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

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FORM 10-Q

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the Quarterly Period Ended June 30, 2001

or

|/ / | 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)

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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 /x/  No / /

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares of the registrant's Common Stock, $.001 par value, outstanding as of August 9, 2001, was 32,961,988.

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TABLE OF CONTENTS

|           |  |                       |                                                                                                        |  | Page No.
|---------- |  | --------------------- | ------------------------------------------------------------------------------------------------------ |  | --------
|PART I     |  | FINANCIAL INFORMATION |                                                                                                        | 
|           |  | Item 1               | Financial Statements (Unaudited)                                                                       |  |         
|           |  |                       | Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000                                  |  | 3       
|           |  |                       | Consolidated Statements of Operations for the three and six month periods ended June 30, 2001 and 2000 |  | 4       
|           |  |                       | Consolidated Statements of Cash Flows for the six month periods ended June 30, 2001 and 2000           |  | 5       
|           |  |                       | Notes to Consolidated Financial Statements                                                             |  | 6       
|           |  | Item 2               | Management's Discussion and Analysis of Financial Condition and Results of Operations                  |  | 9       
|           |  | Item 3               | Quantitative and Qualitative Disclosures About Market Risk                                             |  | 17      
|PART II    |  | OTHER INFORMATION     |                                                                                                        | 
|           |  | Item 2               | Changes in Securities                                                                                  |  | 18      
|           |  | Item 4               | Submission of Matters to a Vote of Security Holders                                                    |  | 18      
|           |  | Item 6               | Exhibits and Reports on Form 8-K                                                                       |  | 18      
|SIGNATURES |  | 19                   

2

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

|                                       |                                                                                                                                                                            | June 30,
2001                              |        | December 31,
2000 |        
|-------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ----------------- | -------
|
|ASSETS                                 |                                                                                                                                                                            |                                            |        |                   |        
|Current assets:                        |                                                                                                                                                                            |                                            |        |                   |        
|                                       | Cash and cash equivalents                                                                                                                                                  |                                            | $      | 22,456            |        
|                                       | Marketable securities                                                                                                                                                      |                                            |        | 58,703            |        
|                                       | Accounts receivable                                                                                                                                                        |                                            |        | 2,388             |        
|                                       | Other receivables                                                                                                                                                          |                                            |        | 1,494             |        
|                                       | Inventories                                                                                                                                                                |                                            |        | 1,482             |        
|                                       | Prepaid expenses and other current assets                                                                                                                                  |                                            |        | 3,435             |        
|                                       |                                                                                                                                                                            |                                            |        |                   |        
|                                       |                                                                                                                                                                            | Total current assets                       |        |                   | 89,958 
|Marketable securitiesnon-current      |                                                                                                                                                                            |                                            | 14,265 |                   |        
|Investment in stock of related parties |                                                                                                                                                                            |                                            | 26,939 |                   |        
|Due from related parties               |                                                                                                                                                                            |                                            | 485    |                   |        
|Property, plant and equipment, net     |                                                                                                                                                                            |                                            | 6,542  |                   |        
|Developed technology at cost, net      |                                                                                                                                                                            |                                            | 1,157  |                   |        
|Goodwill and other intangibles, net    |                                                                                                                                                                            |                                            | 1,372  |                   |        
|Restricted cash                        |                                                                                                                                                                            |                                            | 3,307  |                   |        
|Other assets                           |                                                                                                                                                                            |                                            | 48     |                   |        
|                                       |                                                                                                                                                                            |                                            |        |                   |        
|                                       |                                                                                                                                                                            | Total assets                               |        | $                 | 144,073
|                                       |                                                                                                                                                                            |                                            |        |                   |        
|LIABILITIES AND STOCKHOLDERS' EQUITY   |                                                                                                                                                                            |                                            |        |                   |        
|Current liabilities:                   |                                                                                                                                                                            |                                            |        |                   |        
|                                       | Accounts payable and accrued liabilities                                                                                                                                   |                                            | $      | 6,780             |        
|                                       | Deferred revenue                                                                                                                                                           |                                            |        | 1,000             |        
|                                       | Accrued employee benefits                                                                                                                                                  |                                            |        | 1,401             |        
|                                       |                                                                                                                                                                            |                                            |        |                   |        
|                                       |                                                                                                                                                                            | Total current liabilities                  |        |                   | 9,181  
|Deferred revenuenon-current           |                                                                                                                                                                            |                                            | 2,667  |                   |        
|                                       |                                                                                                                                                                            |                                            |        |                   |        
|                                       |                                                                                                                                                                            | Total liabilities                          |        |                   | 11,848 
|                                       |                                                                                                                                                                            |                                            |        |                   |        
|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;
32,789,789 and 33,383,723 shares issued and outstanding at
June 30, 2001 and December 31, 2000, respectively |                                            |        | 33                |        
|                                       | Additional paid in capital                                                                                                                                                 |                                            |        | 282,469           |        
|                                       | Deferred compensation                                                                                                                                                      |                                            |        | (159              | )      
|                                       | Accumulated other comprehensive income (loss)                                                                                                                              |                                            |        | 4,750             |        
|                                       | Accumulated deficit                                                                                                                                                        |                                            |        | (154,868          | )      
|                                       |                                                                                                                                                                            |                                            |        |                   |        
|                                       |                                                                                                                                                                            | Total stockholders' equity                 |        |                   | 132,225
|                                       |                                                                                                                                                                            |                                            |        |                   |        
|                                       |                                                                                                                                                                            | Total liabilities and stockholders' equity |        | $                 | 144,073
|                                       |                                                                                                                                                                            |                                            |        |                   |        

See
accompanying notes to consolidated financial statements

3

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SUPERGEN, INC.  CONSOLIDATED STATEMENTS OF OPERATIONS  (in thousands, except per share amounts)  (unaudited)

|                                                                                 |                                      | Three months ended
June 30, |         | Six months ended
June 30, |       
|-------------------------------------------------------------------------------- | ------------------------------------ | --------------------------- | ------- | ------------------------- | ------
|
|Revenues:                                                                        |                                      |                             |         |                           |       
|                                                                                 | Net sales revenue                    |                             | $       | 3,294                     |       
|                                                                                 | Other revenue                        |                             |         | 250                       |       
|                                                                                 |                                      |                             |         |                           |       
|                                                                                 |                                      | Total revenue               |         |                           | 3,544 
|Operating expenses:                                                              |                                      |                             |         |                           |       
|                                                                                 | Cost of sales                        |                             |         | 914                       |       
|                                                                                 | Research and development             |                             |         | 11,672                    |       
|                                                                                 | Selling, general, and administrative |                             |         | 6,165                     |       
|                                                                                 |                                      |                             |         |                           |       
|                                                                                 |                                      | Total operating expenses    |         |                           | 18,751
|                                                                                 |                                      |                             |         |                           |       
|Loss from operations                                                             |                                      |                             | (15,207 | )                         |       
|Interest income                                                                  |                                      |                             | 1,467   |                           |       
|                                                                                 |                                      |                             |         |                           |       
|Net loss                                                                         |                                      | $                           | (13,740 | )                         | $     
|                                                                                 |                                      |                             |         |                           |       
|Basic and diluted net loss per share                                             |                                      | $                           | (0.42   | )                         | $     
|                                                                                 |                                      |                             |         |                           |       
|Weighted average shares used in basic and diluted net loss
per share calculation |                                      |                             | 32,764  |                           |       
|                                                                                 |                                      |                             |         |                           |       

See
accompanying notes to consolidated financial statements

4

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SUPERGEN, INC.  CONSOLIDATED STATEMENTS OF CASH FLOWS  (in thousands)  (unaudited)

|                                                     |                                                                             | Six months ended
June 30,                                              |                                                    
|---------------------------------------------------- | --------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ---------------------------------------------------
|
|Operating activities:                                |                                                                             |                                                                        |                                                    
|                                                     | Net loss                                                                    |                                                                        | $                                                  
|                                                     | Adjustments to reconcile net loss to net cash used in operating activities: |                                                                        |                                                    
|                                                     |                                                                             | Depreciation and amortization                                          |                                                    
|                                                     |                                                                             | Amortization of deferred revenue                                       |                                                    
|                                                     |                                                                             | Expense related to stock options and warrants granted to non-employees |                                                    
|                                                     |                                                                             | Non-cash charge related to acquisition of license agreement            |                                                    
|                                                     |                                                                             | Changes in operating assets and liabilities:                           |                                                    
|                                                     |                                                                             |                                                                        | Accounts receivable                                
|                                                     |                                                                             |                                                                        | Inventories                                        
|                                                     |                                                                             |                                                                        | Prepaid expenses and other assets                  
|                                                     |                                                                             |                                                                        | Due from related parties                           
|                                                     |                                                                             |                                                                        | Other receivables                                  
|                                                     |                                                                             |                                                                        | Restricted cash                                    
|                                                     |                                                                             |                                                                        | Accounts payable and other liabilities             
|                                                     |                                                                             |                                                                        |                                                    
|Net cash used in operating activities                |                                                                             |                                                                        | (27,769                                            
|                                                     |                                                                             |                                                                        |                                                    
|Investing activities:                                |                                                                             |                                                                        |                                                    
|                                                     |                                                                             | Purchases of marketable securities                                     |                                                    
|                                                     |                                                                             | Sales or maturities of marketable securities                           |                                                    
|                                                     |                                                                             | Purchase of equity investment in Peregrine Pharmaceuticals             |                                                    
|                                                     |                                                                             | Purchases of property and equipment                                    |                                                    
|                                                     |                                                                             |                                                                        |                                                    
|Net cash used in investing activities                |                                                                             |                                                                        | (14,278                                            
|                                                     |                                                                             |                                                                        |                                                    
|Financing activities:                                |                                                                             |                                                                        |                                                    
|                                                     |                                                                             | Issuance of common stock, net of issuance costs                        |                                                    
|                                                     |                                                                             | Repurchases of common stock                                            |                                                    
|                                                     |                                                                             |                                                                        |                                                    
|Net cash provided by (used in) financing activities  |                                                                             |                                                                        | (6,228                                             
|                                                     |                                                                             |                                                                        |                                                    
|Net increase (decrease) in cash and cash equivalents |                                                                             |                                                                        | (48,275                                            
|Cash and cash equivalents at beginning of period     |                                                                             |                                                                        | 70,731                                             
|                                                     |                                                                             |                                                                        |                                                    
|Cash and cash equivalents at end of period           |                                                                             | $                                                                      | 22,456                                             
|                                                     |                                                                             |                                                                        |                                                    
|Supplemental Disclosures of Cash Flow Information:   |                                                                             |                                                                        |                                                    
|                                                     |                                                                             | Non-cash investing and financing activities:                           |                                                    
|                                                     |                                                                             |                                                                        | Issuance of warrant related to consulting agreement

See
accompanying notes to consolidated financial statements

5

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SUPERGEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2001

(Unaudited)

NOTE 1. BASIS OF PRESENTATION

The accompanying 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 accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month period ended June 30, 2001
are not necessarily indicative of results that may be expected for the year ended December 31, 2001.

The
balance sheet at December 31, 2000 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.

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, 2000.

NOTE 2. 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 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 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 debt securities as available-for-sale, with unrealized gains and losses included in equity.

The
following is a summary of available-for-sale securities as of June 30, 2001 (in thousands):

Amortized
Cost

Gross
Unrealized
Gains
(Losses)

Estimated
Fair ValueU.S. corporate debt securities

$
91,041

$
712

$
91,753U.S. government debt securities


3,988


4


3,992Marketable equity securities


22,919


4,034


26,953Total

$
117,948

$
4,750

$
122,698


6

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Balance
sheet classification as of June 30, 2001 (in thousands):

Amortized
Cost

Gross
Unrealized
Gains
(Losses)

Estimated
Fair ValueAmounts included in cash and cash equivalents.

$
23,292

$
(1
)
$
23,291Marketable securities, current


58,086


617


58,703Marketable securities, non-current


14,071


194


14,265Investment in stock of related parties


22,499


3,940


26,439Total

$
117,948

$
4,750

$
122,698


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

Estimated Fair ValueJune 30,
2001

December 31,
2000Debt securities:Due in one year or less

$
81,994

$
89,583Due after one year through three years


13,751


38,67595,745


128,258Marketable equity securities


26,953


12,903Total

$
122,698

$
141,161


There
were no realized gains and losses for the three and six month periods ended June 30, 2001 and 2000.

NOTE 3. INVENTORIES

Inventories consist of the following (in thousands):

June 30,
2001

December 31,
2000Raw material

$
176

$
176Work in process


303


720Finished goods


1,003


752$
1,482

$
1,648


7

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NOTE 4. STOCKHOLDERS' EQUITY

Stock Repurchase Plan

In September 2000, the SuperGen Board of Directors authorized a stock repurchase plan to acquire, in the open market, an aggregate of up to one million
shares of our common stock, at prices not to exceed $22.00 per share or $20,000,000 in total. In March 2001, the Board authorized the repurchase of an additional one million shares, but
maintained the $20,000,000 repurchase total. During the six months ended June 30, 2001, we repurchased 717,500 shares of our common stock at a cost, net of commissions, of $7,084,000. All
shares repurchased have been retired.

NOTE 5. ACQUISITION OF LICENSE FROM PEREGRINE PHARMACEUTICALS

In February 2001, we completed a transaction to license a platform drug-targeting technology known as Vascular Targeting Agent ("VTA") and to acquire
stock from Peregrine Pharmaceuticals, formerly known as Techniclone Corp. Total consideration for this transaction was $600,000 cash. We received 150,000 shares of Peregrine common stock valued at
$253,000, which we included as part of Marketable Securitiesnon-current. The remaining $347,000 cash payment was allocated to the licensed technology which specifically relates to the
Vascular Endothelial Growth Factor ("VEGF") and was recorded as research and development expense.

The
terms of the agreement require that we pay milestone payments and royalties to Peregrine based on the net revenues of any drugs commercialized using the VEGF technology. These
payments could ultimately total $8 million.

NOTE 6. COMPREHENSIVE INCOME/LOSS

For the three months ended June 30, 2001 and 2000, total comprehensive income (losses) amounted to $1,920,000 and ($10,628,000), respectively. For the
six months ended June 30, 2001 and 2000, total comprehensive losses amounted to ($12,550,000) and ($10,904,000), respectively. Comprehensive income or losses consisted primarily of the net
losses and unrealized gains or losses on investments.

NOTE 7. BASIC NET LOSS PER SHARE

Basic and diluted net loss per common share is computed by dividing net loss by the weighted average number of shares outstanding during the quarter.

As
we have reported operating losses each period since our inception, the effect of assuming the exercise of options and warrants would be anti-dilutive and, therefore,
basic and diluted net loss per share are the same.

8

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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. To the extent that the information presented in this discussion addresses
financial projections, information or expectations about our products or markets or otherwise makes statements about future events, such statements are forward-looking and are subject to a number of
risks and uncertainties that could cause actual results to differ materially from the statements made.

Overview

We are an emerging pharmaceutical company dedicated to the acquisition, rapid development and commercialization of oncology therapies for solid tumors and
hematological malignancies. We seek to minimize the time, expense and technical risk associated with drug commercialization by identifying and acquiring pharmaceutical compounds in the later stages of
development, rather than committing significant resources to the research phase of drug discovery.

Our
primary objective is to become a leading supplier of oncology therapies for solid tumors and hematological malignancies. Key elements of our strategy include:



Since
our incorporation in 1991 we have devoted substantially all of our resources to our product development efforts. Our product revenues to date have been limited and have been
principally from sales of Nipent, which we are marketing in the United States for the treatment of hairy cell leukemia. As a result of our substantial research and development expenditures and minimal
product revenues, we have incurred cumulative losses of $154.9 million for the period from inception through June 30, 2001. These losses include non-cash charges of
$20 million for the acquisition of in-process research and development.

The
level of our expenditures related to ongoing clinical trials has increased significantly throughout the current year as we expand the number of clinical trials and increase the
patient accrual into these trials. We are currently nearing completion of Phase III clinical trials with rubitecan for treatment of pancreatic cancer, beginning Phase III clinical trials with
decitabine for treatment of myelodysplastic syndrome, and are continuing to pursue Phase I and II clinical trials with a number of other drug candidates for treatment of other cancers and
hematological malignancies. We are also conducting trials with Nipent, currently approved for hairy cell leukemia, for use in other indications such as graft-versus-host disease, chronic
lymphocytic leukemia, and non-Hodgkin's lymphoma. To support these additional trials, we are continuing to increase our clinical development staff which, when combined with the increased
clinical trial activity, may result in increased costs over the level expended in this quarter.

We
expect to continue to incur operating losses at least into 2002. This is due primarily to projected increases in our spending for the development of our product candidates. Our
ability to become profitable will depend upon a variety of factors, including regulatory approvals of our products,

9

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the timing of the introduction and market acceptance of our products and competing products, increases in sales and marketing expenses related to the launch of rubitecan, and our ability to control
our costs.

As
part of our strategy, we intend either to market our products directly or co-promote these products with partners. In late 1999, we entered into an alliance with Abbott
Laboratories ("Abbott") under which Abbott will undertake to market and distribute rubitecan. We will co-promote rubitecan with Abbott in the United States and Abbott has exclusive rights
to market rubitecan outside of the United States. In the U.S. market, we will share profits from product sales equally with Abbott. Outside the U.S. market, Abbott will pay us royalties and transfer
fees based on product sales. We will remain
responsible for pursuing and funding the clinical development of rubitecan and obtaining regulatory approval for the product in the United States, Canada and the member states of the European Union.
In July 2001, we received an equity milestone payment of $2.5 million from Abbott in accordance with the marketing agreement for rubitecan.

In
2000, we entered into agreements with AVI BioPharma, Inc. ("AVI") related to the development and marketing rights to Avicine, AVI's therapeutic vaccine for
colorectal cancer, which is now entering Phase III clinical trials. Under these agreements, we will share U.S. developmental and regulatory approval costs for Avicine and upon commercialization in the
U.S., we will split all U.S. profits. AVI and SuperGen will jointly determine the optimum development strategy for the international marketplace and will share all profits received. In addition to an
up front equity investment, we are obligated to make additional payments to AVI based on successful achievement of developmental, regulatory approval, and commercialization milestones over the next
several years. As part of this agreement, we obtained the right of first discussion to all of AVI's oncology compounds and an option to acquire an additional 10% of AVI's common stock. Avicine will
require significant additional expenditures to complete the clinical development necessary to gain marketing approval from the FDA and equivalent foreign regulatory agencies.

Results of Operations



Revenues were $3.5 million in the second quarter of 2001 compared to $3.1 million in the second quarter of 2000. The increase was due primarily
to increased domestic and European sales of Nipent, our drug currently approved for the treatment of hairy cell leukemia. The increase in domestic Nipent sales was due primarily to additional
marketing efforts by our increased sales and marketing staff and purchases of Nipent by outside organizations for expanded clinical trials using Nipent for the treatment of chronic lymphocytic
leukemia, low grade non-Hodgkin's lymphoma, and graft-versus-host disease. Unlike our Nipent sales efforts in the U.S. market where we call on clinicians directly, our role in
Europe is currently limited to that of a supplier. As such, we do not have a direct influence on Nipent sales at the clinical level, making their timing and magnitude difficult to predict and
dependent on the efforts of our European distributor. We had approximately $338,000 in European sales of Nipent in the second quarter of 2001, but had no such sales in the comparable period in 2000.
Based on discussions with our European distributor, we do not expect to realize further European sales in the second half of 2001.

Cost
of sales as a percentage of net sales revenue was 28% in the second quarter of 2001 compared to 23% during the same period in 2000. The increased cost of sales percentage is due
primarily to European sales of Nipent which were made at a lower unit selling price under a supply agreement for sale outside North America. Current margins may not be indicative of future margins due
to possible variations in average selling prices and manufacturing costs.

Research
and development expenses were $11.7 million in the second quarter of 2001 compared to $8.3 million in 2000. The increase was due primarily to increased
expenditures relating to our clinical

10

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trial programs with rubitecan, decitabine, and Avicine, as well as additional personnel expenses related to supporting our clinical trial and drug development programs.

Selling,
general, and administrative expenses were $6.2 million in the second quarter of 2001 compared to $4.5 million in 2000. This increase was due primarily to costs
associated with the expansion of the sales, marketing, professional services, information technology, and general and administrative staffs together with increased costs associated with trade shows,
speakers' programs, and symposiums. In addition, expenses in 2001 reflect additional rent, insurance, and depreciation expenses related to the move in December 2000 of our headquarters offices
from a 9,000 square foot location to a new 50,000 square foot facility.

Interest
income was $1.5 million in the second quarter of 2001 compared to $2.4 million in 2000. This was due to lower cash and marketable securities balances and a
decline in interest rates.



Revenues were $5.4 million in the first half of 2001 compared to $4 million in the first half of 2000. The increase was due primarily to higher
domestic and European sales of Nipent, our drug currently approved for the treatment of hairy cell leukemia. The increase in U.S. sales was due primarily to additional marketing efforts by our
increased sales and marketing staff and purchases of Nipent by outside organizations for expanded clinical trials using Nipent for the treatment of chronic lymphocytic leukemia, low grade
non-Hodgkin's lymphoma, and graft-versus-host disease. Unlike our Nipent sales efforts in the U.S. market where we call on clinicians directly, our role in Europe is currently
limited to that of a supplier. As such, we do not have a direct influence on Nipent sales at the clinical level, making their timing and magnitude difficult to predict and dependent on the efforts of
our European distributor. We had approximately $338,000 in European sales of Nipent in the first half of 2001, but had no such sales in the comparable period in 2000. Based on discussions with our
European distributor, we do not expect to realize further European sales in the second half of 2001.

Cost
of sales as a percentage of net sales revenue was 26% in the first half of 2001 compared to 22% during the same period in 2000. The increased cost of sales percentage is due
primarily to distribution fees paid to Abbott for distribution of Nipent, as well as European sales of Nipent which were made at a lower unit selling price under a supply agreement for sale outside
North America. The distribution
fees did not begin until March 2000, and there were no European Nipent sales in 2000. Current margins may not be indicative of future margins due to possible variations in average selling
prices and manufacturing costs.

Research
and development expenses were $23.5 million in the first half of 2001 compared to $14.6 million in 2000. The increase was due primarily to increased
expenditures relating to our clinical trial programs with rubitecan, decitabine, and Avicine, as well as additional personnel expenses related to supporting our clinical trial and drug development
programs.

Selling,
general, and administrative expenses were $10.8 million in the first half of 2001 compared to $7.4 million in 2000. This increase was due primarily to costs
associated with the expansion of the sales, marketing, professional services, information technology, and general and administrative staffs together with increased costs associated with trade shows,
speakers' programs, and symposiums. In addition, expenses in 2001 reflect additional rent and depreciation expenses related to the move in December 2000 of our headquarters offices from a 9,000
square foot location to a new 50,000 square foot facility.

Interest
income was $3.4 million in both the first half of 2001 and 2000. Our interest income in each period was due to investments of funds received as a result of various
fund-raising activities in March and April 2000, including our corporate partnership with Abbott, a follow-on offering of our

11

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common stock, and the exercise of our SUPGW warrants and related underwriters' unit purchase warrants, partially offset by a decline in interest rates in 2001.

Liquidity and Capital Resources

Our cash, cash equivalents, and both short and long-term marketable securities totaled approximately $95 million at June 30, 2001,
compared to approximately $131 million at December 31, 2000. In addition, at June 30, 2001 we held approximately 2.7 million shares of registered stock of AVI
BioPharma, Inc., with a market value of approximately $26.4 million.

The
net cash used in operating activities in the first half of 2001 was $27.8 million, which consisted primarily of the net loss of $26.7 million and a reduction in
accounts payable and other liabilities of $1 million. During the first half of 2001 we also repurchased 717,500 shares of our common stock on the open market at a net cost of
$7.1 million.

We
believe that our current cash, cash equivalents and marketable securities will satisfy our cash requirements at least through December 31, 2002. Our primary planned uses of
cash during that period are:



We
believe that our need for additional funding will increase in the future and that our continued ability to raise additional 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 seek such additional funding through public or private financings or collaborative or other arrangements with third parties.
We may not be able to obtain additional funds on acceptable terms, if at all.

Factors Affecting Future Operating Results

You should carefully consider the risks described below before making an investment decision. The risks and uncertainties described
below are not the only ones facing our company. Our business operations may be impaired by additional risks and uncertainties that we do not know of or that we currently consider
immaterial.

Our business, results of operations or cash flows may be adversely affected if any of the following risks actually occur. In such case, the trading price of
our common stock could decline, and you may lose all or part of your investment.

This report also contains and incorporates by reference 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.

If the results of further clinical testing indicate that our proposed products are not safe and effective for human use, our business will
suffer.Most of our products are in the development stage and prior to their sale will require the commitment of substantial resources. All of the potential proprietary
products that we are currently developing will require extensive pre-clinical and clinical testing before we can submit any application for regulatory approval. Before obtaining regulatory
approvals for the commercial sale of any of our products, we must demonstrate through pre-clinical testing and clinical trials that our product candidates are safe and effective in humans.
Conducting clinical trials is a

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lengthy, expensive and uncertain process. Completion of clinical trials may take several years or more. The length of time generally varies substantially according to the type, complexity, novelty and
intended use of the product candidate. 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. We
may encounter problems in our studies which will cause us or the FDA to delay or suspend the studies. Our commencement and rate of completion of clinical trials may be delayed by many factors,
including:



The
clinical results we have obtained to date do not necessarily predict that the results of further testing, including later-stage controlled human clinical testing, will be
successful. If our trials are not successful, or are perceived as not successful by the FDA or physicians, our business, financial condition and results of operations will be harmed.

If we fail to obtain regulatory marketing approvals in a timely manner, our business will suffer. Even if we believe our trials are
successful, the FDA may require additional clinical testing and, therefore we would have to commit additional unanticipated resources. The FDA has substantial discretion in the drug approval process.
We cannot assure you that we will obtain the necessary regulatory approvals to market our products. The FDA and comparable agencies in foreign countries impose substantial requirements for the
introduction of both new pharmaceutical products and generic products through lengthy and detailed clinical testing procedures, sampling activities and other costly and time-consuming
compliance procedures. We have not yet received marketing approval for any of our internally developed proprietary products. Our proprietary drugs and products will require lengthy clinical trials
along with FDA and comparable foreign agency review as new drugs. Our generic drugs will also require regulatory review and approval.

We
cannot predict with certainty if or when we might submit for regulatory review those products currently under development. Once we submit our potential products for review, we
cannot assure you that the FDA or other regulatory agencies will grant approvals for any of our pharmaceutical products on a timely basis or at all. Sales of our products outside the United States
will be subject to foreign regulatory requirements governing clinical trials and marketing approval. These requirements vary widely from country to country and could delay the introduction of our
products in those countries.

If our relationship with Abbott is not successful, our business could be harmed.Our strategic relationship with Abbott is important to
our success. However, that relationship may not be successful. We cannot assure you that we will receive any additional payments from Abbott or that the relationship will be commercially successful.
The transactions contemplated by our agreements with Abbott, including the equity purchases and cash payments, are subject to numerous risks and conditions. For example:



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The
occurrence of any of these events could severely harm our business.

We have granted certain rights to Abbott that could negatively affect your investment.We have granted Abbott an option to purchase
shares of our common stock so that upon its exercise Abbott will own up to 49% of our outstanding common stock. Our ability to satisfy this contractual obligation is subject to a number of conditions
outside of our control, including:



If
we do not satisfy any of these conditions, Abbott could terminate our relationship. If we obtain all necessary approvals and Abbott exercises its option, the stock ownership of our
other stockholders will be diluted and Abbott will have significant influence over us. Abbott's right to exercise this option, and Abbott's share ownership after exercise, may discourage other parties
from acquiring us.

Abbott
has a right of first discussion with respect to our product portfolio and a right of first refusal to acquire us. These rights may discourage third parties from bidding on any
assets that we wish to sell or license and may discourage acquisition bids. These provisions may limit the price that investors might be willing to pay in the future for shares of our common stock.

We have a history of operating losses and an accumulated deficit, we may not achieve or maintain profitability in the future, and we may need to obtain
additional funding.We incurred cumulative losses of $154.9 million for the period from inception through June 30, 2001. These losses included
non-cash charges of $20.0 million for the acquisition of in-process research and development. Currently we are not profitable and we expect to continue to incur
substantial operating losses at least into 2002. Our ability to achieve profitability will depend primarily on our ability to obtain regulatory approval for and successfully commercialize rubitecan.
Our success will also depend, to a lesser extent, on our ability to develop and obtain regulatory approval of Nipent for indications other than hairy cell leukemia and to
bring our proprietary products to market. Our ability to become profitable will also depend upon a variety of other factors, including the following:



We
cannot predict the outcome of these factors and we cannot assure you that we will ever become profitable.

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Even if we do become profitable, we may need substantial additional funding. We expect that our rate of spending will accelerate as a result of increased clinical trial costs and
expenses associated with regulatory approval and commercialization of our products now in development. We anticipate that our capital resources will be adequate to fund operations and capital
expenditures at least through 2002. However, if we experience unanticipated cash requirements during this period, we could require additional funds much sooner. Our business, results of operations and
cash flows will be adversely affected if we fail to obtain adequate funding in a timely manner, or at all. We may receive funds from the sale of equity securities, or the exercise of outstanding
warrants and stock options. Additionally, we may receive funds upon the achievement of certain developmental and sales milestones pursuant to our agreement with Abbott. However, we cannot assure you
that any of those fundings will occur, or if they occur, that they will be on terms favorable to us. Also, the dilutive effect of those fundings could adversely affect our results per share.

We depend on third parties for manufacturing and storage of our products and our business may be harmed if the manufacture of our products is interrupted or
discontinued.We have no manufacturing facilities and we currently rely on third parties for manufacturing activities related to all of our products. As we develop new products
and increase sales of our existing products, we must establish and maintain relationships with manufacturers to produce and package sufficient supplies of our finished pharmaceutical products,
including rubitecan.

Our
manufacturing strategy presents the following risks:



Any
of these factors could delay clinical trials or commercialization of our products under development, interfere with current sales, entail higher costs and result in our being
unable to effectively sell our products. In addition, 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. For example, the company that had been purifying our Nipent finished product has filed for bankruptcy. We anticipate that our current inventory levels will meet our
domestic sales needs through the first quarter of 2002, and we have contracted with a new manufacturer for the purification of Nipent. However, this manufacturer must still be approved by the FDA. If
this approval is not received prior to the depletion of our inventory levels, we may experience a short-term interruption in sales of Nipent.

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In addition, we store the majority of the unpurified, bulk form of Nipent at a single location. Improper storage, fire, natural disaster, theft or other conditions at this location
that may lead to the loss or destruction of the bulk concentrate could adversely affect our business, results of operations and cash flows.

We
do not currently intend to manufacture any pharmaceutical products, although we may choose to do so in the future. If we decide to manufacture products, we would be subject to the
regulatory risks and requirements described above. We will also be subject to similar risks regarding delays or difficulties encountered in manufacturing these pharmaceutical products and we will
require additional facilities and substantial additional capital. In addition, we have only limited experience in manufacturing pharmaceutical products. We cannot assure you that we would be able to
manufacture any of these products successfully in accordance with regulatory requirements and in a cost-effective manner.

Asserting, defending and maintaining intellectual property rights could be difficult and costly and failure to do so will harm our ability to compete and the
results of our operations.If competitors develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets, if our trade
secrets are disclosed or if we cannot effectively protect our rights to unpatented trade secrets, our business will be harmed.

The
pharmaceutical fields are characterized by a large number of patent filings. A substantial number of patents have already been issued to other pharmaceutical companies, research
or academic institutions or others. Competitors may have filed applications for or have been issued patents and may obtain additional patents and proprietary rights related to 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 that may have been issued to others.

We
actively seek patent protection for our proprietary products and technologies. We have a number of United States patents and also have licenses to, or assignments of, numerous
patents issued both in the United States and elsewhere. We may also license our patents outside the United States. Limitations on patent protection outside the United States, and differences in what
constitutes patentable subject matter in countries outside the United States, may limit the protection we have on patents or licenses of patents outside the United States.

Litigation
may be necessary to protect our patent position, and we cannot be certain that we will have the required resources to pursue the necessary litigation or otherwise to
protect our patent rights. Our
efforts to protect our patents may fail. In addition to pursuing patent protection in appropriate cases, we also rely on trade secret protection 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.

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 business, results of operations and cash flows.

From
time to time we receive correspondence inviting us to license patents from third parties. Although we know of no pending patent infringement suits, discussions regarding possible
patent infringements or threats of patent infringement litigation either related to patents held by us or our licensors or our products or proposed products, there has been, and we believe that there
will continue to be, significant litigation in the pharmaceutical industry 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,

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manufacturing and marketing of the affected product. If we become involved in any litigation, it could consume a substantial portion of our resources, regardless of the outcome of the litigation. If
any of these actions are 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 whether we would prevail in any of these actions or that we could obtain any licenses required under any of these patents on acceptable terms, if at all.

If we lose key personnel or 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 Dr. Rubinfeld, our President and Chief Executive Officer, and members of our senior management and
scientific staff. To successfully expand our operations, we will need to attract and retain additional, highly skilled individuals, particularly in the areas of sales, marketing, clinical
administration, manufacturing and finance. We compete with other companies for the services of existing and potential employees. We believe our compensation and benefits packages are competitive for
our geographical region and our industry group. However, we may be at a disadvantage to the extent that potential employees may favor larger, more established employers.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

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SUPERGEN, INC.  PART IIOTHER INFORMATION

Item 2. Changes in Securities

In March 2001, the Company issued in exchange for consulting services provided to the Company warrants for the purchase of a total of 200,000 shares of
Common Stock at $10.47 per share. The securities were issued pursuant to exemptions from registration provided under Section 4(2) of the Securities Act. The warrant holders had access to
information about the Company and made representations to the Company concerning their sophistication and investment intent.

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

The Company's Annual Meeting of Stockholders was held on May 30, 2001. The results of the voting were as follows:

|Proposal 1: |  | Election of the Board of Directors of the Company.
|----------- |  | --------------------------------------------------
|
|            |  | Joseph Rubinfeld                                  
|            |  | Denis Burger                                      
|            |  | Thomas V. Girardi                                 
|            |  | Walter J. Lack                                    
|            |  | James S.J. Manuso                                 
|            |  | Daniel Zurr                                       

|Proposal 2: |  | Amendment to the 1998 Employee Stock Purchase Plan increasing the number of shares authorized for issuance by 200,000 shares:
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------
|            |  | Votes For:                                                                                                                   
|            |  | Votes Against:                                                                                                               
|            |  | Votes Abstaining:                                                                                                            
|            |  | Broker Non-Votes:                                                                                                            

|Proposal 3: |  | Amendment to the 1996 Directors' Stock Option Plan increasing the number of shares authorized for issuance by 300,000 shares:
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------
|            |  | Votes For:                                                                                                                   
|            |  | Votes Against:                                                                                                               
|            |  | Votes Abstaining:                                                                                                            
|            |  | Broker Non-Votes:                                                                                                            

|Proposal 4: |  | Ratification of Ernst & Young LLP as independent auditors for the year ending December 31, 2001:
|----------- |  | ------------------------------------------------------------------------------------------------
|            |  | Votes For:                                                                                      
|            |  | Votes Against:                                                                                  
|            |  | Votes Abstaining:                                                                               
|            |  | Broker Non-Votes:                                                                               

Item 6. Exhibits and Reports on Form 8-K

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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: | August 14, 2001 |  | By:           

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