##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, 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
    June 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

(I.R.S. Employerincorporation or
    organization)

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 CORPORATION
  FORM 10-Q
 For the
    Quarterly Period Ended June 30, 2007
  TABLE OF CONTENTS
  PagePART
    I  FINANCIAL INFORMATIONItem 1.


Financial
    Statements (unaudited)


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


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


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


5Notes to
    Consolidated Financial Statements


6Item 2.


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


14Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


25Item 4.


Controls and
    Procedures


26PART
    II  OTHER INFORMATIONItem 1.


Legal
    Proceedings


27Item 1A.


Risk
    Factors


27Item 2.


Unregistered Sales
    of Equity Securities and Use of Proceeds


39Item 3.


Defaults Upon
    Senior Securities


40Item 4.


Submission of
    Matters to a Vote of Security Holders


40Item 5.


Other
    Information


41Item 6.


Exhibits


41SIGNATURE


42Section 302 C.E.O. CertificationSection 302 C.F.O. CertificationSection 906 C.E.O. CertificationSection 906 C.F.O. Certification   2




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##### Table of Contents



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


December 31,2007


2006ASSETSCurrentCash and cash equivalents

$
51,822


$
49,217Restricted cash


809



731Marketable securities (Note 3)


272,119



210,678Accounts receivable


68,709



57,426Prepaid expenses


669



394Deferred income tax asset


2,428



2,142Foreign currency contracts
    (Note 8)


2,066



298Total current assets


398,622



320,886Property and equipment, net


4,419



4,736Deferred income tax asset


2,360



1,435TOTAL ASSETS

$
405,401


$
327,057LIABILITIES AND
    SHAREHOLDERS EQUITYCurrentAccounts payable

$
11,467


$
14,279Income taxes payable


9,443



11,769Accrued liabilities


9,983



8,604Foreign currency contracts
    (Note 8)


608



1,695Unearned royalty advance


6,536



6,559Current portion under capital
    leases


171



329Current portion of deferred lease
    inducement


153



130Deferred income tax liability


1,007



742Total current liabilities


39,368



44,107Long-term portion under capital
    leases


45



91Long-term portion of deferred
    lease inducement


334



391Deferred income tax liability


1,056



830Total liabilities


40,803



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


151,408



150,815June 30, 2007 -
    35,196,709December 31, 2006 - 35,159,619Additional paid-in capital


18,185



13,049Retained earnings


193,181



118,625Accumulated other comprehensive
    income (loss)


1,824



(851
)Total shareholders equity


364,598



281,638TOTAL LIABILITIES AND
    SHAREHOLDERS EQUITY

$
405,401


$
327,057    3




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##### Table of Contents



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


Six Months EndedJune 30


June 302007


2006


2007


2006Royalty revenue(Note 2)

$
63,776


$
51,693


$
123,049


$
114,373ExpensesResearch and development
    (Note 15)


15,541



12,218



27,811



22,032Marketing, general and
    administrative


9,210



10,753



19,012



16,86424,751



22,971



46,823



38,896Operating income


39,025



28,722



76,226



75,477Other income
    (expense)Foreign exchange gain (loss)


425



(97
)


411



769Interest and other income


3,361



2,202



6,683



3,622Total other income


3,786



2,105



7,094



4,391Income before income
    taxes


42,811



30,827



83,320



79,868Income tax expense (Note 9)


4,669



2,871



8,764



7,160Net income

$
38,142


$
27,956


$
74,556


$
72,708Net income per common share(Note 5)Basic

$
1.08


$
0.81


$
2.12


$
2.11Diluted

$
1.08


$
0.78


$
2.11


$
2.03    4




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##### Table of Contents



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


Six Months EndedJune 30


June 302007


2006


2007


2006Operating ActivitiesNet income for the period

$
38,142


$
27,956


$
74,556


$
72,708Adjustment to reconcile net income
    to cash provided by operating activities:Depreciation and amortization
    (Note 15)


3,158



150



3,373



272Deferred taxes


(336
)


(87
)


(388
)


830Stock-based compensation


2,615



2,241



5,464



3,214Net change in non-cash working
    capital items related to operations:Accounts receivable


(3,998
)


11,399



(9,336
)


(7,782
)Prepaid expenses


214



(90
)


(275
)


(923
)Restricted cash


(67
)


(38
)


(78
)


(40
)Accounts payable


1,295



535



(2,836
)


2,757Income taxes payable


5,427



2,805



(2,326
)


5,645Accrued liabilities


2,553



3,037



1,379



1,497Net cash flows from operating
    activities


49,003



47,908



69,533



78,178Investing ActivitiesPurchases of marketable securities


(164,983
)


(98,278
)


(251,592
)


(153,893
)Redemptions of marketable
    securities


151,553



40,295



187,722



94,250Purchase of property and equipment


(1,412
)


(275
)


(3,089
)


(329
)Net cash flows used in investing
    activities


(14,842
)


(58,258
)


(66,959
)


(59,972
)Financing ActivitiesIssuance of common shares


154



551



234



1,955Payments on capital lease
    obligations


(103
)


(110
)


(203
)


(219
)Net cash flows from financing
    activities


51



441



31



1,736Net increase (decrease) in cash
    and cash equivalents


34,212



(9,909
)


2,605



19,942Cash and cash equivalents,
    beginning of the period


17,610



44,610



49,217



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

$
51,822


$
34,701


$
51,822


$
34,701See Note 10 for supplemental
    cash flow information    5




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##### Table of Contents



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)
    June 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
  Revenue Recognition
 6




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##### Table of Contents



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




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##### Table of Contents



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


ValueJune 30, 2007

$
267,815


$
3,376


$
1,108


$
(180
)

$
272,119December 31,
    2006

$
208,762


$
1,820


$
153


$
(57
)

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


Six Months EndedJune 30


June 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


Six Months EndedJune 30


June 302007


2006


2007


2006Research and development expense

$
1,309


$
784


$
2,209


$
1,125Marketing, general and
    administrative expense


1,306



1,457



3,255



2,089Total stock-based compensation

$
2,615


$
2,241


$
5,464


$
3,214  8




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##### Table of Contents



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


$
19.62Exercisable at June 30,
    2007


933,252


$
14.98     5.
    Net
    Income per Common Share  Earnings per Share
    Three Months Ended June 30


Six Months Ended June 302007


2006


2007


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


35,188,062



34,676,544



35,176,659



34,527,315Effect of dilutive stock options


256,080



1,226,628



223,528



1,120,270Effect of dilutive warrants






108,271







106,475Weighted average shares
    outstanding used for diluted net income per common share


35,444,142



36,011,443



35,400,187



35,754,060     Three Months Ended June 30


Six Months Ended June 302007


2006


2007


2006Stock options


821,822







821,822



336,000  9




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##### Table of Contents



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


$
364,598   Comprehensive
    Income
   10




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##### Table of Contents



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

AverageNotional

SettlementType of hedge

Currency Exchanged

Settlement dates

Amount

AmountForward Contract

Sell USD buy CAD

July 2007  June 2008

7,567 USD


0.7938Forward Contract

Sell USD buy GBP

July 2007  June 2008

4,115 USD


1.9334Forward Contract

Sell CHF buy GBP

August 2007  May
    2008

1,022 CHF


2.3921Forward Contract

Sell CHF buy CAD

August 2007  May
    2008

2,308 CHF


1.0796Forward Contract

Sell USD buy Euro

July 2007  December
    2007

869 USD


1.3074Forward Contract

Sell CHF buy Euro

August
    2007  November 2007

234 CHF


1.5993Fair Value  dual purpose

Sell CHF buy USD

August 2007

62,034 CHF


1.2011Cash Flow  dual purpose

Sell CHF buy USD

November 2007  May
    2008

130,426 CHF


1.2069NARC

Sell USD buy CHF

August
    2007  November 2007

56,926 USD


0.8273NARC

Sell Euro buy CHF

August
    2007  November 2007

11,231 Euro


0.6140       9.
    Income
    Taxes   11




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##### Table of Contents



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


Six Months EndedJune 30


June 302007


2006


2007


2006Income taxes paid






50



11,995



269Interest paid


19



11



25



23Amortization of leasehold
    inducements


15



31



34



61   11.
    Related
    Party Transactions    12.
    Contingencies    13.
    Comparative
    Figures    14.
    Recent
    Accounting Pronouncements  Fair Value
    Measurements
 12




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##### Table of Contents



ASPREVA
    PHARMACEUTICALS CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    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.
    Subsequent
    Events   13




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##### Table of Contents



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;
    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;
    our ability to file a supplemental new drug application, or
    sNDA, with the U.S. Food and Drug Administration, or FDA,
    as well as other applicable filings with the European Union and
    Canadian regulatory authorities;
    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.  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
 14




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##### Table of Contents



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
    and/or
        Collaborative
    Agreements
         15




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##### Table of Contents



Clinical
    Development Program
    Lupus
    Nephritis
      Clinical
    and Regulatory Progress
     16




---



##### Table of Contents



Pemphigus
    Vulgaris
    Clinical
    and Regulatory Progress
    Preliminary
    Studies
    Commercialization
      Critical
    Accounting Policies and Significant Judgments and
    Estimates
   17




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##### Table of Contents



Form 10-K
  Revenue
    Recognition
  Revenue
    Recognition and/or
    and/or
     18




---



##### Table of Contents



Stock-Based
    Compensation
    Share-based Payment
      Three Months Ended June 30


Six Months Ended June 302007


2006


2007


2006(In millions)Research and development expense

$
1.3


$
0.8


$
2.2


$
1.1Marketing, general and
    administrative expense


1.3



1.4



3.3



2.1Total stock-based compensation

$
2.6


$
2.2


$
5.5


$
3.2   Clinical
    Trial Accounting
      Income
    Taxes
       19




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##### Table of Contents



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
     20




---



##### Table of Contents



June 30,

September 30,

December 31,

March 31,

June 30,2006

2006

2006

2007

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

$
48.7


$
47.1


$
50.0


$
54.5


$
59.8Reconciliation amount


3.0



0.8



2.5



4.8



4.0Total royalty revenue

$
51.7


$
47.9


$
52.5


$
59.3


$
63.8       Research
    and Development Expenses
        Annual


Annual


Annual


For the Six Months


Total from InceptionTotal


Total


Total


Ended June 30,


to June 302004


2005


2006


2006


2007


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

$
4.9


$
11.9


$
23.9


$
8.8


$
14.5


$
55.3Myasthenia gravis


2.2



11.3



12.0



6.1



1.8



27.7Pemphigus vulgaris


1.3



3.3



3.4



2.0



1.6



10.0Other






0.7



3.2



1.7



6.5



8.7Clinical development expenditures


8.4



27.2



42.5



18.6



24.4



103.4Business development expenditures


1.7



3.0



5.5



3.4



3.4



13.9Total

$
10.1


$
30.2


$
48.0


$
22.0


$
27.8


$
117.3    21




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##### Table of Contents



Marketing,
    General and Administrative Expenses
            Foreign
    Exchange Gain (Loss)
     22




---



##### Table of Contents



Interest
    and Other Income
      Income
    Taxes
          Liquidity
    and Capital Resources
  Sources
    of Liquidity
        Cash
    Flows
  Operating
    activities
   23




---



##### Table of Contents



Investing
    activities
      Financing
    activities
      Hedging
    Activities
      Contractual
    Obligations and Commitments
    follow-up
 24




---



##### Table of Contents



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
  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
     25




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##### Table of Contents



Interest
    Rate Risk
    Foreign
    Currency Exchange and Foreign Economic Conditions Risk
        Counterparties
    Credit Risks
    Item 4.
    CONTROLS
    AND PROCEDURES  Evaluation
    of disclosure controls and procedures
  Rule 13a-15(e))
  Rule 13a-15(e))
  Changes
    in internal controls
   26




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##### Table of Contents



PART II 
    OTHER INFORMATION  ITEM 1.
    LEGAL
    PROCEEDINGS    ITEM 1A.
    RISK
    FACTORS  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.
    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.
   27




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##### Table of Contents



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.    The
    expiration of Roches patents covering CellCept may reduce
    our revenue as competitors may seek to sell generic versions of
    CellCept.
     28




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##### Table of Contents



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.
        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. 29




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##### Table of Contents



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.
    The
    terms and conditions of any future collaboration agreements may
    be less favorable than our agreement with Roche.
   30




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##### Table of Contents




    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.
      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.
   31




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##### Table of Contents



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;
    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.
   32




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##### Table of Contents



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.
        We may
    incur losses associated with currency fluctuations and may not
    be able to effectively hedge our exposure.
   33




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##### Table of Contents



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;
    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; 34




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##### Table of Contents




    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.
    
    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. 35




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##### Table of Contents



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.
    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.
       36




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##### Table of Contents



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.
      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.   37




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##### Table of Contents



Our
    stock price is volatile and purchasers of our common shares
    could incur substantial losses.
    
    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;
    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.
     38




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##### Table of Contents



We may
    be a passive foreign investment company for U.S. tax purposes
    which may negatively affect U.S. investors.
      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.
    ITEM 2.
    UNREGISTERED
    SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.   39




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##### Table of Contents



ITEM 3.
    DEFAULTS
    UPON SENIOR SECURITIES    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS.                    Proposal 1:
    Nominee

For


WithheldRichard M. Glickman


8,371,010



46,496Noel F. Hall


8,406,731



10,775Kirk K. Calhoun, C.P.A.


8,406,948



10,558Ronald M. Hunt


8,413,998



3,508Julia G. Levy, Ph.D.


8,414,001



3,505William L. Hunter, MD, MSc


8,413,998



3,508R. Hector MacKay-Dunn, Q.C.


8,406,090



11,416George M. Milne, Ph.D.


8,413,998



3,508Arnold L. Oronsky, Ph.D.


8,414,026



3,480   Proposal 2:
    For

Against

Withheld8,416,806



0



700  40




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##### Table of Contents



Proposal 3:
    For

Against

Withheld

Insiders

No-Vote7,454,457



963,049



0



N/A



0   Proposal 4:
    For


Against


Withheld


Insiders


No-Vote7,842,862



934,644



0



N/A



0   ITEM 5.
    OTHER
    INFORMATION    ITEM 6.
    EXHIBITS.  10
.3(1)

Aspreva 2002 Incentive Stock Plan.10
.4(2)

Form of Stock Option Agreement
    with respect to the Aspreva 2002 Incentive Stock Option Plan.10
.11(3)

Employment Agreement between the
    Registrant and Bruce G. Cousins, dated May 29, 2007.10
.12(4)

Change in Control Agreement
    between the Registrant and Bruce G. Cousins, dated May 29,
    2007.31
.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).     *
    
    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.(1)
    
    Filed as an attachment to our Proxy Statement for our 2007
    Annual and Special General Meeting of Shareholders held on
    May 31, 2007, as set forth in a Current Report on
    Form 8-K
    (File
    No. 000-51169),
    dated April 27, 2007, and filed with the U.S. Securities
    and Exchange Commission on April 30, 2007, and incorporated
    herein by reference(2)
    
    Filed as Exhibit 10.4 to our Registration Statement on
    Form F-1
    (No. 333-122234)
    filed with U.S. Securities and Exchange Commission on
    January 24, 2005, as amended, and incorporated herein by
    reference.(3)
    
    Filed as Exhibit 10.11 to our Current Report on
    Form 8-K
    (File
    No. 000-51169),
    dated May 30, 2007, and filed with the U.S. Securities and
    Exchange Commission on June 5, 2007, and incorporated
    herein by reference.(4)
    
    Filed as Exhibit 10.12 to our Current Report on
    Form 8-K
    (File
    No. 000-51169),
    dated May 30, 2007, and filed with the U.S. Securities and
    Exchange Commission on June 5, 2007, and incorporated
    herein by reference. 41




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##### Table of Contents



SIGNATURE      
       42




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##### Table of Contents



EXHIBIT INDEX
  10
.3(1)

Aspreva 2002 Incentive Stock Plan.10
.4(2)

Form of Stock Option Agreement
    with respect to the Aspreva 2002 Incentive Stock Option Plan.10
.11(3)

Employment Agreement between the
    Registrant and Bruce G. Cousins, dated May 29, 2007.10
.12(4)

Change in Control Agreement
    between the Registrant and Bruce G. Cousins, dated May 29,
    2007.31
.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).     *
    
    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.(1)
    
    Filed as an attachment to our Proxy Statement for our 2007
    Annual and Special General Meeting of Shareholders held on
    May 31, 2007, as set forth in a Current Report on
    Form 8-K
    (File
    No. 000-51169),
    dated April 27, 2007, and filed with the U.S. Securities
    and Exchange Commission on April 30, 2007, and incorporated
    herein by reference.(2)
    
    Filed as Exhibit 10.4 to our Registration Statement on
    Form F-1
    (No. 333-122234)
    filed with U.S. Securities and Exchange Commission on
    January 24, 2005, as amended, and incorporated herein by
    reference.(3)
    
    Filed as Exhibit 10.11 to our Current Report on
    Form 8-K
    (File
    No. 000-51169),
    dated May 30, 2007, and filed with the U.S. Securities and
    Exchange Commission on June 5, 2007, and incorporated
    herein by reference.(4)
    
    Filed as Exhibit 10.12 to our Current Report on
    Form 8-K
    (File
    No. 000-51169),
    dated May 30, 2007, and filed with the U.S. Securities and
    Exchange Commission on June 5, 2007, and incorporated
    herein by reference. 43