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

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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 March 31, 2002

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)

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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 ý    No o

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares of the registrant's Common Stock, $.001 par value, outstanding as of May 8, 2002, was 32,611,399.

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TABLE OF CONTENTS

|           |  |                                                                                                     |  | Page No.
|---------- |  | --------------------------------------------------------------------------------------------------- |  | --------
|PART I     |  | FINANCIAL INFORMATION                                                                               |  |         
|           |  | Item 1Financial Statements (Unaudited)                                                             |  |         
|           |  | Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001                              |  | 3       
|           |  | Consolidated Statements of Operations for the three month periods ended
    March 31, 2002 and 2001 |  | 4       
|           |  | Consolidated Statements of Cash Flows for the three month periods ended
    March 31, 2002 and 2001 |  | 5       
|           |  | Notes to Consolidated Financial Statements                                                          |  | 6       
|           |  | Item 2Management's Discussion and Analysis of Financial Condition and Results of Operations        |  | 10      
|           |  | Item 3Quantitative and Qualitative Disclosures About Market Risk                                   |  | 18      
|PART II    |  | OTHER INFORMATION                                                                                   |  |         
|           |  | Item 6Exhibits and Reports on Form 8-K                                                             |  | 19      
|SIGNATURES |  | 20                                                                                                 

2

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

|                                       |                                                                                                                                                                             | March 31,
2002                             |        | December 31, 2001 |       
|-------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ----------------- | ------
|
|ASSETS                                 |                                                                                                                                                                            
|Current assets:                        |                                                                                                                                                                             |                                            |        |                   |       
|                                       | Cash and cash equivalents                                                                                                                                                   |                                            | $      | 11,591            |       
|                                       | Marketable securities                                                                                                                                                       |                                            |        | 41,323            |       
|                                       | Accounts receivable                                                                                                                                                         |                                            |        | 1,055             |       
|                                       | Other receivables                                                                                                                                                           |                                            |        | 62                |       
|                                       | Inventories                                                                                                                                                                 |                                            |        | 1,777             |       
|                                       | Prepaid expenses and other current assets                                                                                                                                   |                                            |        | 2,790             |       
|                                       |                                                                                                                                                                             |                                            |        |                   |       
|                                       |                                                                                                                                                                             | Total current assets                       |        |                   | 58,598
|Marketable securities  non-current    |                                                                                                                                                                             |                                            | 3,292  |                   |       
|Investment in stock of related parties |                                                                                                                                                                             |                                            | 22,446 |                   |       
|Due from related parties               |                                                                                                                                                                             |                                            | 743    |                   |       
|Property, plant and equipment, net     |                                                                                                                                                                             |                                            | 6,257  |                   |       
|Developed technology at cost, net      |                                                                                                                                                                             |                                            | 1,057  |                   |       
|Goodwill and other intangibles, net    |                                                                                                                                                                             |                                            | 1,118  |                   |       
|Restricted cash                        |                                                                                                                                                                             |                                            | 3,396  |                   |       
|Other assets                           |                                                                                                                                                                             |                                            | 30     |                   |       
|                                       |                                                                                                                                                                             |                                            |        |                   |       
|                                       |                                                                                                                                                                             | Total assets                               |        | $                 | 96,937
|                                       |                                                                                                                                                                             |                                            |        |                   |       
|LIABILITIES AND STOCKHOLDERS' EQUITY   |                                                                                                                                                                            
|Current liabilities:                   |                                                                                                                                                                             |                                            |        |                   |       
|                                       | Accounts payable and accrued liabilities                                                                                                                                    |                                            | $      | 5,663             |       
|                                       | Payable to AVI BioPharma, Inc                                                                                                                                               |                                            |        | 250               |       
|                                       | Deferred revenue                                                                                                                                                            |                                            |        | 1,000             |       
|                                       | Accrued employee benefits                                                                                                                                                   |                                            |        | 1,657             |       
|                                       |                                                                                                                                                                             |                                            |        |                   |       
|                                       |                                                                                                                                                                             | Total current liabilities                  |        |                   | 8,570 
|Deferred revenue  non-current         |                                                                                                                                                                             |                                            | 1,917  |                   |       
|                                       |                                                                                                                                                                             |                                            |        |                   |       
|                                       |                                                                                                                                                                             | Total liabilities                          |        |                   | 10,487
|                                       |                                                                                                                                                                             |                                            |        |                   |       
|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; 32,638,496 and 32,821,163 shares issued and outstanding at March 31, 2002 and December 31, 2001, respectively |                                            |        | 33                |       
|                                       | Additional paid in capital                                                                                                                                                  |                                            |        | 282,918           |       
|                                       | Deferred compensation                                                                                                                                                       |                                            |        | (103              | )     
|                                       | Accumulated other comprehensive gain (loss)                                                                                                                                 |                                            |        | (590              | )     
|                                       | Accumulated deficit                                                                                                                                                         |                                            |        | (195,808          | )     
|                                       |                                                                                                                                                                             |                                            |        |                   |       
|                                       |                                                                                                                                                                             | Total stockholders' equity                 |        |                   | 86,450
|                                       |                                                                                                                                                                             |                                            |        |                   |       
|                                       |                                                                                                                                                                             | Total liabilities and stockholders' equity |        | $                 | 96,937
|                                       |                                                                                                                                                                             |                                            |        |                   |       

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
March 31, |        
|-------------------------------------------------------------------------------- | ------------------------------------ | ---------------------------- | -------
|
|Revenues:                                                                        |                                      |                              |        
|                                                                                 | Net sales revenue                    |                              | $      
|                                                                                 | Other revenue                        |                              |        
|                                                                                 |                                      |                              |        
|                                                                                 |                                      | Total revenue                |        
|Operating expenses:                                                              |                                      |                              |        
|                                                                                 | Cost of sales                        |                              |        
|                                                                                 | Research and development             |                              |        
|                                                                                 | Selling, general, and administrative |                              |        
|                                                                                 |                                      |                              |        
|                                                                                 |                                      | Total operating expenses     |        
|Loss from operations                                                             |                                      |                              | (12,805
|Interest income                                                                  |                                      |                              | 724    
|                                                                                 |                                      |                              |        
|Net loss                                                                         |                                      | $                            | (12,081
|                                                                                 |                                      |                              |        
|Basic and diluted net loss per share                                             |                                      | $                            | (0.37  
|                                                                                 |                                      |                              |        
|Weighted average shares used in basic and diluted net loss per share calculation |                                      |                              | 32,785 
|                                                                                 |                                      |                              |        

See
accompanying notes to consolidated financial statements

4

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

|                                                    |                                                                             | Three months ended
March 31,                                           |                                       
|--------------------------------------------------- | --------------------------------------------------------------------------- | ---------------------------------------------------------------------- | --------------------------------------
|
|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               |                                                                             |                                                                        | (15,742                               
|                                                    |                                                                             |                                                                        |                                       
|Investing activities:                               |                                                                             |                                                                        |                                       
|                                                    | Purchases of marketable securities                                          |                                                                        |                                       
|                                                    | Sales or maturities of marketable securities                                |                                                                        |                                       
|                                                    | Purchase of investment in Peregrine Pharmaceuticals                         |                                                                        |                                       
|                                                    | Purchases of property and equipment                                         |                                                                        |                                       
|                                                    |                                                                             |                                                                        |                                       
|Net cash provided by (used in) investing activities |                                                                             |                                                                        | 10,886                                
|                                                    |                                                                             |                                                                        |                                       
|Financing activities:                               |                                                                             |                                                                        |                                       
|                                                    | Issuance of common stock, net of issuance costs                             |                                                                        |                                       
|                                                    | Repurchases of common stock                                                 |                                                                        |                                       
|                                                    |                                                                             |                                                                        |                                       
|Net cash used in financing activities               |                                                                             |                                                                        | (1,203                                
|                                                    |                                                                             |                                                                        |                                       
|Net decrease in cash and cash equivalents           |                                                                             |                                                                        | (6,059                                
|Cash and cash equivalents at beginning of period    |                                                                             |                                                                        | 17,650                                
|                                                    |                                                                             |                                                                        |                                       
|Cash and cash equivalents at end of period          |                                                                             | $                                                                      | 11,591                                
|                                                    |                                                                             |                                                                        |                                       
|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        MARCH 31, 2002        (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 month periods ended March 31, 2002 are not
necessarily indicative of results that may be expected for the year ended December 31, 2002.

The
balance sheet at December 31, 2001 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, 2001.

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 March 31, 2002 (in thousands):

Amortized
Cost

Unrealized
Gains
(Losses)

Estimated
Fair ValueU.S. corporate debt securities

$
52,100

$
153

$
52,253U.S. government debt securities


3,815


(12
)

3,803Marketable equity securities


23,191


(731
)

22,460Total

$
79,106

$
(590
)
$
78,516


6

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Balance
sheet classification as of March 31, 2002 (in thousands):

Amortized
Cost

Unrealized
Gains
(Losses)

Estimated
Fair ValueAmounts included in cash and cash equivalents

$
12,106

$
(1
)
$
12,105Marketable securities, current


41,158


165


41,323Marketable securities, non-current


3,343


(51
)

3,292Amounts included in investment in stock of related parties


22,499


(703
)

21,796Total

$
79,106

$
(590
)
$
78,516


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

Estimated Fair ValueMarch 31, 2002

December 31, 2001Debt securities:Due in one year or less

$
53,027

$
65,201Due after one year through three years


3,029


5,55056,056


70,751Marketable equity securities


22,460


29,899Total

$
78,516

$
100,650


There
were no realized gains and losses for the three month periods ended March 31, 2002 and 2001.

NOTE 3. INVENTORIES

Inventories consist of the following (in thousands):

March 31,
2002

December 31, 2001Raw material

$
139

$
176Work in process


1,161


960Finished goods


477


697$
1,777

$
1,833


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

7

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repurchase of an additional one million shares, but maintained the $20,000,000 repurchase total. During the quarter ended March 31, 2002, we repurchased 183,500 shares of our common stock at a
cost, net of commissions, of $1,208,000. All shares repurchased have been retired.

NOTE 5. COMPREHENSIVE LOSS

For the three months ended March 31, 2002 and 2001, total comprehensive losses amounted to $20,170,000 and $14,471,000, respectively. Comprehensive losses
consisted primarily of the net losses and unrealized gains or losses on investments.

NOTE 6. 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.

NOTE 7. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statements of Financial Accounting Standards No. 142 "Goodwill and Other
Intangible Assets" ("SFAS 142"). Under SFAS 142, which became effective for fiscal years beginning after December 15, 2001, goodwill and indefinite lived intangible assets are no
longer amortized but are reviewed annually (or more frequently if impairment indicators arise) for impairment. Intangible assets with finite useful lives will continue to be amortized over their
respective useful lives. The standard also establishes specific guidance for testing impairment of goodwill and intangible assets with indefinite useful lives. We adopted SFAS 142 on
January 1, 2002. At March 31, 2002, we had approximately $730,000 in goodwill that is no longer subject to amortization.

In
October 2001, the FASB issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets"
("SFAS 144"). SFAS 144 amends existing accounting guidance on asset impairment and provides a single accounting model for long-lived assets to be disposed of. Among other
provisions, the new rules change the criteria for classifying an asset as held-for-sale. The standard also broadens the scope of businesses to be disposed of that qualify for
reporting as discontinued operations, and changes the timing of recognizing losses on such operations. The provisions of SFAS 144 became effective for our fiscal year 2002. The adoption of
SFAS 144 did not have a material effect on our financial statements.

NOTE 8. TERMINATION OF AGREEMENTS WITH ABBOTT LABORATORIES

In December 1999, we entered into two agreements with Abbott Laboratories ("Abbott"), a Common Stock and Option Purchase Agreement and a Worldwide Sales,
Distribution and Development Agreement relating to our drug candidate Orathecin. Under these agreements, Abbott was to invest in shares of our common stock and would participate with us
in the marketing and

8

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distribution of Orathecin. We would have co-promoted Orathecin with Abbott in the United States and Abbott had exclusive rights to market Orathecin outside of the United States. In the
United States market, we would have shared profits from product sales equally with Abbott, while outside of the United States market, Abbott would have paid us royalties and transfers fees based on
product sales. Abbott was obligated to purchase up to $81.5 million in shares of our common stock over a period of time. In addition, Abbott had an option to purchase up to 49% of the shares of
our common stock outstanding at the time of the exercise at $85 per share. Abbott also had a right of first discussion with respect to our product portfolio and a right of first refusal to acquire us.

On
March 4, 2002, SuperGen and Abbott mutually terminated the Common Stock and Option Purchase Agreement and the Worldwide Sales, Distribution and Development Agreement. We
regained all marketing rights to Orathecin worldwide and are no longer obligated to share profits from product sales of Orathecin. Abbott no longer has the right or obligation to purchase the
remaining aggregate
amount of $52.5 million of shares of our common stock, no longer has the option to purchase up to 49% of our outstanding shares, no longer has the right of first discussion with respect to our
product portfolio, and no longer has a right of first refusal to acquire us. In connection with this termination agreement, we agreed to reimburse Abbott for development work they completed on our
behalf totaling $1.6 million. Of this total, $800,000 remained in Accounts payable and accrued liabilities at March 31, 2002.

NOTE 9. AGREEMENT WITH EUROGEN PHARMACEUTICALS

In September 2001, we entered into a Supply and Distribution Agreement with EuroGen Pharmaceuticals Ltd. ("EuroGen"), a company incorporated and
registered in England and Wales. Under the agreement, we granted EuroGen the exclusive European and South African rights to promote and sell certain of our existing generic and other products or
compounds. The agreement also establishes a process for granting EuroGen rights to sell additional products in Europe and South Africa, subject to our compliance with our other existing licensing and
distribution arrangements. After complying with these existing obligations, we will be required to offer EuroGen the option to obtain European and South African rights to our future products. EuroGen
will seek and pay for all necessary regulatory approvals and authorizations necessary for the commercial sale of the products in the territories where they market and sell the products.

EuroGen
is not yet an operating company, but we intend to hold a substantial equity interest in the company once it raises additional capital and is operational. We have not yet
determined our ownership share of EuroGen, but it may be as much as ninety-five percent. Through March 31, 2002, we had advanced $410,000 to EuroGen to fund its start-up operations. We do not
expect to be reimbursed for these advances, and have charged this amount to selling, general, and administrative expenses in the current quarter.

9

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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 contains
forward-looking statements. Forward-looking statements provide our current expectations or forecasts of future events and include the following: our statements regarding the timing of filing of a new
drug application for Orathecin; our estimates about becoming profitable; our forecasts regarding our research and development expenses; our estimates of the cost of decitabine clinical trials and our
statements regarding the sufficiency of our cash to meet our operating needs through December 2003. Any or all of these forward-looking statements may turn out to be wrong. For example, our
clinical data in our Orathecin clinical trials may not support filing of an NDA or the FDA may not approve our application if filed; the analysis of our clinical trial data may be more complex than we
anticipate causing delays; we may not be successful in commercializing our products and may not become profitable when planned or at all; our research and development expenses may be larger than we
currently anticipate; our decitabine trials may be more complex than we currently anticipate and our cash and capital resources may be insufficient to meet our needs. Inaccurate assumptions we might
make and known or unknown risks and uncertainties can affect our forward-looking statements. Consequently, no forward-looking statement can be guaranteed and our actual results may differ materially.
We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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 $195.8 million for the period from inception through March 31, 2002. These losses include
non-cash charges of $20 million for the acquisition of in-process research and development.

We
have completed patient enrollment in each of the three separate stand-alone pivotal Phase III clinical trials with Orathecin for treatment of pancreatic cancer. The three
studies"Gemzar refractory," where patients who failed treatment with Gemzar were randomized to either Orathecin or

10

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5-FU; "Chemotherapy refractory," where patients who have failed multiple types of chemotherapy are randomized to either Orathecin or the next best therapy; and "Chemotherapy
naïve," where patients who have had no prior chemotherapy are randomized to Orathecin or Gemzarhave enrolled a combined total of over 1,800 patients. We are still in the
process of compiling, auditing, and analyzing data from each of the three clinical trials. The trial design for each of the three studies allows patients who initially were being treated with Gemzar
or other therapies to "cross over," or elect to be treated with Orathecin. At the time the trials were designed, based on results of cancer studies conducted by others, we believed that the percentage
of patients that would cross over for treatment with Orathecin would be in the range of 10% to 20% of the enrolled patients. Based on a preliminary review of the clinical trial information, we believe
that the number of patients in our Orathecin studies that have actually crossed over to Orathecin has exceeded the number anticipated. This could affect the timing and statistical analysis of the
studies. Assuming favorable results from any one or a combination of our Phase III studies, we anticipate filing a new drug application ("NDA") with the Food and Drug Administration ("FDA") in 2002.

We
are beginning Phase III clinical trials with decitabine for treatment of myelodysplastic syndrome, and are continuing to pursue Phase I and II clinical trials with Orathecin and 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.

We
expect to continue to incur operating losses at least through 2003. This is due primarily to projected 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, 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 Orathecin and other drug candidates, and our ability to control our costs.

In
late 1999, we entered into two agreements related to Orathecin with Abbott Laboratories under which Abbott would undertake to market and distribute Orathecin and under which Abbott
was obligated to make investments in the Company based on achievements of milestone events. We were to co-promote Orathecin with Abbott in the United States and Abbott had exclusive rights
to market Orathecin outside of the United States. In the U.S. market, we would have shared profits from product sales equally with Abbott. Outside the U.S. market, Abbott would have paid us royalties
and transfer fees based on product sales. On March 4, 2002, we mutually terminated these agreements with Abbott and they no longer have any marketing, promotion, or royalty rights relating to
Orathecin. We agreed to pay Abbott $1.6 million for development activities undertaken by Abbott and we relieved Abbott of any obligation to pay us further milestone payments. We continue to be
responsible for pursuing and funding the clinical development of Orathecin and obtaining regulatory approval for the product in the United States, Canada and the member states of the European Union.

Due
to the termination of the agreements with Abbott we now have the flexibility to pursue opportunities with Orathecin and other compounds on our own or with a new strategic partner. We
are currently evaluating our options as we work toward completion of the ongoing Orathecin trials and evaluate the trial results. Assuming we receive regulatory approval, if we elect to pursue
marketing of Orathecin on our own we will be required to significantly increase our sales and marketing departments to a greater extent than currently planned.

11

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Results of Operations



Revenues were $1.6 million in the first quarter of 2002 compared to $1.8 million 2001. The decrease was due primarily to lower sales of Nipent, our
drug currently approved for the treatment of hairy cell leukemia, because of unusually low inventory levels. The company that had been purifying our Nipent finished product filed for bankruptcy in
mid-2001. We contracted with a new manufacturer for the purification in 2001 and it has completed two production batches of Nipent. The new manufacturer is now in the process of being
inspected by the FDA. Once the manufacturer is approved by the FDA, the batches of Nipent can be released to inventory and be available for sale. Until the FDA gives its clearance, we may still
experience interruption in sales of Nipent. Sales in the first quarter of 2002 included approximately $50,000 in sales to Europe. There were no European sales in the first quarter of 2001. 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.

Cost
of sales as a percentage of net sales revenue was 54% in the first quarter of 2002 compared to 23% during the same period in 2001. The increase in cost of sales percentage in 2002
was due to the decline in sales of Nipent and a larger proportion of our sales related to generic mitomycin, which is sold at lower margins than Nipent. Current margins may not be indicative of future
margins due to possible variations in product mix, average selling prices, and manufacturing costs.

Research
and development expenses were $7.2 million in the first quarter of 2002 compared to $11.8 million in 2001. The decline was due primarily to the completion of
enrollment in 2001 of over 1,800 patients into our Phase III clinical trials of Orathecin for pancreatic cancer. Although we are continuing to enroll new patients into our Phase III trials for
decitabine, we do not expect these trials to be as costly as the Orathecin trials. However, conducting clinical trials is a 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. Because of these uncertainties, we cannot predict when or whether we will successfully complete the development of our product candidates or the ultimate product
development cost.

Selling,
general, and administrative expenses were $6.5 million in the first quarter of 2002 compared to $4.6 million in 2001. This increase was due primarily to higher
expenditures for patent and copyright legal expenses, liability insurance, business development relating to our European start up operations, sales salaries and bonuses, and executive bonuses.

Interest
income was $0.7 million in the first quarter of 2002 compared to $2.0 million in 2001. This was due to lower available cash and marketable securities balances and
a decline in interest rates.

Liquidity and Capital Resources

Our cash, cash equivalents, and both short and long-term marketable securities totaled $56.2 million at March 31, 2002, compared to
$74.0 million at December 31, 2001. In addition, at March 31, 2002 we held approximately 2.7 million shares of registered stock of AVI BioPharma, Inc., with a market
value of $21.8 million.

The
net cash used in operating activities in the first quarter of 2002 was $15.7 million, which consisted primarily of the net loss of $12.1 million and the reduction of
accounts payable and accrued

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liabilities totaling $4.2 million. In addition, during the first quarter of 2002, we repurchased 183,500 shares of our common stock on the open market at a net cost of $1.2 million.

We
believe that our current cash, cash equivalents and marketable securities will satisfy our cash requirements at least through December 31, 2003. 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 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:



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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 regulatory approval for Orathecin is not supported by our clinical data or if filing or approval of a New Drug Application with the FDA is delayed our business
will be harmed.We have expended significant
resources on developing Orathecin and preparing an infrastructure to support its sales and marketing if approved for sale by regulatory authorities. While we believe we have a portfolio of product
candidates with promise, we have focused much of our attention and resources on developing Orathecin. Our ongoing Phase III Orathecin clinical trials are large and complex and are requiring a
significant amount of time and statistical analysis. For example, the trial design of these studies allows patients who initially were being treated with Gemzar or other therapies to elect to be
treated with Orathecin. At the time the trials were designed, based on results of cancer studies conducted by others, we believed that the percentage of patients that would cross over for treatment
with Orathecin would be in the range of 10% to 20% of the enrolled patients. Based on a preliminary review of the clinical trial information, we believe that the number of patients in our Orathecin
studies that have actually crossed over to treatment with Orathecin has exceeded the number anticipated. This cross over could affect the statistical analysis of the study. There is no assurance that
the data or statistical analysis from these trials will support an NDA or that we will not be required to perform additional studies. If we are able to file an NDA, the approval process may take a
significant amount of time and we may not be approved. If our Orathecin development activities are unsuccessful for these or other reasons our business will be harmed.

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The termination of our Orathecin related agreements with Abbott may negatively impact our business.While we believe that the
termination of our agreements with Abbott are advantageous to us in a number of respects, the termination also creates some challenges and uncertainties. By terminating our Orathecin related
agreements we have eliminated restraints on our business activities and expanded some of our strategic alternatives which we deem very beneficial. At the same time we have foregone the opportunity to
receive future milestone payments and other potential revenue and benefits from a well established and respected pharmaceutical company. In this respect the termination of the Abbott agreements may
negatively impact our liquidity as we can not offset our development expenses with milestone payments, In addition, the termination of the agreements may be perceived negatively by other potential
partners and may make it difficult for us to pursue opportunities with Orathecin or any other of our proprietary compounds. Because strategic relationships are critical to our business strategy and
success such a perception may negatively impact our business.

Expanding indications for Nipent is important to our future revenues. If we are unable to receive regulatory approval for use of Nipent to treat additional
diseases our revenues will not expand as hoped.Part of our strategy involves expanding the market opportunities for our approved drugs by seeking approval of
their use for treatment of additional diseases. Nipent, which has provided over 80% of our revenues in the past three years, is a product that we believe has promise for treatment of a variety of
diseases. We are conducting a series of clinical trials with Nipent that are important to the expansion of our business. These trials include Phase IV trials for chronic lymphocytic leukemia, low
grade non-Hodgkin's lymphoma, cutaneous and peripheral T-cell lymphomas, and Phase II/III studies for graft-versus-host disease. If these and our other Nipent
clinical trials are not successful our business may not develop as planned.

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 $195.8 million for the period from inception through March 31, 2002. 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 through 2003. Our ability to achieve profitability will depend primarily on our ability to obtain regulatory approval for and successfully commercialize Orathecin. 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.

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

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capital resources will be adequate to fund operations and capital expenditures at least through 2003. 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. 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 Orathecin.

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. The company that had been purifying our Nipent finished product filed for bankruptcy in mid-2001. We contracted with a new manufacturer for the purification of
Nipent in 2001 and it has completed two production batches of Nipent. The new manufacturer is now in the process of being inspected by the FDA. Once the manufacturer is approved by the FDA, the
batches of Nipent can be released to inventory and be available for sale. If this approval is not received prior to the depletion of our inventory levels, we may experience an interruption in sales of
Nipent.

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

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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, 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.

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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.

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.

We
do not use or hold derivative financial instruments.

We
operate primarily in the United States and all product sales are denominated in U.S. dollars. Accordingly, we do not have any exposure to foreign currency rate fluctuations.

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SUPERGEN, INC.  PART IIOTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

|(a) |  | Exhibits |  |                                                                                                                                                                 
|--- |  | -------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | 10.1     |  | Executive Employment, Confidential Information, Invention Assignment, and Arbitration Agreement dated March 1, 2002 between the Registrant and Joseph Rubinfeld.
|    |  | 10.2*    |  | Research Agreement (Camptothecin) dated November 15, 1999 between the Registrant and Clayton Foundation for Research                                            
|    |  | 10.3*    |  | Research Agreement (Paclitaxel) dated November 15, 1999 between the Registrant and Clayton Foundation for Research                                              
|    |  | 10.4*    |  | License Agreement (Camptothecin) dated November 15, 1999 between the Registrant and Clayton Foundation for Research                                             
|    |  | 10.5*    |  | License Agreement (Paclitaxel) dated November 15, 1999 between the Registrant and Clayton Foundation for Research                                               
|    |  |         



|(b) |  | Reports on Form 8-K                                                                                                                                                                                                                               
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | Form 8-K dated March 4, 2002, filed on March 8, 2002, regarding the termination of the Worldwide Sales, Distribution, and Development Agreement and the Common Stock and Option Purchase Agreement between the Registrant and Abbott
Laboratories.

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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: May 15, 2002 |  | By:           
|                   |  | By:           

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