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

---

FORM 10-Q

|ý                                                        | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 
|-------------------------------------------------------- | ----------------------------------------------------------------------------------------
|For the Quarterly Period Ended September 30, 2007       
|or                                                      
|o                                                        | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|For the transition period
from                        to

Commission file number 0-27628

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SUPERGEN, INC.

(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction
of incorporation or organization)                  | 91-1841574(IRS Employer
Identification Number)
|--------------------------------------------------------------------------------------- | ----------------------------------------------
|4140 Dublin Blvd, Suite 200, Dublin, California(Address of principal executive offices) | 94568(Zip Code)                               

(925) 560-0100(Registrant's telephone number, including area code)

Not applicable(Former name, former address and former fiscal year, if changed since last report)

---

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes ý    No o

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

Large
accelerated filer o                Accelerated
filer ý                Non-accelerated filer o

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

The number of shares of the registrant's Common Stock, $.001 par value, outstanding as of November 1, 2007 was 57,478,163.



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TABLE OF CONTENTS

|           |  |                                                                                              |                                                                                                                        |    | Page No.
|---------- |  | -------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- | -- | --------
|PART I     |  | FINANCIAL INFORMATION                                                                        |                                                                                                                        |   
|           |  | Item 1Financial Statements (Unaudited)                                                      |                                                                                                                        |   
|           |  |                                                                                              | Condensed Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006                                   |    | 3       
|           |  |                                                                                              | Condensed Consolidated Statements of Operations for the three and nine month periods ended September 30, 2007 and 2006 |    | 4       
|           |  |                                                                                              | Condensed Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2007 and 2006           |    | 5       
|           |  |                                                                                              | Notes to Condensed Consolidated Financial Statements                                                                   |    | 6       
|           |  | Item 2Management's Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                                        | 17
|           |  | Item 3Quantitative and Qualitative Disclosures About Market Risk                            |                                                                                                                        | 27
|           |  | Item 4Controls and Procedures                                                               |                                                                                                                        | 27
|PART II    |  | OTHER INFORMATION                                                                            |                                                                                                                        |   
|           |  | Item 1ARisk Factors                                                                         |                                                                                                                        | 29
|           |  | Item 6Exhibits                                                                              |                                                                                                                        | 40
|SIGNATURES |  | 41                                                                                          

2

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

|                                             |                                                                                                                                                                                 | September 30,
2007                         |       | December 31,
2006 |       
|-------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ----- | ----------------- | ------
|
|ASSETS                                       |                                                                                                                                                                                 |                                            |       |                   |       
|Current assets:                              |                                                                                                                                                                                 |                                            |       |                   |       
|                                             | Cash and cash equivalents                                                                                                                                                       |                                            | $     | 76,445            |       
|                                             | Marketable securities                                                                                                                                                           |                                            |       | 4,392             |       
|                                             | Accounts receivable, net                                                                                                                                                        |                                            |       | 160               |       
|                                             | Development revenue receivable from MGI PHARMA, Inc.                                                                                                                            |                                            |       |                  |       
|                                             | Accounts receivable from Mayne Pharma                                                                                                                                           |                                            |       | 57                |       
|                                             | Inventories, net                                                                                                                                                                |                                            |       |                  |       
|                                             | Prepaid distribution and marketing rights                                                                                                                                       |                                            |       |                  |       
|                                             | Prepaid expenses and other current assets                                                                                                                                       |                                            |       | 1,241             |       
|                                             |                                                                                                                                                                                 |                                            |       |                   |       
|                                             |                                                                                                                                                                                 | Total current assets                       |       |                   | 82,295
|Marketable securities, non-current           |                                                                                                                                                                                 |                                            | 6,184 |                   |       
|Investment in stock of related parties       |                                                                                                                                                                                 |                                            |      |                   |       
|Property, plant and equipment, net           |                                                                                                                                                                                 |                                            | 3,913 |                   |       
|Goodwill                                     |                                                                                                                                                                                 |                                            | 731   |                   |       
|Other intangibles, net                       |                                                                                                                                                                                 |                                            | 639   |                   |       
|Restricted cash and investments, non-current |                                                                                                                                                                                 |                                            | 2,509 |                   |       
|Other assets                                 |                                                                                                                                                                                 |                                            | 506   |                   |       
|                                             |                                                                                                                                                                                 |                                            |       |                   |       
|                                             |                                                                                                                                                                                 | Total assets                               |       | $                 | 96,777
|                                             |                                                                                                                                                                                 |                                            |       |                   |       
|LIABILITIES AND STOCKHOLDERS' EQUITY         |                                                                                                                                                                                 |                                            |       |                   |       
|Current liabilities:                         |                                                                                                                                                                                 |                                            |       |                   |       
|                                             | Accounts payable and accrued liabilities                                                                                                                                        |                                            | $     | 3,384             |       
|                                             | Payable to AVI BioPharma, Inc.                                                                                                                                                  |                                            |       | 565               |       
|                                             | Deferred gain on sale of products to Mayne Pharma                                                                                                                               |                                            |       | 712               |       
|                                             | Deferred revenue                                                                                                                                                                |                                            |       |                  |       
|                                             | Accrued payroll and employee benefits                                                                                                                                           |                                            |       | 2,302             |       
|                                             |                                                                                                                                                                                 |                                            |       |                   |       
|                                             |                                                                                                                                                                                 | Total current liabilities                  |       |                   | 6,963 
|Deferred rent                                |                                                                                                                                                                                 |                                            | 863   |                   |       
|                                             |                                                                                                                                                                                 |                                            |       |                   |       
|                                             |                                                                                                                                                                                 | Total liabilities                          |       |                   | 7,826 
|                                             |                                                                                                                                                                                 |                                            |       |                   |       
|Commitments and contingencies                |                                                                                                                                                                                 |                                            |       |                   |       
|Stockholders' equity:                        |                                                                                                                                                                                 |                                            |       |                   |       
|                                             | Preferred stock, $.001 par value; 2,000,000 shares authorized; none outstanding                                                                                                 |                                            |       |                  |       
|                                             | Common stock, $.001 par value; 150,000,000 shares authorized; 57,478,163 and 55,177,377 shares issued and outstanding at September 30, 2007 and December 31, 2006, respectively |                                            |       | 57                |       
|                                             | Additional paid in capital                                                                                                                                                      |                                            |       | 445,922           |       
|                                             | Accumulated other comprehensive income                                                                                                                                          |                                            |       | 324               |       
|                                             | Accumulated deficit                                                                                                                                                             |                                            |       | (357,352          | )     
|                                             |                                                                                                                                                                                 |                                            |       |                   |       
|                                             |                                                                                                                                                                                 | Total stockholders' equity                 |       |                   | 88,951
|                                             |                                                                                                                                                                                 |                                            |       |                   |       
|                                             |                                                                                                                                                                                 | Total liabilities and stockholders' equity |       | $                 | 96,777
|                                             |                                                                                                                                                                                 |                                            |       |                   |       

See
accompanying notes to condensed consolidated financial statements

3

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

|                                                                                            |                                                       | Three Months Ended
September 30,   |        | Nine Months Ended
September 30, |      
|------------------------------------------------------------------------------------------- | ----------------------------------------------------- | ---------------------------------- | ------ | ------------------------------- | -----
|
|Revenues:                                                                                   |                                                       |                                    |        |                                 |      
|                                                                                            | Net product revenue                                   |                                    | $      |                                |      
|                                                                                            | Development and license revenue from MGI PHARMA, Inc. |                                    |        |                                |      
|                                                                                            | Royalty revenue                                       |                                    |        | 6,123                           |      
|                                                                                            |                                                       |                                    |        |                                 |      
|                                                                                            |                                                       | Total revenues                     |        |                                 | 6,123
|Costs and operating expenses:                                                               |                                                       |                                    |        |                                 |      
|                                                                                            | Cost of product revenue                               |                                    |        |                                |      
|                                                                                            | Research and development                              |                                    |        | 6,170                           |      
|                                                                                            | Selling, general, and administrative                  |                                    |        | 3,072                           |      
|                                                                                            | Acquired in-process research and development          |                                    |        |                                |      
|                                                                                            | Gain on sale of products                              |                                    |        | (1,828                          | )    
|                                                                                            |                                                       |                                    |        |                                 |      
|                                                                                            |                                                       | Total costs and operating expenses |        |                                 | 7,414
|                                                                                            |                                                       |                                    |        |                                 |      
|Income (loss) from operations                                                               |                                                       |                                    | (1,291 | )                               |      
|Interest income                                                                             |                                                       |                                    | 1,044  |                                 |      
|Gain on disposition of investment in AVI BioPharma stock resulting from exercise of warrant |                                                       |                                    |       |                                 |      
|Other income                                                                                |                                                       |                                    | 12     |                                 |      
|Change in valuation of derivatives                                                          |                                                       |                                    |       |                                 |      
|                                                                                            |                                                       |                                    |        |                                 |      
|Income (loss) before income tax                                                             |                                                       |                                    | (235   | )                               |      
|Income tax benefit (provision)                                                              |                                                       |                                    | 427    |                                 |      
|                                                                                            |                                                       |                                    |        |                                 |      
|Net income (loss)                                                                           |                                                       | $                                  | 192    |                                 | $    
|                                                                                            |                                                       |                                    |        |                                 |      
|Net income (loss) per common share:                                                         |                                                       |                                    |        |                                 |      
|                                                                                            | Basic                                                 |                                    | $      | 0.00                            |      
|                                                                                            |                                                       |                                    |        |                                 |      
|                                                                                            | Diluted                                               |                                    | $      | 0.00                            |      
|                                                                                            |                                                       |                                    |        |                                 |      
|Weighted average shares used in net income (loss) per common share calculation:             |                                                       |                                    |        |                                 |      
|                                                                                            | Basic                                                 |                                    |        | 57,478                          |      
|                                                                                            |                                                       |                                    |        |                                 |      
|                                                                                            | Diluted                                               |                                    |        | 57,759                          |      
|                                                                                            |                                                       |                                    |        |                                 |      

See
accompanying notes to condensed consolidated financial statements

4

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

|                                                          |                                                                                                    | Nine Months Ended
September 30,                                   |                                                       
|--------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ------------------------------------------------------
|
|Operating activities:                                     |                                                                                                    |                                                                   |                                                       
|                                                          | Net income (loss)                                                                                  |                                                                   | $                                                     
|                                                          | Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |                                                                   |                                                       
|                                                          |                                                                                                    | Depreciation                                                      |                                                       
|                                                          |                                                                                                    | Amortization of intangibles and distribution and marketing rights |                                                       
|                                                          |                                                                                                    | Change in valuation of derivatives                                |                                                       
|                                                          |                                                                                                    | Stock compensation expense                                        |                                                       
|                                                          |                                                                                                    | Gain on disposition of investment in AVI BioPharma stock          |                                                       
|                                                          |                                                                                                    | Cash paid for distribution and marketing rights                   |                                                       
|                                                          |                                                                                                    | Recognition of gain on sale of products                           |                                                       
|                                                          |                                                                                                    | Acquired in-process research and development                      |                                                       
|                                                          |                                                                                                    | Changes in operating assets and liabilities:                      |                                                       
|                                                          |                                                                                                    |                                                                   | Accounts receivable and development revenue receivable
|                                                          |                                                                                                    |                                                                   | Inventories                                           
|                                                          |                                                                                                    |                                                                   | Prepaid expenses and other assets                     
|                                                          |                                                                                                    |                                                                   | Restricted cash and investments                       
|                                                          |                                                                                                    |                                                                   | Accounts payable and other liabilities                
|                                                          |                                                                                                    |                                                                   | Deferred gain on sale of products                     
|                                                          |                                                                                                    |                                                                   | Deferred revenue                                      
|                                                          |                                                                                                    |                                                                   |                                                       
|Net cash provided by (used in) operating activities       |                                                                                                    |                                                                   | (7,001                                                
|                                                          |                                                                                                    |                                                                   |                                                       
|Investing activities:                                     |                                                                                                    |                                                                   |                                                       
|                                                          | Purchases of marketable securities                                                                 |                                                                   |                                                       
|                                                          | Maturities of marketable securities                                                                |                                                                   |                                                       
|                                                          | Purchases of property and equipment                                                                |                                                                   |                                                       
|                                                          | Proceeds from sale of products                                                                     |                                                                   |                                                       
|                                                          | Acquisition of Montigen net assets, net of cash acquired                                           |                                                                   |                                                       
|                                                          |                                                                                                    |                                                                   |                                                       
|Net cash provided by investing activities                 |                                                                                                    |                                                                   | 12,094                                                
|                                                          |                                                                                                    |                                                                   |                                                       
|Financing activities:                                     |                                                                                                    |                                                                   |                                                       
|                                                          | Proceeds from issuance of common stock, net of issuance costs                                      |                                                                   |                                                       
|                                                          |                                                                                                    |                                                                   |                                                       
|Net cash provided by financing activities                 |                                                                                                    |                                                                   | 3,648                                                 
|                                                          |                                                                                                    |                                                                   |                                                       
|Net increase in cash and cash equivalents                 |                                                                                                    |                                                                   | 8,741                                                 
|Cash and cash equivalents at beginning of period          |                                                                                                    |                                                                   | 67,704                                                
|                                                          |                                                                                                    |                                                                   |                                                       
|Cash and cash equivalents at end of period                |                                                                                                    | $                                                                 | 76,445                                                
|                                                          |                                                                                                    |                                                                   |                                                       
|Supplemental Disclosure of Non-Cash Financing Activities: |                                                                                                    |                                                                   |                                                       
|                                                          | Common stock issued in connection with Montigen acquisition                                        |                                                                   | $                                                     

See
accompanying notes to condensed consolidated financial statements

5

---





SUPERGEN, INC.        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        SEPTEMBER 30, 2007        (Unaudited)

NOTE 1.    BASIS OF PRESENTATION

The accompanying condensed unaudited consolidated financial statements of SuperGen, Inc. ("we," "SuperGen" or the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine month
periods ended September 30, 2007 are not necessarily indicative of results that may be expected for the year ending December 31, 2007.

The
balance sheet at December 31, 2006 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. Certain balances in the Company's 2006 consolidated financial statements have been reclassified to conform to the
presentation in 2007.

For
further information, refer to the consolidated financial statements and footnotes included in the Company's annual report on Form 10-K for the year ended
December 31, 2006.

NOTE 2.    STOCK-BASED COMPENSATION

We account for stock-based compensation in accordance with the fair value recognition provisions of Statement of Financial Accounting Standards No. 123(R),
"Share-Based Payment" ("SFAS 123R").

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

Employee Stock Purchase Plan.We also have an employee stock purchase plan ("ESPP") that allows eligible employees to
purchase common stock at a price per share equal to 85% of the lower of the fair market value of the common stock at the beginning or end of each six month period during the term of the ESPP. The
current offering period began May 15, 2007 and is scheduled to end on November 14, 2007. Upon adoption of SFAS 123R, we began recording stock-based compensation expense related to
the ESPP.

We
recognized $904,000 and $1,093,000, respectively, in stock based compensation expense for the three months ended September 30, 2007 and 2006. We recognized $3,162,000 and
$2,566,000, respectively, in stock based compensation expense for the nine months ended September 30, 2007 and 2006. These amounts have been recorded in research and development expense or
selling, general and administrative expenses, based on the home department of our employees.

6

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

Three months ended
September 30,

Nine months ended
September 30,2007

2006

2007

2006Risk-free interest rate

4.44
%
4.78
%
4.66
%
4.75
%Dividend yield







Expected volatility

66.17
%
65.91
%
61.41
%
65.97
%Expected life (in years)

5.14

5.18

5.21

5.18Forfeiture rate

9.63
%
12.02
%
9.63
%
12.02
%


A
summary of the Company's stock option activity as of September 30, 2007, and changes during the nine months then ended is presented below:

|                                                 |  | Options
Outstanding |   | Weighted
Average
Exercise
Price |       | Weighted
Average
Remaining
Contractual
Term |      | Aggregate
Intrinsic
Value
|------------------------------------------------ |  | ------------------- | - | ------------------------------- | ----- | ------------------------------------------- | ---- | -------------------------
|Balance at December 31, 2006                     |  | 6,615,153           |   | $                               | 8.75  |                                             |      |                          
|Granted                                          |  | 2,197,365           |   |                                 | 5.28  |                                             |      |                          
|Exercised                                        |  | (256,826            | ) |                                 | 3.87  |                                             |      |                          
|Forfeited                                        |  | (193,459            | ) |                                 | 5.48  |                                             |      |                          
|Expired                                          |  | (501,100            | ) |                                 | 10.59 |                                             |      |                          
|                                                 |  |                     |   |                                 |       |                                             |      |                          
|Balance at September 30, 2007                    |  | 7,861,133           |   | $                               | 7.90  |                                             | 6.39 |                          
|                                                 |  |                     |   |                                 |       |                                             |      |                          
|Vested or expected to vest at September 30, 2007 |  | 7,316,183           |   | $                               | 7.99  |                                             | 6.24 |                          
|                                                 |  |                     |   |                                 |       |                                             |      |                          
|Exercisable at September 30, 2007                |  | 5,269,104           |   | $                               | 8.57  |                                             | 5.32 |                          
|                                                 |  |                     |   |                                 |       |                                             |      |                          

The
weighted-average grant-date fair value of options granted during the nine months ended September 30, 2007 was $3.01. The total intrinsic value of options exercised
(i.e. the difference between the market price at exercise and the price paid to exercise the options) during the nine
months ended September 30, 2007 was $484,000 and the total amount of cash received from exercise of these options was $988,000.

As
of September 30, 2007, there was $5,562,000 of total unrecognized compensation cost related to unvested stock-based awards. This cost is expected to be recognized over a
weighted average period of 2.26 years. We expect approximately 2,047,079 in unvested options to vest at some point in the future. Options expected to vest is calculated by applying an estimated
forfeiture rate to the unvested options.

NOTE 3.    CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES

Cash and cash equivalents include bank demand deposits, certificates of deposit, investments in debt securities with maturities of three months or less when
purchased, and an interest in money

7

---



market
funds which invest primarily in U.S. government obligations and commercial paper. These instruments are highly liquid and are subject to insignificant risk.

Investments
in marketable securities consist of equity securities and corporate or government debt securities that have a readily ascertainable market value and are readily marketable.
We report these investments at fair value. We designate all marketable securities as available-for-sale, with unrealized gains and losses included as a component of equity.

The
following is a summary of available-for-sale securities as of September 30, 2007 (in thousands):

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
ValueU.S. corporate debt securities

$
63,243

$
2

$
(21
)
$
63,224Debt securities issued by U.S. government agencies


13,496


1





13,497Marketable equity securities


5,842


358


(16
)

6,184Total

$
82,581

$
361

$
(37
)
$
82,905


The
available-for-sale securities are classified on the balance sheet as of September 30, 2007 as follows (in thousands):

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
ValueAmounts included in cash and cash equivalents

$
72,347

$
2

$
(20
)
$
72,329Marketable securities, current


4,392


1


(1
)

4,392Marketable securities, non-current


5,842


358


(16
)

6,184Total

$
82,581

$
361

$
(37
)
$
82,905


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

Fair ValueSeptember 30,
2007

December 31,
2006Debt securities due in one year or less

$
76,721

$
64,031Marketable equity securities


6,184


7,761Total

$
82,905

$
71,792


8

---



NOTE 4.    INVENTORIES

Inventories consist of the following (in thousands):

September 30,
2007

December 31,
2006Work in process



$
126Finished goods




97Total



$
223


NOTE 5.    LICENSE AGREEMENT WITH MGI PHARMA, INC.

In August 2004, we entered into a license agreement, which became effective on September 21, 2004, with MGI PHARMA, Inc., a Minnesota
corporation ("MGI") relating to Dacogen® (decitabine) for Injection, an anti-cancer therapeutic which has been approved by the United States Food and Drug Administration
("FDA") for the treatment of patients with myelodysplastic syndrome ("MDS").

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

In
May 2006, the FDA approved Dacogen for the treatment of patients with MDS and MGI commenced commercial sales of Dacogen in the United States. In July 2006, MGI executed
an agreement to sublicense Dacogen to Janssen-Cilag, a Johnson & Johnson company, granting exclusive development and commercialization rights in all territories outside North America.

MGI
is required to pay us royalties starting at 20% and escalating to a maximum of 30% of net worldwide Dacogen sales within 45 days after the end of each calendar quarter. We
recognize royalty revenue on a cash basis when we receive it from MGI because we do not have sufficient ability to accurately estimate Dacogen sales. During the three and nine months ended
September 30, 2007, we recorded royalty revenue of $6,123,000 and $14,536,000, respectively. During the three and nine months ended September 30, 2006, we recorded royalty revenue of
$1,043,000.

NOTE 6.    ACQUISITION OF MONTIGEN PHARMACEUTICALS, INC.

On April 4, 2006, we completed our acquisition of Montigen Pharmaceuticals, Inc. ("Montigen"), a privately-held oncology-focused drug
discovery and development company headquartered in Salt Lake City, Utah. Montigen's assets included its research and development team, a proprietary drug discovery

9

---



technology
platform and optimization process, CLIMB, and late-stage pre-clinical compounds targeting Aurora-A Kinase and members of the Tyrosine Kinase
receptor family.

Pursuant
to the terms of the acquisition, we paid the Montigen stockholders a total of $17.9 million upon the closing of the transaction in cash and shares of SuperGen common
stock. The acquisition of Montigen was accounted for as an acquisition of assets rather than as a business combination. The results of operations of Montigen since April 4, 2006 have been
included in our consolidated financial statements and primarily consist of research and development expenses.

The
values assigned to assembled workforce and the CLIMB technology platform are being amortized over three years, the estimated useful lives of the assets. The accumulated amortization
of the assembled workforce and CLIMB technology was $118,000 and $521,000, respectively, at September 30, 2007.

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

NOTE 7.    ASSET ACQUISITION AGREEMENTS WITH MAYNE PHARMA

Sale of North American Rights

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

Purchase price per agreement

$
21,095Less:

Mitomycin reduction


(1,140
)Supply holdback


(5,000
)Indemnification holdback


(1,000
)Net asset adjustment


(445
)Channel inventory adjustment


(115
)Initial cash proceeds

$
13,395


The
$5.0 million supply holdback is being retained by Mayne until the following three events occur: (1) the qualification of an FDA approved manufacturer of Nipent,
(2) the execution of a

10

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commercial
supply agreement between Mayne and the approved manufacturer, and (3) acceptance of the first delivery under the commercial supply agreement. The $1.0 million indemnification
holdback will be retained by Mayne for 18 months to cover any potential claims.

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

In
conjunction with this transaction, we also entered into certain related agreements including the following:



We
have a number of additional obligations under the asset acquisition agreement, including the following:



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Sale of Remaining Worldwide Rights

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

Recognition of Gain on Sale

From the initial cash proceeds from the North American transaction of $13,395,000, the accelerated milestone payment of $10,312,000, and $4,012,000 in net
proceeds from the sale of the remaining worldwide rights, we deducted the value of net assets delivered to Mayne, including inventory, prepaid expenses, and manufacturing equipment, certain legal
fees, and the reimbursement of alternative supply costs, and have deferred amounts for alternative supply reimbursements and price protection exposure. This resulted in a remaining net gain of
$24,601,000, which was recognized during the quarter ended June 30, 2007. The gain recognized during the second quarter included proceeds received in prior periods related to the sale of the
North American rights to Nipent that were previously recorded on the balance sheet as a deferred gain until Mayne entered into a supply agreement with an FDA approved manufacturing site during the
quarter ended June 30, 2007, and as a result, we were able to estimate our price protection exposure. The remaining balance of the deferred gain on sale of products of $712,000 at
September 30, 2007 consists of $112,000 in remaining obligations related to Mayne's alternative supply reimbursement and $600,000 for estimated price protection exposure.

We
received the first annual sales milestone payment of $1,828,000 in August 2007, which was also recorded as a gain on sale of products in the quarter ended September 30,
2007.

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

NOTE 8.    NIPENT EUROPEAN MARKETING AND DISTRIBUTION RIGHTS

Wyeth Distribution Rights

On June 1, 2006, we entered into an agreement with Wyeth to terminate the European distribution of Nipent by Wyeth and transition distribution to SuperGen.
In connection with the execution of the amended agreement, we paid Wyeth $2.1 million in consideration for the acceleration of the transfer of the Nipent European distribution rights and the
net profit amounts to be paid by Wyeth as described below. The original distribution and supply agreement with Wyeth would have terminated on its own terms at no cost to SuperGen over a period of
time, varying by country, through March 2007. Under the amended agreement, distribution rights transitioned for most countries, except Spain and France, on December 1, 2006. Spain and
France transitioned in February 2007.

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

We
recorded the initial $2.1 million payment to Wyeth as Prepaid distribution and marketing rights, and amortized it as a reduction of product revenue over 10 months, which
corresponds to the termination acceleration period of June 2006 through March 2007. This payment was fully amortized at March 31, 2007. We recognized the revenue, and related cost
of revenue, when the vials were delivered to the end customer by Wyeth. We determined that Wyeth's ability to collect from the end customer is reasonably assured. During the nine months ended
September 30, 2007, we recorded $257,000 of net profit from Wyeth, which was included in net product revenue.

NOTE 9.    SALE OF PRODUCTS TO INTAS

In April 2007, we sold the rights to anticancer agents mitomycin and paclitaxel to Intas Pharmaceuticals Ltd. for an aggregate purchase price of
$1.2 million. We also sold related inventory with the transaction for $146,000. In May 2007, we sold the rights to generic etoposide to Intas for $70,000.
After deducting inventory costs and other fees, we recognized a net gain of $1,248,000 during the three months ended June 30, 2007 relating to the sale of these non-core assets.

13

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NOTE 10.    CONVERTIBLE DEBT FINANCING DERIVATIVE LIABILITY AND COLLATERAL

In June 2003, we closed a private placement transaction in which we issued Senior Convertible Notes ("June Notes") in the aggregate principal amount of
$21.25 million. In connection with the issuance of the June Notes, we issued to the note holders warrants to purchase the 2,634,211 shares of AVI BioPharma, Inc. that we own ("AVI
Shares") at an exercise price of $5.00 per share. The warrants represented a derivative under Statement of Financial Accounting Standards ("SFAS") 133 that must be recorded at fair value. Changes in
the fair value of the derivative have been recognized in earnings. During the three and nine months ended September 30, 2006, we recorded changes in the value of this derivative of $654,000 and
$1,327,000, respectively. There were no similar charges in the three and nine months ended September 30, 2007 as the warrants expired on December 31, 2006.

During
the nine months ended September 30, 2006, one of the warrant holders exercised warrants to purchase 300,000 shares. As part of this transaction, we received $1,500,000 in
cash and transferred 300,000 of the AVI Shares to the warrant holder. We recognized a gain on disposition of the shares of $780,000, representing the difference between our carrying value of the
shares and the proceeds we received.

In
connection with the issuance of the warrants to acquire the AVI Shares, the AVI Shares had been pledged into a collateral account. At December 31, 2006, the fair value of the
pledged 2,334,211 AVI Shares were included in the accompanying balance sheet under non-current Restricted cash and investments, with an additional 50,000 unrestricted shares of AVI
included in Investment in stock of related parties. As noted above, the warrants expired on December 31, 2006, and the 2,334,211 pledged shares were released from the collateral account. At
September 30, 2007, all 2,384,211 AVI Shares are included in Marketable securities, non-current. We reflect temporary changes in the value of those shares as part of accumulated
other comprehensive income or loss in stockholders' equity.

NOTE 11.    COMPREHENSIVE INCOME/LOSS

Comprehensive income or loss consists primarily of the net income or loss and changes in unrealized gains or losses on investments. For the three months ended
September 30, 2007, total comprehensive loss amounted to $442,000, compared to a comprehensive loss of $2,629,000 for the three months ended September 30, 2006. We recorded unrealized
losses on investments of $634,000 for the three months ended September 30, 2007 compared to unrealized losses on investments of $311,000 for the three months ended September 30, 2006.

For
the nine months ended September 30, 2007, total comprehensive income amounted to $6,338,000, compared to a comprehensive loss of $9,661,000 for the nine months ended
September 30, 2006. For the nine months ended September 30, 2007, we recorded unrealized losses on investments of $1,602,000, compared to $503,000 in unrealized gains for the nine months
ended September 30, 2006.

NOTE 12.    BASIC AND DILUTED INCOME (LOSS) PER SHARE

Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of common shares outstanding for the period,
without consideration for potential common shares. Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding for the
period and dilutive potential

14

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common
shares for the period determined using the treasury-stock method. For purposes of this calculation, options to purchase stock and warrants are considered to be potential common shares and are
only included in the calculation of diluted net income (loss) per share when their effect is dilutive.

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

Three months ended
September 30,

Nine months ended
September 30,2007

2006

2007

2006Weighted-average common shares outstanding used in calculation of basic net income (loss) per share

57,478

53,607

56,655

52,858Dilutive stock options and warrants

281



642

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

57,759

53,607

57,297

52,858Outstanding stock options and warrants not included in dilutive net income (loss) per share as they had an antidilutive effect

9,739

11,823

6,922

11,823


NOTE 13.    INCOME TAXES

We have recorded a tax benefit of $427,000 for the three months ended September 30, 2007, resulting primarily from a change in the anticipated timing of a
milestone payment to the former Montigen shareholders, and a tax provision of $236,000 for the nine months ended September 30, 2007, based on the Company's estimated effective tax rate for the
year. The effective tax rate is based on the anticipated alternative minimum taxes and state income taxes that we estimate will be incurred in the current year. We recorded tax provisions of $217,000
for the three months ended September 30, 2006 and $252,000 for the nine months ended September 30, 2006 related to federal alternative minimum taxes, state income taxes, and the tax
effect of the net proceeds received on the sale of products to Mayne.

We
adopted the provisions of Financial Accounting Standards Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"), on January 1,
2007. There was no impact on our consolidated financial position, results of operations and cash flows as a result of adoption. We have no unrecognized tax benefit, as described in FIN 48, as of
September 30, 2007. Also, there are no accrued amounts for interest and penalties.

Our
policy will be to recognize interest and penalties related to income taxes as a component of income tax expense. We are subject to income tax examinations for U.S. Federal incomes
taxes and state income taxes from 1992 forward due to net operating losses in tax years 1992 through 2005. We are subject to tax examinations in the United Kingdom from 2001 forward. We do not
anticipate that total unrecognized tax benefits will significantly change prior to September 30, 2008.

15

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NOTE 14.    RECENT ACCOUNTING PRONOUNCEMENTS

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

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

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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

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

Overview

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

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

Dacogen.Dacogen is approved by the FDA for the treatment of patients with MDS. In September 2004, we executed an
agreement granting MGI exclusive worldwide rights to the development, manufacture, commercialization and distribution of Dacogen. Under the terms of the agreement, MGI made a $40.0 million
equity investment in our company and will pay up to $45.0 million in specific regulatory and commercialization milestone payments. To date, we have received $32.5 million of these
milestone payments, including $20.0 million upon first commercial sale of Dacogen in the U.S. in May 2006. In accordance with our agreement with MGI, we are entitled to receive a royalty
on worldwide net sales starting at 20% and escalating to a maximum of 30%. During the nine months ended September 30, 2007, we recorded royalty revenue of $14.5 million. Because we do
not have sufficient ability to accurately estimate Dacogen sales, we recognize royalty revenue on a cash basis when we receive it from MGI.

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In
July 2006, MGI executed an agreement to sublicense Dacogen to Janssen-Cilag, a Johnson & Johnson company, granting exclusive development and commercialization rights in
all territories outside North America. In accordance with our license agreement with MGI, we are entitled to receive 50% of any payments MGI receives as a result of any sublicenses. We received
$5.0 million, 50% of the $10 million upfront payment MGI received, and, as a result of both the original agreement with MGI and this sublicense with Janssen-Cilag, we may receive up to
$23.75 million in future milestone payments as they are achieved for Dacogen globally. Janssen-Cilag companies will be responsible for conducting regulatory and commercial activities related to
Dacogen in all territories outside North America, while MGI retains all commercialization rights and responsibility for all activities in the United States, Canada and Mexico.

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

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

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

On
April 2, 2007, we closed another transaction with Mayne, completing the sale of the remaining worldwide rights for Nipent for total consideration of up to $8.3 million.
We received an initial up-front payment of $3,750,000 as a condition of the closing, plus an additional $389,000 for the carrying value of the remaining Nipent inventory. The balance of
the purchase price is guaranteed and payable in five installments over a five year period on the anniversary of the closing date, except for $1.25 million that will be received when certain
contractual conditions are met.

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

Pursuant
to the terms of the merger agreement with Montigen, we paid the Montigen stockholders a total of $17.9 million upon the closing of the transaction in cash and shares of
SuperGen common stock. The agreement also specified an additional $22.0 million due to the Montigen stockholders,

18

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payable
in shares of SuperGen common stock, contingent upon achievement of specific regulatory milestones. The first Montigen compound was cleared in April 2007 by the FDA to begin Phase I
clinical trials, which triggered the first milestone payment to the former Montigen stockholders of $10.0 million which we paid in shares of our common stock.

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

As
a result of our substantial research and development expenditures and minimal product revenues, we have incurred cumulative losses of $357.4 million through
September 30, 2007, and have never generated enough funds through our operations to support our business. We expect to continue to incur operating losses at least through 2008.

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

Critical Accounting Policies

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

Our
significant accounting policies are more fully disclosed in Note 1 to our consolidated financial statements included in our 2006 Annual Report on Form 10-K.
However, some of our accounting policies are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our
management. We believe the following critical accounting policies, among others, affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial
statements.

19

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We account for stock-based compensation in accordance with the fair value recognition provisions of Statement of Financial Accounting Standards No. 123(R),
"Share-Based Payment" ("SFAS 123R").

The
fair value of each stock award is estimated on the grant date using the Black-Scholes option-pricing model based on assumptions for volatility, risk-free interest rates,
expected life of the option, and dividends (if any). Expected volatility is determined based on a blend of historical volatility and implied volatility of our common stock based on the period of time
corresponding to the expected life of the stock options. The expected life of our stock options is based on our historical data and represents the period of time that stock options granted are
expected to be outstanding. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected life assumption.

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

As
of September 30, 2007, there was $5,562,000 of total unrecognized compensation cost related to unvested stock-based awards. This cost is expected to be recognized over a
weighted average period of 2.26 years. We expect approximately 2,047,000 in unvested options to vest at some point in the future. Options expected to vest is calculated by applying an estimated
forfeiture rate to the unvested options.



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

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

We
accounted for our $2.1 million payment to Wyeth in June 2006 as Prepaid distribution and marketing rights, which were amortized against revenue over 10 months,
equaling the termination acceleration period of June 2006 through March 2007. The amortization of $630,000 through the nine months ended September 30, 2007 was reflected as a
reduction of product revenue. Proceeds from our initial product shipments to Wyeth were deferred and were recognized as revenue (and related cost of revenue) when the product was delivered to the end
customer by Wyeth. Under the terms of our amended license agreement with Wyeth, we received an additional amount of net profit based on Wyeth's sales of Nipent. During the nine months ended
September 30, 2007, we received $257,000 of net profit, which was included in net product revenue.

MGI
is required to pay us royalties starting at 20% and escalating to a maximum of 30% of net worldwide Dacogen sales within 45 days after the end of each calendar quarter. During
the nine month period ended September 30, 2007, we recorded royalty revenue of $14.5 million. Because we do not have sufficient ability to accurately estimate Dacogen sales, we recognize
royalty revenue on a cash basis when we receive it from MGI. In accordance with our license agreement with MGI, we are

20

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entitled
to receive 50% of any payments MGI receives as a result of any sublicenses. We received $5.0 million, 50% of the $10 million upfront payment MGI received, and, as a result of
both the original agreement with MGI and a sublicense with Cilag GmbH, may receive up to $23.75 million in future milestone payments as they are achieved for Dacogen globally.

We
received initial cash proceeds from the North American transaction with Mayne Pharma of $13,395,000. From the initial cash proceeds from the agreement of $13,395,000, the accelerated
milestone payment of $10,312,000, and $4,012,000 in net proceeds from the sale of the remaining worldwide rights, we deducted the value of net assets delivered to Mayne, including inventory, prepaid
expenses, and manufacturing equipment, certain legal fees, and the reimbursement of alternative supply
costs, and have deferred amounts for alternative supply reimbursements and price protection exposure. This resulted in a remaining net gain of $24,601,000, which was recognized during the quarter
ended June 30, 2007. The gain recognized included proceeds received in prior periods related to the sale of the North American rights to Nipent that were previously recorded on the balance
sheet as a deferred gain because Mayne entered into a supply agreement with an FDA approved manufacturing site during the quarter ended June 30, 2007, and as a result, we were able to estimate
our price protection exposure. The remaining balance of the deferred gain on sale of products of $712,000 at September 30, 2007 consists of $112,000 in remaining obligations toward Mayne's
alternative supply reimbursement and $600,000 for potential price protection exposure.

We
received our first annual sales milestone payment of $1,828,000 from Mayne/Hospira in August 2007, which was also recorded as a gain on sale of products in the quarter ended
September 30, 2007.



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



Investments in financial instruments are carried at fair value with unrealized gains and losses included in Accumulated other comprehensive income or loss in
stockholders' equity. Our investment portfolio includes equity securities that could subject us to material market risk and corporate and U.S. government (or U.S. governmental agency) obligations that
subject us to varying levels of credit risk. If the fair value of a financial instrument has declined below its carrying value for a period in excess of six consecutive months or if the decline is due
to a significant adverse event, such that the carrying amount of these investments may not be fully recoverable, the impairment is considered to be other than temporary. An other than temporary
decline in fair value of a financial instrument would be subject to a write-down resulting in a charge against earnings. The determination of whether a decline in fair value is other than
temporary requires significant judgment, and could have a material impact on our balance sheet and results of operations. Our management reviews the securities within our portfolio for other than
temporary declines in value on a regular basis. The prices of some
of our marketable securities, are subject to considerable volatility. Decreases in the fair value of these securities may significantly impact our results of operations.

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

Recent Accounting Pronouncements

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

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

Results of Operations

Three months ended September 30, 2007 compared to three months ended September 30, 2006:

Three months ended
September 30,ChangeRevenues2007

2006

Dollar

Percent(Dollars in thousands)Net product revenue

$


$
2,228

$
(2,228
)
(100.0
)%Development and license revenue from MGI PHARMA.





5,064


(5,064
)
(100.0
)Royalty revenue


6,123


1,043


5,080

487.1


The
decrease in net product revenue for the three months ended September 30, 2007 was due to the sale of our worldwide rights to Nipent and Surface Safe to Mayne Pharma.

In
accordance with our license agreement entered into with MGI in September 2004, MGI is required to pay certain milestone payments upon achievement, and royalties starting at 20%
and escalating to a maximum of 30% of net worldwide Dacogen sales within 45 days after the end of each calendar quarter. For the three months ended September 30, 2006, development and
license revenue consisted of $5,000,000 from MGI, which represented 50% of the amount MGI received as a result of sublicensing Dacogen in Europe, and $64,000 in reimbursable costs. We had no similar
revenues in the three months ended September 30, 2007.

During
the three months ended September 30, 2007, we recorded royalty revenue of $6,123,000 related to Dacogen sales as reported by MGI for their second quarter of 2007. The
royalty revenue of $1,043,000 recorded in the three months ended September 30, 2006 related to Dacogen sales for MGI's second quarter of 2006. MGI commenced sales of Dacogen in the second
quarter of 2006. Because we

22

---



do
not have sufficient ability to accurately estimate Dacogen sales, we recognize royalty revenue on a cash basis when we receive it from MGI.

Three months ended
September 30,ChangeCosts and operating expenses2007

2006

Dollar

Percent(Dollars in thousands)Cost of product revenue

$


$
482

$
(482
)
(100.0
)%Research and development


6,170


4,651


1,519

32.7Selling, general and administrative


3,072


6,753


(3,681
)
(54.5
)Gain on sale of products


(1,828
)




1,828




The
decline in cost of product revenue was due to the sale of our worldwide rights to Nipent and Surface Safe to Mayne Pharma.

The
increase in research and development expenses was due to higher drug discovery research costs at the Montigen facility in Salt Lake City, Utah, which was acquired in
April 2006, and clinical trial costs related to the initiation of Phase I studies for MP470, partially offset by lower clinical research and supply costs related to Nipent.

The
decrease in selling, general and administrative expenses for the three months ended September 30, 2007 relates primarily to lower costs associated with sales and marketing
programs due to the sale of Nipent and Surface Safe to Mayne, lower legal expenses, and lower costs related to our European operations.

Gain
on sale of products recorded in the three months ended September 30, 2007 relates to the first annual milestone payment from Mayne/Hospira relating to the achievement of
certain Nipent sales targets.

Three months ended
September 30,ChangeOther income (expense)2007

2006

Dollar

Percent(Dollars in thousands)Interest income

$
1,044

$
796

$
248

31.2
%Other income


12





12

Change in valuation of derivatives





654


(654
)
(100.0
)


The
increase in interest income was due to higher available cash and marketable securities balances for the three months ended September 30, 2007, compared to the same period in
2006. Other income in the three months ended September 30, 2007 relates primarily to foreign currency transaction gains.

The
warrants issued in our June 2003 convertible debt transaction represented a derivative instrument and were revalued each quarter using the Black-Scholes pricing model. During
the third quarter of 2006, the value of this derivative had declined by $654,000. The warrants expired on December 31, 2006, so there was no corresponding change during the third quarter of
2007.

23

---



Nine months ended September 30, 2007 compared to nine months ended September 30, 2006:

Nine months ended
September 30,ChangeRevenues2007

2006

Dollar

Percent(Dollars in thousands)Net product revenue

$
621

$
9,096

$
(8,475
)
(93.2
)%Development and license revenue from MGI PHARMA.





25,064


(25,064
)
(100.0
)Royalty revenue


14,536


1,043


13,493

1,293.7


The
decrease in net product revenue for the nine months ended September 30, 2007 was due primarily to the sale of our worldwide rights to Nipent and Surface Safe to Mayne Pharma.
Net product revenues in 2007 relate only to sales in Europe through March 31, 2007.

Development
and license revenue relates to our license agreement entered into with MGI in September 2004. For the nine months ended September 30, 2006, we recognized
milestone revenue of $20,000,000 earned upon first commercial sales of Dacogen by MGI in May 2006, we received $5,000,000 from MGI representing 50% of the amount they received as a result of
sublicensing Dacogen in Europe, and recorded $64,000 in reimbursable costs. We had no similar revenues in 2007.

MGI
is required to pay us royalties starting at 20% and escalating to a maximum of 30% of net worldwide Dacogen sales within 45 days after the end of each calendar quarter.
Because we do not have sufficient ability to accurately estimate Dacogen sales, we recognize royalty revenue on a cash basis when we receive it from MGI. During the nine months ended
September 30, 2007, we recorded royalty revenue of $14,536,000 related to Dacogen sales for the fourth quarter of 2006 through the second quarter of 2007. The royalty revenue of $1,043,000
recorded in the nine months ended September 30, 2006 related to Dacogen sales by MGI for their second quarter of 2006. MGI commenced sales of Dacogen in the second quarter of 2006.

Nine months ended
September 30,ChangeCosts and operating expenses2007

2006

Dollar

Percent(Dollars in thousands)Cost of product revenue

$
221

$
1,877

$
(1,656
)
(88.2
)%Research and development


17,185


11,509


5,676

49.3Selling, general and administrative


10,345


19,312


(8,967
)
(46.4
)Acquired in-process research and development


9,967


16,318


(6,351
)
(38.9
)Gain on sale of products


(27,677
)




27,677




The
decline in cost of product revenue was due to the sale of our worldwide rights to Nipent and Surface Safe to Mayne Pharma.

The
increase in research and development expenses was due to higher drug discovery research costs associated with the acquisition of the Montigen facility in Salt Lake City, Utah in
April 2006 and clinical trial costs related to the initiation of Phase I studies for MP470, partially offset by lower clinical research and supply costs related to Nipent.

The
decrease in selling, general and administrative expenses for the nine months ended September 30, 2007 relates primarily to lower costs associated with sales and marketing
programs due to the sale of our worldwide rights to Nipent and Surface Safe to Mayne, and lower costs related to our European operations, partially offset by higher expenses related to stock
compensation expense.

24

---



In
April 2007, the first Montigen compound received clearance from the FDA to begin Phase I clinical trials, triggering the first milestone payment to the former Montigen
stockholders of $9,967,000, which we paid through the issuance of 1,477,000 shares of our common stock. This was recorded as acquired in-process research and development expense in the
nine months ended September 30, 2007. Acquired in-process research and development expense recorded in the nine months ended September 30, 2006 related to the valuation of
our acquisition of Montigen in April 2006. The value assigned to acquired in-process research and development represented the fair value of Montigen's incomplete research and
development programs that had not yet reached technological feasibility and had no alternative future use as of the acquisition date.

Gain
on sale of products recorded in the nine months ended September 30, 2007 relates to the sale of our worldwide rights to Nipent and Surface Safe to Mayne Pharma and the sale
of mitomycin,
paclitaxel, and etoposide to Intas Pharmaceuticals, as well as the first annual milestone payment of $1,828,000 received from Mayne/Hospira relating to the achievement of certain Nipent sales targets.

Nine months ended
September 30,ChangeOther income (expense)2007

2006

Dollar

Percent(Dollars in thousands)Interest income

$
3,027

$
1,794

$
1,233

68.7
%Gain on disposition of AVI stock





780


(780
)
(100.0
)Other income


33





33

Change in valuation of derivatives





1,327


(1,327
)
(100.0
)


The
increase in interest income was due to higher available cash and marketable securities balances for the nine months ended September 30, 2007, compared to the same period in
2006. Other income in the nine months ended September 30, 2007 relates primarily to foreign currency transaction gains.

As
part of our June 2003 convertible debt transaction, we issued to the note holders warrants to purchase 2,634,211 shares of AVI at $5.00 per share. During the nine months ended
September 30, 2006, one of the warrant holders exercised 300,000 warrants. As part of this transaction, we received $1,500,000 in cash and transferred 300,000 of the AVI Shares to the warrant
holder. We recognized a gain on disposition of the shares of $780,000, representing the difference between our $2.40 per share adjusted cost basis of the shares and the exercise price of $5.00 per
share. We had no similar transaction during the nine months ended September 30, 2007.

The
warrants issued in our June 2003 convertible debt transaction represented a derivative instrument and were revalued each quarter using the Black-Scholes pricing model. During
the nine months ended September 30, 2006, the value of this derivative had decreased by $1,327,000. The warrants expired on December 31, 2006, so there was no corresponding change during
the nine months ended September 30, 2007.

Income Taxes

We have recorded a tax benefit of $427,000 for the three months ended September 30, 2007, resulting primarily from a change in the anticipated timing of a
milestone payment to the former Montigen shareholders, and a tax provision of $236,000 for the nine months ended September 30, 2007, based on the Company's estimated effective tax rate for the
year. The effective tax rate is based on the anticipated alternative minimum taxes and state income taxes that will be incurred in the current year. We recorded tax provisions of $217,000 and
$252,000, respectively, for the three and nine months ended September 30, 2006, related to federal alternative minimum taxes, state income taxes, and the tax effect of the net proceeds received
on the sale of products to Mayne.

25

---



Liquidity and Capital Resources

Our unrestricted cash, cash equivalents, and marketable securities totaled $87,021,000 at September 30, 2007 compared to $67,883,000 at December 31,
2006. Included in the 2007 total are 2,384,211 shares of registered stock of AVI, which had a market value of $6,080,000 at September 30, 2007. In connection with the issuance of the warrants
to acquire the AVI Shares in 2003, the majority of the AVI Shares had been pledged into a collateral account. The warrants expired on December 31, 2006, and 2,334,211 pledged shares were
released from the collateral account. At December 31, 2006, 2,334,211 of the AVI Shares were included in Restricted cash and investments and 50,000 shares were included in Investment in stock
of related parties. At September 30, 2007, all AVI Shares are included in Marketable securities, non-current.

Net
cash used in operating activities was $7,001,000 in the nine months ended September 30, 2007, and consisted primarily of net income of $7,940,000, non-cash
acquired in-process research and development of $9,967,000, non-cash stock compensation expense of $3,162,000, non-cash depreciation and amortization of $1,681,000,
and a decrease in accounts receivable of $1,803,000, partially offset by a decrease in accounts payable and other liabilities of $2,887,000 and the recognition of and change in the deferred gain on
sale of products of $28,442,000. Net cash provided by operating activities was $12,105,000 in the nine months ended September 30, 2006, and consisted primarily of the net loss of $10,164,000,
cash of $2,100,000 paid to Wyeth for Nipent European distribution rights, and a non-cash change in valuation of derivatives of $1,327,000, offset by non-cash stock compensation
expense of $2,566,000, depreciation and amortization of $1,930,000, payment for acquired in-process research and development expense of $16,318,000, a decrease in accounts receivable of
$4,149,000, and an increase in deferred revenue of $1,007,000.

Net
cash provided by investing activities was $12,094,000 in the nine months ended September 30, 2007, and consisted primarily of milestone payments of $12,140,000 from Mayne
relating to the sale of North American rights to Nipent, $4,012,000 from Mayne for the sale of the remaining worldwide rights to Nipent, and $1,248,000 for the sale of products to Intas, offset by
$4,413,000 paid for the purchase of marketable securities, and $893,000 for the purchases of property and equipment. Net cash provided by investing activities was $5,837,000 in the nine months ended
September 30, 2006, which consisted of $13,395,000 in net proceeds from the sale of Nipent and Surface Safe to Mayne and proceeds of $1,500,000 from disposition of shares of AVI BioPharma as a
result of the exercise of warrants, partially offset by $8,693,000 related to the acquisition of the net assets of Montigen.

Net
cash provided by financing activities was $3,648,000 and $7,368,000 in the nine months ended September 30, 2007 and 2006, respectively, and in both periods consisted of
proceeds from the exercise of stock options or warrants.

We
have financed our operations primarily through the issuance of equity and debt securities and the receipt of milestone payments in connection with collaborative agreements. We believe
that our current cash, cash equivalents, marketable securities and other investments will satisfy our cash requirements through 2008. However, it is our intention to consider additional financing
options, including the selling of additional shares of stock in a public or private offering and/or exploring marketing partnership opportunities for existing or newly acquired or licensed products
and development activities resulting from the acquired research and discovery operation based in Salt Lake City, Utah.

In
addition to the contractual obligations disclosed in Management's Discussion and Analysis included in our annual report on Form 10-K for the year ended
December 31, 2006, effective April 4, 2006, we have $12.0 million in future contingent regulatory non-cash milestone payments due to the former Montigen stockholders,
which would be payable in shares of SuperGen stock.

26

---



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

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

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

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

Foreign Currency Risk

We have foreign operations based in Europe. Accordingly, we are subject to exposure from adverse movements in foreign currency exchange rates. To date, the effect
of changes in foreign currency exchange rates on revenue and operating expenses has not been material. Operating expenses incurred by our foreign subsidiaries are denominated primarily in local
currencies. We currently do not use financial instruments to hedge these operating expenses. We will assess our need to utilize financial instruments to hedge currency exposures on an ongoing basis.

Item 4.    Controls And Procedures

(a)    Evaluation
of disclosure controls and procedures.

A
material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of our annual or interim
financial statements will not be prevented or detected. Our management's assessment of our internal control over financial reporting performed during the preparation of our consolidated financial
statements as of December 31, 2006 identified the following material weakness (as defined by the Public Company Accounting Oversight Board) in our internal control over financial reporting:

It
was determined that a material weakness existed in the Company's system of internal control over financial reporting related to the Company's ability to maintain effective internal
controls over the application of generally accepted accounting principles ("GAAP") related to non-routine and complex

27

---



transactions
due to insufficient GAAP expertise commensurate with the Company's financial reporting requirements.

As
a result of the material weakness, errors were identified during the 2006 audit process in the following two areas. First, in connection with its periodic assessment of goodwill for
impairment the Company inappropriately evaluated goodwill for impairment below the reporting unit level. Second, the Company did not determine whether the computations in the reports used to record
compensation cost for share based payments appropriately applied the estimated forfeiture rate such that compensation cost recognized for the year ended December 31, 2006 was at least equal to
the portion of the grant-date value of the awards that were vested at that date. As a result, adjustments to correct the identified errors were recorded in the consolidated financial
statements for the year ended December 31, 2006 related to goodwill, additional paid in capital, and costs and operating expenses.

Subsequent
to December 31, 2006, in response to the material weakness in internal controls described above, we took measures to improve our ability to maintain effective internal
controls over the application of GAAP to non-routine and complex transactions to meet our financial reporting requirements. These measures included assessing and enhancing the experience
and knowledge of certain accounting personnel responsible for applying GAAP by providing additional training for various pertinent accounting issues or topics facing the Company and using third party
specialists to assist in assessing non-routine and complex accounting transactions, such as the adoption of FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes"
and assessing the remaining complex accounting issues related to the recording of the net gain on sale of products to third parties and related contractual commitments and contingencies with financial
implications.

Based
on the measures taken and implemented, management has determined that the material weakness in our system of internal control over financial reporting related to the application of
GAAP to non-routine and complex transactions due to insufficient GAAP expertise commensurate with the Company's financial reporting requirements has been successfully remediated as of
September 30, 2007.

As
of September 30, 2007, our management evaluated, with the participation of our chief executive officer and our chief financial officer, the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our chief executive officer and our chief financial
officer have concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

(b)    Changes
in internal control over financial reporting.

Except
as noted above, there were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on
Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

28

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SUPERGEN, INC.    PART IIOTHER INFORMATION

Item 1A.    Risk Factors

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

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

Risks Related to Dacogen and Nipent

Dacogen may not be commercially successful.

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

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

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

In
July 2006, MGI announced that it had sublicensed Dacogen to Cilag GmbH, a Johnson & Johnson company, granting exclusive development and commercialization rights in all
territories outside North America. We received 50% of the $10 million upfront payment and, as a result of both the original agreement with MGI and this sublicense with Cilag GmbH, may receive
up to $23.75 million in future milestone payments if they are achieved for Dacogen sales globally. Cilag will be responsible for conducting regulatory and commercial activities related to
Dacogen in all territories outside North America, while MGI retains all commercialization rights and responsibility for all activities in the United States, Canada and Mexico. However, if Dacogen is
never approved in Europe, we will not receive any of the expected royalty payments for commercial sales by Janssen-Cilag and future revenues and our business will be harmed.

Our right to receive a significant portion of the consideration in the transaction with Mayne Pharma is subject to contingencies beyond our control.

In August 2006 we sold the North American rights to Nipent and Surface Safe to Mayne Pharma (USA), Inc. for a total aggregate consideration of
approximately $34.0 million. $5.0 million of that aggregate amount is a supply holdback, the payment of which is contingent upon acceptance of the first delivery under a commercial
supply agreement between Mayne and the manufacturer. We cannot

29

---



control
the timing of this event. In addition, over $2.0 million of the aggregate consideration will not be paid to us unless and until Mayne achieves specified targets for sales of Nipent,
over the next two years. Achievement of these sales targets are beyond our control. Further, $1.0 million is subject to an indemnification holdback to be held by Mayne until
February 2008 to cover any potential claims. In April 2007 we sold the remaining worldwide rights to Nipent to Mayne for approximately $8.3 million. $1.0 million of that
aggregate purchase price is subject to a supply holdback related to the North American supply holdback, and $250,000 is an indemnification holdback to be held by Mayne until October 2008 to
cover any potential claims. If the conditions for the release of the supply holdbacks are not met, if there are claims against the indemnification holdbacks, and/or we are not entitled to the
approximately $2.0 million of deferred payments under the North American transaction, we will not have received full value for Nipent. If we are not able to sell our revenue generating and
otherwise valuable assets for full value, our financial condition and business will be harmed.

Risks Related to Our Financial Condition and Common Stock

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

Since inception, we have funded our research and development activities primarily from private placements and public offerings of our securities, milestone
payments and revenues generated primarily from sales of Nipent. The North American rights to Nipent were sold to Mayne Pharma in August 2006 and we sold the remaining worldwide rights to Nipent
to Mayne in April 2007. Our substantial research and development expenditures and limited revenues have resulted in significant net losses. We have incurred cumulative losses of
$357.4 million from inception through September 30, 2007, and our products have not generated sufficient revenues to support our business during that time. We expect to continue to incur
substantial operating losses at least through 2008 and may never achieve profitability.

Whether
we achieve profitability depends primarily on the following factors:



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

30

---



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

We will continue to spend substantial resources on expanding our product pipeline, commercializing future products, and conducting research and development,
including clinical trials for our product candidates. We anticipate that our capital resources will be adequate to fund operations and capital expenditures at least through 2008. However, if we
experience unanticipated cash requirements during this period, we could require additional funds much sooner. We may raise money by the sale of our equity securities or debt, or the exercise of
outstanding warrants and stock options by the holders of such warrants and options. However, given uncertain market conditions and the volatility of our stock price, we may not be able to sell our
securities in public offerings or private placements at prices and/or on terms that are favorable to us, if at all. Also, the dilutive effect of additional financings could adversely affect our per
share results. We may also choose to obtain funding through licensing and other contractual agreements. For example, we licensed the worldwide rights to the development, commercialization and
distribution of Dacogen to MGI. Such arrangements may require us to relinquish our rights to our technologies, products or marketing territories, or to grant licenses on terms that are not favorable
to us. If we fail to obtain adequate funding in a timely manner, or at all, we will be forced to scale back our product development activities, or be forced to cease our operations.

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

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

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

Our investments in marketable securities are carried at fair value with unrealized gains and losses included in accumulated other comprehensive income or loss in
stockholders' equity. However, we are exposed to equity price risk on our equity investment in AVI. Currently we own 2,384,211 shares of AVI. During the year ended December 31, 2004, we
recorded a write-down of $7.9 million related to an other than temporary decline in the value of our equity investment in AVI, resulting in a reduction of our cost basis in the AVI
shares. Under our accounting policy, marketable equity securities are presumed to be impaired if their fair value is less than their cost basis for more than six months, absent compelling evidence to
the contrary. As of June 30, 2004, the AVI shares had been trading below our original cost basis for more than six months. Since there was no compelling evidence to the contrary, we recorded
the impairment charge of $7.9 million in our results of operations. The amount of the charge was based on the difference between the market price of the shares as of June 30, 2004 and
our adjusted cost basis. The public trading prices of the AVI shares have fluctuated significantly since we

31

---



purchased
them and could continue to do so. If the public trading prices of these shares continue to trade below their new cost basis in future periods, we may incur additional impairment charges
relating to this investment, which in turn will affect our results of operations.

Product Development and Regulatory Risks

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

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

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

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

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

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



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

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

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

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

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

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

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

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

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

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

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

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

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

Additional Risks Associated with Our Business

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

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



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

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

We may be unable to maintain our relationships with our third-party manufacturers. If we need to replace or seek new manufacturing arrangements, we may have
difficulty locating and entering into arrangements with qualified contract manufacturers on acceptable terms, if at all. We are aware of only a limited number of companies on a worldwide basis who
operate manufacturing facilities in which our products can be manufactured to our specifications and in compliance with GMPs. It could take several months, or significantly longer, for a new contract
manufacturing facility to obtain FDA approval and to develop substantially equivalent processes for the production of our product candidates. We may not be able to contract with any of these companies
on acceptable terms, if at all. For example, the company that had been purifying Nipent filed for reorganization under Chapter 11 and ceased operations in late 2004. We contracted with another
manufacturer for the purification of Nipent, which has recently received qualification by the FDA and equivalent European authorities. If the new manufacturer experiences difficulties or goes out of
business, we will be unable to satisfy the conditions necessary to receive from Mayne Pharma the $6.0 million held back from us pursuant to the terms of that transaction.

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

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

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

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

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

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

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



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

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

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

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

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

We
actively pursue a policy of seeking patent protection when applicable for our proprietary products and technologies, whether they are developed in-house or acquired from
third parties. We attempt to protect our intellectual property position by filing United States and foreign patent applications related to our proprietary technology, inventions and improvements that
are important to

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the
development of our business. To date, we have ownership of or acquired licenses to numerous patents covering various aspects of our proprietary drugs and technologies. In addition, we are
prosecuting a number of patent applications for new drug candidates that we are actively developing at this time.

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

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

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

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

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

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

The pharmaceutical industry in general and the oncology sector in particular is highly competitive and subject to significant and rapid technological change. Our
competitors and probable competitors include companies such as Aventis SG, Bristol-Myers Squibb Company, Celgene, Eli Lilly & Co., GlaxoSmithKline, Novartis AG, Pfizer, Pharmion Corp. and
others.

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Many
of our competitors and research institutions are addressing the same diseases and disease indications and working on products to treat such diseases as we are, and have
substantially greater financial, research and development, manufacturing and marketing experience and resources than we do. Some of our competitors have received regulatory approval for products, or
are developing or testing product candidates that compete directly with, our product candidates. For example, Dacogen faces competition from Pharmion's Vidaza and Celgene's Revlimid.

Many
of these competitors have significantly greater experience than we do in developing products, undertaking pre-clinical testing and clinical trials, obtaining FDA and
other regulatory approvals, and manufacturing and marketing products. Accordingly, our competitors may succeed in obtaining patent protection, receiving FDA approval or commercializing products before
we do. If we commence sales of our product candidates, we will be competing against companies with greater marketing expertise and manufacturing capabilities, areas in which we have limited or no
experience.

We
also face intense competition from other companies for collaborative relationships, for establishing relationships with academic and research institutions, and for licenses to
proprietary technology.

Our
competitive positions in our generic drugs are uncertain and subject to risks. The market for generic drugs, including the pricing for generic drugs, is extremely competitive. As a
result, unless our generic drugs are the first or among the initial few to launch, there is a high risk that our products would not gain meaningful market share, or we would not be able to maintain
our price and continue the product line. Moreover, marketing of generic drugs is also subject to regulatory approval, and if we were not able to obtain such approval before our competitors, we would
lose our competitive advantage. Failure to maintain our competitive position could have a material adverse effect on our business and results of operations.

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

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

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



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

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

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

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

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

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

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

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

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



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

We
are also subject to Section 203 of the Delaware General Corporation Law, an anti-takeover provision. In general, Section 203 of the Delaware General
Corporation Law prevents a stockholder

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owning
15% or more of a corporation's outstanding voting stock from engaging in business combinations with a Delaware corporation for three years following the date the stockholder acquired 15% or
more of a corporation's outstanding voting stock. This restriction is subject to exceptions, including the approval of the board of directors and of the holders of at least two-thirds of
the outstanding shares of voting stock not owned by the interested stockholder.

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

Item 6.    Exhibits

|Exhibit
No. |  | Description of Document                                                                                                                                                       
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1        |  | Certification of Chief Executive Officer under Section 302(a) of the Sarbanes-Oxley Act of 2002                                                                               
|31.2        |  | Certification of Chief Financial Officer under Section 302(a) of the Sarbanes-Oxley Act of 2002                                                                               
|32.1        |  | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|      |  |                  |  |     |  | SUPERGEN, INC.                                                                                                  
|----- |  | ---------------- |  | --- |  | ----------------------------------------------------------------------------------------------------------------
|Date: |  | November 9, 2007 |  | By: |  | /s/JAMES S.J. MANUSOJames S.J. Manuso, Ph.D. President and Chief Executive Officer
(Principal Executive Officer)
|      |  |                  |  | By: |  | /s/MICHAEL MOLKENTINMichael Molkentin Chief Financial Officer
(Principal Financial and Accounting Officer)      

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