


(13,038
)


5.52Outstanding at March 31, 2007


2,654,175


$
19.45Options granted






Options forfeited


(23,490
)


13.46Options exercised


(24,052
)


7.04Outstanding at June 30, 2007


2,606,633


$
19.62Options granted






Options forfeited


(237,854
)


25.58Options exercised


(16,802
)


11.93Outstanding at September 30, 2007


2,351,977



19.07Exercisable at September 30, 2007


1,043,566


$
15.38     5.
    Net
    Income per Common Share  Earnings per Share
    Three Months Ended


Nine Months EndedSeptember 30


September 302007


2006


2007


2006Weighted average shares outstanding used for basic net income
    per common share


35,201,767



34,890,894



35,185,106



34,650,645Effect of dilutive stock options


494,961



982,404



595,598



1,167,885Effect of dilutive warrants






43,802







105,534Weighted average shares outstanding used for diluted net income
    per common share


35,696,728



35,917,100



35,781,704



35,924,064  9




---



##### 



ASPREVA
    PHARMACEUTICALS CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three Months Ended

Nine Months EndedSeptember 30

September 302007

2006

2007

2006Stock options


1,312,837



2,334,497



882,012



2,334,497   6.
    Shareholders
    Equity  Statement
    of Shareholders Equity
    AccumulatedAdditional


Other





TotalNumber


Common


Paid-In


Comprehensive


Retained


Shareholdersof Shares


Shares


Capital


Income (Loss)


Earnings


EquityBalance, as of December 31, 2006


35,159,619


$
150,815


$
13,049


$
(851
)

$
118,625


$
281,638Shares issued on:Exercise of options


13,038



229



(149
)










80Stock-based compensation expense










2,849











2,849Unrealized gain on derivative financial instruments, net of tax














159







159Reclassification of unrealized gain on derivative financial
    instruments, net of tax














(147
)






(147
)Unrealized gain on marketable securities, net of tax














314







314Net income for the period


















36,414



36,414Balance, as of March 31, 2007


35,172,657


$
151,044


$
15,749


$
(525
)

$
155,039


$
321,307Shares issued on:Exercise of options


24,052



364



(210
)










154Stock-based compensation expense










2,615











2,615Income tax benefit on exercise of stock options










31











31Unrealized gain on derivative financial instruments, net of tax














2,025







2,025Reclassification of unrealized gain on derivative financial
    instruments, net of tax














(93
)






(93
)Unrealized gain on marketable securities, net of tax














461







461Reclassification of unrealized gain on marketable securities,
    net of tax














(44
)






(44
)Net income for the period


















38,142



38,142Balance, as of June 30, 2007


35,196,709


$
151,408


$
18,185


$
1,824


$
193,181


$
364,598Shares issued on:Exercise of options


16,802



363



(176
)










187Stock-based compensation expense










987











987Income tax benefit on exercise of stock options










3











3Unrealized loss on derivative financial instruments, net of tax














(3,643
)






(3,643
)Reclassification of unrealized gain on derivative financial
    instruments, net of tax














(269
)






(269
)Unrealized gain on marketable securities, net of tax














775







775Reclassification of unrealized gain on marketable securities,
    net of tax














(521
)






(521
)Net income for the period


















23,320



23,320Balance, as of September 30, 2007


35,213,511


$
151,771


$
18,999


$
(1,834
)

$
216,501


$
385,437  10




---



##### 



ASPREVA
    PHARMACEUTICALS CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Comprehensive
    Income
    7.
    Contractual
    Obligations and Commitments  follow-up
    8.
    Derivative
    Financial Instruments    AverageTotal Notional

SettlementType of Hedge

Currency Exchanged

Settlement dates

Amount

AmountForward Contract

Sell USD buy CAD

October 2007  September 2008

7,162 USD


0.9053Forward Contract

Sell USD buy GBP

October 2007  September 2008

3,118 USD


1.9673Forward Contract

Sell CHF buy GBP

November 2007  August 2008

1,010 CHF


2.3677Forward Contract

Sell CHF buy CAD

November 2007  August 2008

2,530 CHF


1.0986Forward Contract

Sell USD buy Euro

October 2007  December 2007

408 USD


1.3091Forward Contract

Sell CHF buy Euro

November 2007

140 CHF


1.5967Fair Value  dual purpose

Sell CHF buy USD

November 2007

60,629 CHF


1.2013Cash Flow  dual purpose

Sell CHF buy USD

February 2008  August 2008

126,736 CHF


1.1955NARC

Sell USD buy CHF

November 2007  February 2008

55,373 USD


0.8446NARC

Sell Euro buy CHF

August 2007  November 2007

10,677 Euro


0.6068      11




---



##### 



ASPREVA
    PHARMACEUTICALS CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  9.
    Income
    Taxes          10.
    Supplemental
    Cash Flow    Three Months Ended


Nine Months EndedSeptember 30


September 302007


2006


2007


2006Income taxes paid

$
1,028


$



$
13,023


$
269Interest paid


29



11



54



32Amortization of leasehold inducements


22



17



56



78   11.
    Related
    Party Transactions    12.
    Contingencies     12




---



##### 



ASPREVA
    PHARMACEUTICALS CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  13.
    Comparative
    Figures    14.
    Recent
    Accounting Pronouncements  Fair Value
    Measurements
  The Fair Value Option for
    Financial Assets and Financial Liabilities
  No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or
    Services to Be Used in Future Research and Development
    Activities, EITF 07-3. EITF 07-3 EITF 07-3
  15.
    Impairment
    of Long-Lived Asset    16.
    Restructuring    17.
    Global
    Service Fee   13




---



##### 



ASPREVA
    PHARMACEUTICALS CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  18.
    Subsequent
    Event         14




---



##### 



ITEM 2.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K
  Forward-Looking
    Statements
  The information in this discussion contains forward-looking
    statements within the meaning of Section 27A of the
    Securities Act of 1933 and Section 21E of the Securities
    Exchange Act of 1934
    and/or
    forward-looking information under applicable Canadian provincial
    securities laws (collectively, forward-looking
    statements), which are subject to the safe
    harbor created by those sections. The words
    anticipates, believes,
    estimates, expects, intends,
    may, plans, projects,
    will, would and similar expressions are
    intended to identify forward-looking statements, although not
    all forward-looking statements contain these identifying words.
    The forward-looking statements in this discussion include, but
    are not limited to, statements concerning:
  
    our strategy;
    our future operations;
    our future financial position;
    our future revenues;
    our projected costs;
    prospects, plans and objectives of our management;
    the potential acquisition of Aspreva by Galenica in an all
    cash transaction valued at US$26.00 per outstanding share;
    the approval of the acquisition by our shareholders and the
    Canadian regulatory authorities;
    the expected closing date of the acquisition;
    our expectations regarding our relationship with
    Hoffmann  La Roche Inc. and F. Hoffmann -
    La Roche Ltd, or collectively Roche;
    our expectations regarding the development of CellCept for
    certain autoimmune indications; and
    our expectations with respect to our clinical trials of
    CellCept.  With respect to the forward-looking statements contained in
    this discussion, we have made numerous assumptions regarding,
    among other things:
  
    our ability to complete our clinical trials of CellCept;
    Galenicas ability to finance its acquisition of
    Aspreva;
    the ability of Aspreva and Galenica to satisfy all of the
    closing conditions to complete the acquisition;
    our ability to protect our intellectual property rights and
    to not infringe on the intellectual property rights of
    others;
    our ability to comply with applicable governmental
    regulations and standards;
    our ability to succeed at establishing a successful
    commercialization program for CellCept in any indication for
    which it may be approved; and
    other assumptions set forth in Part II, Item 1A
    Risk Factors in this Quarterly Report on
    Form 10-Q. 15




---



##### 



We may not actually achieve the plans, intentions, or
    expectations disclosed in our forward-looking statements or the
    underlying assumptions thereto, and you should not place undue
    reliance on our forward-looking statements. These
    forward-looking statements involve risks and uncertainties that
    could cause our actual results to differ materially from the
    plans, intentions and expectations disclosed in the
    forward-looking statements and underlying assumptions,
    including, without limitation, those set forth in Part II,
    Item 1A Risk Factors in this Quarterly Report
    on
    Form 10-Q.
    Our forward-looking statements do not reflect the potential
    impact of any future acquisitions, mergers, dispositions, joint
    ventures or investments we may make. We do not assume any
    obligation to update any forward-looking statements, other than
    as required by applicable law.
  Overview
        2 3
  Collaborative
    Agreements
     16




---



##### 



Clinical
    Development Programs
    Lupus
    Nephritis
     17




---



##### 



Clinical
    and Regulatory Progress
        Pemphigus
    Vulgaris
    Clinical
    and Regulatory Progress
    Preliminary
    Studies
    Commercialization
   18




---



##### 



Critical
    Accounting Policies and Significant Judgments and
    Estimates
    Form 10-K
  Revenue
    Recognition
  Revenue Recognition and/or
    and/or
   19




---



##### 



Stock-Based
    Compensation
    Share-based Payment
        Three Months Ended


Nine Months EndedSeptember 30


September 302007


2006


2007


2006(In thousands)Research and development expense

$
(19
)

$
991


$
2,190


$
2,116Marketing, general and administrative expense


1,006



1,839



4,261



3,928Total stock-based compensation

$
987


$
2,830


$
6,451


$
6,044   Clinical
    Trial Accounting
     20




---



##### 



Income
    Taxes
            Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement No. 109
  Derivative
    Instruments
    Accounting for Derivative Instruments
    and Hedging Activities
  Results
    of Operations
    Royalty
    Revenue
   21




---



##### 



September 30,


December 31,


March 31,


June 30,


September 30,2006


2006


2007


2007


2007(In millions of U.S. dollars)Initial quarterly payment less collar

$
47.1


$
50.0


$
54.5


$
59.8


$
59.5Reconciliation amount


0.8



2.5



4.8



4.0



2.8Total royalty revenue

$
47.9


$
52.5


$
59.3


$
63.8


$
62.3       Research
    and Development Expenses
     22




---



##### 



For the NineAnnual


Annual


Annual


Months Ended


Total from InceptionTotal


Total


Total


September 30,


to September 302004


2005


2006


2006


2007


2007(In millions of U.S. dollars)Lupus nephritis

$
4.9


$
11.9


$
23.9


$
15.5


$
20.5


$
61.3Myasthenia gravis


2.2



11.3



12.0



9.1



1.9



27.8Pemphigus vulgaris


1.3



3.3



3.4



2.5



2.4



10.8Other






0.7



3.2



2.1



6.9



10.8Clinical development expenditures


8.4



27.2



42.5



29.2



31.7



110.7Business development expenditures


1.7



3.0



5.5



5.2



5.0



15.5Total

$
10.1


$
30.2


$
48.0


$
34.4


$
36.7


$
126.2             Global
    Service Fee
    Marketing,
    General and Administrative Expenses
   23




---



##### 



Foreign
    Exchange Gain (Loss)
      Interest
    and Other Income
      Income
    Taxes
        Liquidity
    and Capital Resources
  Sources
    of Liquidity
   24




---



##### 



Cash
    Flows
  Operating
    activities
      Investing
    activities
      Financing
    activities
     25




---



##### 



Hedging
    Activities
      Contractual
    Obligations and Commitments
    follow-up
  Credit
    Facilities
    Off-Balance
    Sheet Arrangements
    Related
    Party Transactions
    Recent
    Accounting Pronouncements
  Fair Value
    Measurements
  The Fair Value Option for
    Financial Assets and Financial Liabilities
 26




---



##### 



No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or
    Services to Be Used in Future Research and Development
    Activities, EITF 07-3. EITF 07-3 EITF 07-3
  ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Market
    Risks
      Interest
    Rate Risk
    Foreign
    Currency Exchange and Foreign Economic Conditions Risk
        Counterparties
    Credit Risks
   27




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ITEM 4.
    CONTROLS
    AND PROCEDURES  Evaluation
    of disclosure controls and procedures
  Rule 13a-15(e))
  Rule 13a-15(e))
  Changes
    in internal controls
   28




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PART II 
    OTHER INFORMATION
  ITEM 1.
    LEGAL
    PROCEEDINGS    ITEM 1A.
    RISK
    FACTORS  Risks
    Related to the Proposed Arrangement with Galenica
  and/or
  If the
    proposed Arrangement is not completed, we will have incurred
    substantial costs that will adversely affect our financial
    results and operations and our share price.
    Provisions
    of the Combination Agreement may deter alternate business
    combinations that could result in greater value to our
    shareholders.
     29




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The
    Combination Agreement contains provisions that prevent us from
    taking certain actions and might prevent us from taking actions
    we would otherwise pursue.
    
    make or commit to make any capital expenditures over a specified
    dollar amount;
    incur any material indebtedness for borrowed money other than in
    the ordinary course and not to exceed a specified dollar
    amount; or
    make any material change in conduct of our business or enter
    into any transaction outside the ordinary course of business and
    consistent with past practice.    We
    might lose key personnel due to uncertainty created by the
    proposed Arrangement.
    Risks
    Related to Our Business
  We
    anticipate that substantially all of our revenue for the
    foreseeable future will be from royalties based on sales of
    CellCept and we may not be able to sustain our
    profitability.
    
    lower than expected revenues on commercial sales of CellCept;
    higher than expected operating expenses as we further develop
    CellCept for autoimmune indications, seek additional
    collaborations and operate as a public company;
    higher than expected levels of marketing expenses and the
    expenses of potentially launching CellCept and any future
    products for our targeted indications; and
    fluctuations in currency exchange rates.    If we
    and Roche are unable to successfully manage our collaboration,
    the development and potential commercialization of CellCept for
    autoimmune indications may be delayed or
    prevented.
   30




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If we
    do not satisfy our obligations under the Roche agreement or if
    the agreement is terminated we may be forced to limit or cease
    our operations.
    and/or
  If
    Roche does not manufacture, distribute, price or sell CellCept
    at levels which generate sufficient revenue for us to operate,
    we may have to limit or cease our operations.
      
    Roche may fail to comply with FDA-mandated current good
    manufacturing practices or similar regulations in other
    jurisdictions resulting in mandated production halts or
    limitations;
    Roche may experience manufacturing quality or control issues
    which halt or limit CellCept production;
    a manufacturing plant may be closed as a result of a natural
    disaster or work stoppage;
    Roche may experience short or long-term supply problems, or
    problems distributing CellCept, including difficulties importing
    or exporting supplies or products;
    Roche may decrease its efforts to market and promote CellCept
    for the transplant indications thus lowering the visibility of
    CellCept in the market; and
    Roche may set a low price for CellCept or give discounts or
    rebates that effectively lower the price of CellCept, which in
    either case could reduce our revenues. 31




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The
    expiration of Roches patents covering CellCept may reduce
    our revenue as competitors may seek to sell generic versions of
    CellCept.
      We may
    incur significant liability if it is determined that we are
    promoting the off-label use of drugs or are
    otherwise found in violation of federal and state regulations in
    the United States or elsewhere.
       32




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If
    CellCept and any future products do not gain meaningful market
    acceptance we are not likely to generate significant revenues or
    sustain profitability.
    
    acceptance by physicians and patients of each product as safe
    and effective;
    potential advantages over existing or alternative therapies,
    including cost;
    actual or perceived safety of similar classes of products;
    relative convenience and ease of administration;
    reimbursement policies of government and third-party payors;
    effectiveness of our sales, marketing and medical education
    efforts; and
    scope of the product label approved by the FDA and other
    regulatory agencies.    Any
    failure or delay in obtaining additional capital may curtail the
    development or commercialization of CellCept or any future
    products.
    
    our ability to develop and obtain regulatory approval for
    CellCept and any future products in our targeted indications;
    our ability to establish marketing and sales capabilities and
    the costs of launching CellCept and any future products for our
    targeted indications;
    the extent of costs associated with protecting and expanding our
    patent and other intellectual property rights;
    market acceptance of CellCept and any future products for our
    targeted indications;
    future payments, if any, we receive or make under existing or
    future collaborative arrangements;
    the timing of regulatory approvals needed to market products for
    our targeted indications;
    the need to acquire licenses for new products or
    compounds; and
    compliance with rules and regulations implemented by the
    U.S. Securities and Exchange Commission, Canadian
    provincial securities regulatory authorities, the NASDAQ Global
    Select Market and the Toronto Stock Exchange.    If we
    are not successful in establishing additional collaborations we
    will not be able to grow our business.
   33




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The
    terms and conditions of any future collaboration agreements may
    be less favorable than our agreement with Roche.
    
    costs to manufacture, distribute and sell;
    patent terms;
    expenditures by our collaborators on research and development;
    size and difficulty of development programs for potential
    product indications;
    competitive threats; and
    other factors relevant to the development and commercialization
    of such products.    
    our payment of upfront or milestone fees for product rights;
    greater clinical trial expenses;
    longer timelines to approval;
    lower revenue sharing percentages;
    shorter agreement periods; or
    less than global product rights.    If we
    fail to establish sufficient marketing and sales promotion
    capabilities, or enter into successful arrangements with third
    parties to conduct these activities, we may be unable to
    generate sufficient revenue to continue our
    operations.
   34




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If
    product liability lawsuits are successfully brought against us,
    we will incur significant liabilities and may be required to
    limit the commercialization of our product
    candidates.
    If our
    competitors are able to develop and market products that are
    preferred over CellCept or other product candidates that we may
    develop, we may not be able to generate sufficient revenues to
    continue our operations.
        
    are more effective;
    have fewer or less severe adverse side effects;
    have better patient compliance;
    receive better reimbursement terms;
    are accepted by more physicians;
    are more adaptable to various modes of dosing;
    have better distribution channels; 35




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
    are easier to administer; or
    are less expensive.    If we
    are unable to effectively focus on our core activities that are
    expected to drive long-term growth we may be unable to develop
    or commercialize CellCept or any other product candidate
    successfully.
    We may
    engage in future acquisitions that could disrupt our business,
    cause dilution to our stockholders, reduce our financial
    resources and result in increased expenses.
    We
    depend on our executive officers, and if we are not able to
    retain them or recruit additional qualified personnel, we may be
    unable to successfully develop or commercialize
    CellCept.
     36




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We may
    incur losses associated with currency fluctuations and may not
    be able to effectively hedge our exposure.
      Risks
    Related to Regulatory Matters
  We
    will not be able to commercialize our product candidates if our
    clinical trials do not demonstrate safety and efficacy in
    humans.
    
    delays in obtaining regulatory approvals to commence or continue
    a study;
    delays in identifying and reaching agreement on acceptable terms
    with prospective clinical trial sites;
    insufficient quantities of the study drug;
    slower than expected rates of patient recruitment and enrollment
    or the inability to reach full enrollment;
    inconclusive or negative interim results during clinical trials,
    including lack of effectiveness or unforeseen safety issues; 37




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
    death of, or serious adverse effects experienced by, one or more
    patients during a clinical trial even if the reasons are not
    related to the study drug, including the advanced stage of the
    patients disease or medical condition;
    uncertain dosing issues;
    inability to monitor patients adequately during and after
    treatment;
    inability or unwillingness of contract laboratories to follow
    good laboratory practices;
    inability or unwillingness of clinical investigators to follow
    our clinical protocols or good clinical practices
    generally; and
    inability or unwillingness of other third parties to perform
    data collection and analysis in a timely or accurate manner.    
    delay or prevent the commercialization of any product that we
    develop for new indications;
    diminish any competitive advantages;
    reduce or eliminate revenue from the sale of CellCept and any
    future products; and
    adversely affect our ability to attract new collaborators; and,
    impact our staffing levels.      Even
    if CellCept or any future product candidate receives regulatory
    approval, we and our collaborators may still face development
    and regulatory difficulties that may delay or impair future
    sales.
   38




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
    delays in commercialization;
    refusal by the FDA or other similar regulatory agencies to
    review pending applications or supplements to approved
    applications;
    product recalls or seizures;
    warning letters;
    suspension of manufacturing;
    withdrawals of previously approved marketing applications;
    fines and other civil penalties;
    injunctions, suspensions or revocations of marketing licenses;
    refusals to permit products to be imported to or exported from
    the United States; and
    criminal prosecutions.      We may
    experience delays in patient enrollment, which would delay
    regulatory approval of CellCept in autoimmune indications and
    possibly reduce our revenues.
    If
    third-party clinical research organizations do not perform in an
    acceptable and timely manner, our clinical trials could be
    delayed or unsuccessful.
   39




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If
    government and third-party payors fail to provide coverage and
    adequate reimbursement rates for our product candidates, our
    revenues and potential for profitability will be
    reduced.
        Risks
    Related to Intellectual Property
  We may
    incur significant expenses or be prevented from developing or
    commercializing products as a result of an intellectual property
    infringement claim.
     40




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If we
    or our collaborators are unable to adequately protect or enforce
    our intellectual property, our competitive position could be
    impaired.
    
    obtain patents or rights to patents and maintain their validity;
    protect our trade secrets; and
    effectively enforce our proprietary rights or patents against
    infringers.      Our
    stock price is volatile and purchasers of our common shares
    could incur substantial losses.
    
    The timing of our Acquisition by Galenica;
    our ability to develop and obtain regulatory approval for
    CellCept and any future products in our targeted indications;
    our ability to establish marketing and sales capabilities and
    the costs of launching CellCept and any future products for our
    targeted indications;
    market acceptance of CellCept and any future products for our
    targeted indications;
    developments concerning our collaboration with Roche;
    our success in establishing additional collaborations; 41




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
    regulatory developments in the United States, Canada and other
    countries;
    developments or disputes concerning patents or other proprietary
    rights;
    public concern over CellCept or any future products;
    litigation;
    the departure of key personnel;
    future sales of our common shares;
    variations in our financial results or those of companies that
    are perceived to be similar to us;
    investors perceptions of us; and
    general economic, industry and market conditions.  Our
    articles, our shareholder rights plan and certain Canadian laws
    could delay or deter a change of control.
          We may
    be a passive foreign investment company for U.S. tax purposes
    which may negatively affect U.S. investors.
     42




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##### 



As a
    foreign private issuer, we are subject to different U.S.
    securities laws and rules than a domestic U.S. issuer, which may
    limit the information publicly available to our
    shareholders.
    You
    may be unable to enforce actions against us, or certain of our
    directors and officers, under U.S. federal securities
    laws.
    An
    unfavourable determination by tax regulators may cause our
    provision for income and other taxes to be inadequate and may
    result in a material impact to our financial
    results.
     43




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##### 



ITEM 2.
    UNREGISTERED
    SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.    ITEM 3.
    DEFAULTS
    UPON SENIOR SECURITIES    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS.    ITEM 5.
    OTHER
    INFORMATION    ITEM 6.
    EXHIBITS.  2
.1(1)

Combination Agreement, dated as of October 17, 2007, among
    Galenica AG, Galenica Canada Ltd. and Aspreva Pharmaceuticals
    Corporation.10
.35(2)

Employment Agreement between the Registrant and J. William
    Freytag, Ph.D., dated July 10, 2007.10
.36(2)

Change in Control Agreement between the Registrant and J.
    William Freytag, Ph.D., dated July 10, 2007.10
.37(3)

Letter Agreement dated July 25, 2007, between the
    Registrant and Dr. Richard Jones.10
.38(4)

Letter Agreement between the Registrant and Dr. Usman Azam,
    dated September 24, 2007.10
.39#

Fourth Amendment to CellCept Collaboration and Promotion
    Agreement, dated August 28, 2007, between and among the
    Registrant, F. Hoffman-La Roche Ltd and
    Hoffman-La Roche Inc.10
.40#

Support Agreement, dated August 28, 2007, between and among
    the Registrant, F. Hoffman-La Roche Ltd and
    Hoffman-La Roche Inc.31
.1

Certification of the Chief Executive Officer, as required by
    Rule 13a-14(a)
    of the Securities and Exchange Act of 1934, as amended.31
.2

Certification of the Chief Financial Officer, as required by
    Rule 13a-14(a)
    of the Securities and Exchange Act of 1934, as amended.32
.1*

Certification of the Chief Executive Officer, as required by
    Rule 13a-14(b)
    of the Securities and Exchange Act of 1934, as amended and
    Section 1350 of Chapter 63 of Title 18 of the
    United States Code (18 U.S.C. Section 1350).32
.2*

Certification of the Chief Financial Officer, as required by
    Rule 13a-14(b)
    of the Securities and Exchange Act of 1934, as amended and
    Section 1350 of Chapter 63 of Title 18 of the
    United States Code (18 U.S.C. Section 1350).     (1)
    
    Filed as the like numbered exhibit to our Current Report on
    Form 8-K
    (File
    No. 000-51169),
    dated October 17, 2007, and filed with the U.S. Securities
    and Exchange Commission on October 18, 2007, and
    incorporated herein by reference.(2)
    
    Filed as the like numbered exhibit to our Current Report on
    Form 8-K
    (File
    No. 000-51169),
    dated July 10, 2007, and filed with the U.S. Securities and
    Exchange Commission on July 16, 2007, and incorporated
    herein by reference.(3)
    
    Filed as the like numbered exhibit to our Current Report on
    Form 8-K
    (File
    No. 000-51169),
    dated July 25, 2007, and filed with the U.S. Securities and
    Exchange Commission on July 31, 2007, and incorporated
    herein by reference.(4)
    
    Filed as the like numbered exhibit to our Current Report on
    Form 8-K
    (File
    No. 000-51169),
    dated September 24, 2007, and filed with the U.S.
    Securities and Exchange Commission on September 26, 2007,
    and incorporated herein by reference.*
    
    The certifications attached as Exhibits 32.1 and 32.2
    accompany this quarterly report on
    Form 10-Q,
    are not deemed filed with the U.S. Securities and Exchange
    Commission and are not to be incorporated by reference into any
    filing of Aspreva Pharmaceuticals Corporation under the
    Securities Act of 1933, as amended, or the Securities Exchange
    Act of 1934, as amended, whether made before or after the date
    of this
    Form 10-Q,
    irrespective of any general incorporation language contained in
    such filing.#
    
    Confidential treatment has been requested for portions of this
    exhibit. Omitted material for which confidential treatment has
    been requested has been filed separately with the U.S.
    Securities and Exchange Commission. 44




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SIGNATURE
      /s/  Bruce
    G. Cousins       45




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##### 



EXHIBIT INDEX
  2
.1(1)

Combination Agreement, dated as of October 17, 2007, among
    Galenica AG, Galenica Canada Ltd. and Aspreva Pharmaceuticals
    Corporation.10
.35(2)

Employment Agreement between the Registrant and J. William
    Freytag, Ph.D., dated July 10, 2007.10
.36(2)

Change in Control Agreement between the Registrant and J.
    William Freytag, Ph.D., dated July 10, 2007.10
.37(3)

Letter Agreement dated July 25, 2007, between the
    Registrant and Dr. Richard Jones.10
.38(4)

Letter Agreement between the Registrant and Dr. Usman Azam,
    dated September 24, 2007.10
.39#

Fourth Amendment to CellCept Collaboration and Promotion
    Agreement, dated August 28, 2007, between and among the
    Registrant, F. Hoffman-La Roche Ltd and
    Hoffman-La Roche Inc.10
.40#

Support Agreement, dated August 28, 2007, between and among
    the Registrant, F. Hoffman-La Roche Ltd and
    Hoffman-La Roche Inc.31
.1

Certification of the Chief Executive Officer, as required by
    Rule 13a-14(a)
    of the Securities and Exchange Act of 1934, as amended.31
.2

Certification of the Chief Financial Officer, as required by
    Rule 13a-14(a)
    of the Securities and Exchange Act of 1934, as amended.32
.1*

Certification of the Chief Executive Officer, as required by
    Rule 13a-14(b)
    of the Securities and Exchange Act of 1934, as amended and
    Section 1350 of Chapter 63 of Title 18 of the
    United States Code (18 U.S.C. Section 1350).32
.2*

Certification of the Chief Financial Officer, as required by
    Rule 13a-14(b)
    of the Securities and Exchange Act of 1934, as amended and
    Section 1350 of Chapter 63 of Title 18 of the
    United States Code (18 U.S.C. Section 1350).     (1)
    
    Filed as the like numbered exhibit to our Current Report on
    Form 8-K
    (File
    No. 000-51169),
    dated October 17, 2007, and filed with the U.S. Securities
    and Exchange Commission on October 18, 2007, and
    incorporated herein by reference.(2)
    
    Filed as the like numbered exhibit to our Current Report on
    Form 8-K
    (File
    No. 000-51169),
    dated July 10, 2007, and filed with the U.S. Securities and
    Exchange Commission on July 16, 2007, and incorporated
    herein by reference.(3)
    
    Filed as the like numbered exhibit to our Current Report on
    Form 8-K
    (File
    No. 000-51169),
    dated July 25, 2007, and filed with the U.S. Securities and
    Exchange Commission on July 31, 2007, and incorporated
    herein by reference.(4)
    
    Filed as the like numbered exhibit to our Current Report on
    Form 8-K
    (File
    No. 000-51169),
    dated September 24, 2007, and filed with the U.S.
    Securities and Exchange Commission on September 26, 2007,
    and incorporated herein by reference.*
    
    The certifications attached as Exhibits 32.1 and 32.2
    accompany this quarterly report on
    Form 10-Q,
    are not deemed filed with the U.S. Securities and Exchange
    Commission and are not to be incorporated by reference into any
    filing of Aspreva Pharmaceuticals Corporation under the
    Securities Act of 1933, as amended, or the Securities Exchange
    Act of 1934, as amended, whether made before or after the date
    of this
    Form 10-Q,
    irrespective of any general incorporation language contained in
    such filing.#
    
    Confidential treatment has been requested for portions of this
    exhibit. Omitted material for which confidential treatment has
    been requested has been filed separately with the
    U.S. Securities and Exchange Commission. 46