As filed with the Securities and Exchange Commission on April 5, 2005

                      Registration Number 333-____________

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-3
             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                         CALLISTO PHARMACEUTICALS, INC.
                 (Name of Small Business Issuer in its Charter)

             Delaware                                     13-3894575
   (State or other jurisdiction                       (I.R.S. Employer)
  of incorporation or organization)                   Identification No.)

                        420 Lexington Avenue, Suite 1609
                            New York, New York 10170
                                 (212) 297-0010
    (Address, including zip code, and telephone number, including area code
                  of registrant's principal executive offices)

                                  Gary S. Jacob
                             Chief Executive Officer
                         Callisto Pharmaceuticals, Inc.
                        420 Lexington Avenue, Suite 1609
                            New York, New York 10170
                                 (212) 297-0010
  (Name, address, including zip code, and telephone number, including area code
                             of agent for service)

                                   Copies to:
                            Jeffrey J. Fessler, Esq.
                       Sichenzia Ross Friedman Ference LLP
                     1065 Avenue of the Americas, 21st Floor
                            New York, New York 10018
                                 (212) 930-9700

Approximate  date of commencement  of proposed sale to the public:  From time to
time after the effective date of this Registration Statement.

If the only securities  being registered on this form are to be offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]

If any of the  securities  being  registered on this Form are to be offered on a
delayed or continuous  basis  pursuant to Rule 415 under the  Securities  Act of
1933, check the following box. [X]

If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the  Securities  Act  registration  statement  number of the  earlier  effective
registration statement for the same offering. [ ]

If this form is a  post-effective  amendment filed pursuant to Rule 462(c) under
the Securities  Act,  please check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering. [ ]

If delivery  of the  prospectus  is  expected  to be made  pursuant to Rule 434,
please check the following box. [ ]

                         CALCULATION OF REGISTRATION FEE
                         -------------------------------



Title of Each Class of         Amount to be     Proposed Maximum Offering   Proposed Maximum            Amount of Registration
Securities to be Registered    Registered       Price Per Share (1)         Aggregate Offering Price    Fee
---------------------------    ----------       -------------------         ------------------------    ---
                                                                                             
Common Stock, $.0001 par       1,985,791        $1.42                       $2,819,823                  $332
value


(1) Estimated  solely for purposes of calculating the  registration fee pursuant
to Rule 457(c)  under the  Securities  Act of 1933,  as amended,  based upon the
average of the high and low price per share of the Registrant's  Common Stock on
the American Stock Exchange on April 4, 2005.



THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATE(S)
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT  SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY  STATES THAT THIS REGISTRATION  STATEMENT
SHALL  THEREAFTER  BECOME  EFFECTIVE  IN  ACCORDANCE  WITH  SECTION  8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED,  OR UNTIL THE  REGISTRATION  STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION  ACTING PURSUANT TO SAID SECTION
8(a) MAY DETERMINE.



The  information  in this  prospectus  is not complete  and may be changed.  The
securities  may not be sold  until the  registration  statement  filed  with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to  sell  these  securities  and it is not  soliciting  an  offer  to buy  these
securities in any state where the offer or sale is not permitted.


PROSPECTUS


                         CALLISTO PHARMACEUTICALS, INC.

                        1,985,791 Shares of Common Stock

         The selling  stockholders named in this prospectus are offering to sell
up to 1,985,791 shares of common stock of Callisto  Pharmaceuticals,  Inc. which
are currently  issued and outstanding  and were  previously  issued by us to the
selling  stockholders in a private  placement.  We will not receive any proceeds
from the resale of shares of our common stock.

         Our common stock currently  trades on the American Stock Exchange under
the symbol "KAL." On April 4, 2005,  the last reported sale price for our common
stock on the American Stock Exchange was $1.36 per share.

         The  securities  offered in this  prospectus  involve a high  degree of
risk.  See "Risk Factors"  beginning on page 6 of this  prospectus to read about
factors you should consider before buying shares of our common stock.

         The selling stockholders are offering these shares of common stock. The
selling stockholders may sell all or a portion of these shares from time to time
in market  transactions  through  any market on which our  common  stock is then
traded, in negotiated transactions or otherwise, and at prices and on terms that
will be determined by the then prevailing  market price or at negotiated  prices
directly or through a broker or brokers, who may act as agent or as principal or
by a combination of such methods of sale. The selling  stockholders will receive
all proceeds from the sale of the common stock.  For  additional  information on
the  methods  of  sale,  you  should  refer  to the  section  entitled  "Plan of
Distribution."

         Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined whether
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.


                The date of this Prospectus is April _____, 2005





                                TABLE OF CONTENTS

                                                                            Page


Where You Can Find More Information......................................    4
Incorporation of Documents By Reference..................................    4
Summary..................................................................    4
Risk Factors.............................................................    6
Forward-Looking Statements...............................................   15
Use of Proceeds..........................................................   15
Selling Stockholders.....................................................   16
Plan of Distribution.....................................................   16
Legal Matters............................................................   18
Experts..................................................................   18

You may only rely on the  information  contained in this  prospectus  or that we
have  referred  you to.  We have  not  authorized  anyone  to  provide  you with
different information. This prospectus does not constitute an offer to sell or a
solicitation  of an offer to buy any  securities  other  than the  common  stock
offered by this prospectus. This prospectus does not constitute an offer to sell
or a solicitation  of an offer to buy any common stock in any  circumstances  in
which such offer or  solicitation  is  unlawful.  Neither  the  delivery of this
prospectus nor any sale made in connection with this prospectus shall, under any
circumstances,  create  any  implication  that  there  has been no change in our
affairs since the date of this prospectus or that the  information  contained by
reference to this prospectus is correct as of any time after its date.



                       WHERE YOU CAN FIND MORE INFORMATION

         This  prospectus is part of a  registration  statement that we filed on
Form S-3 with the  Securities  and Exchange  Commission or SEC. This  prospectus
does not contain all of the  information in the  registration  statement and the
exhibits and  schedules  that were filed with the  registration  statement.  You
should refer to the registration  statement for additional  information about us
and the common stock being offered in this  prospectus.  Statements made in this
prospectus  regarding the contents of any contract,  agreement or other document
that is  filed as an  exhibit  to the  registration  statement  or any  document
incorporated  by reference into the  registration  statement are not necessarily
complete,  and you should review the referenced  document  itself for a complete
understanding of its terms.

         We file annual,  quarterly and special  reports,  proxy  statements and
other  information with the SEC. You may read and copy any document that we file
at the SEC's public reference  facilities  located at 450 Fifth Street, NW, Room
1024,  Washington,  DC 20549,  and at the  SEC's  regional  offices  at 500 West
Madison Street, Suite 1400, Chicago,  Illinois 60661 and Woolworth Building, 233
Broadway  New  York,  New York.  Copies  of all or any part of the  registration
statement  may be  obtained  from the SEC upon  payment of the  prescribed  fee.
Information  regarding  the  operation  of the  public  reference  rooms  may be
obtained  by  calling  the SEC at  1-800-SEC-0330.  Our  SEC  filings  are  also
available to you free of charge at the SEC's web site at http://www.sec.gov.

                     INCORPORATION OF DOCUMENTS BY REFERENCE

         The SEC allows us to 'incorporate  by reference' the  information  into
this prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
that we  incorporate  by reference is considered to be part of this  prospectus.
Because we are  incorporating by reference our future filings with the SEC, this
prospectus  is  continually  updated  and those  future  filings  may  modify or
supersede  some  or all of the  information  included  or  incorporated  in this
prospectus.  This  means  that you must look at all of the SEC  filings  that we
incorporate  by  reference  to  determine  if  any  of the  statements  in  this
prospectus or in any document  previously  incorporated  by reference  have been
modified or superseded.  This prospectus incorporates by reference the documents
listed  below and any future  filings  we will make with the SEC under  Sections
13(a),  13(c),  14 or 15(d) of the  Securities  Exchange  Act of 1934  until the
selling  stockholders  sell  all of  our  common  stock  registered  under  this
prospectus.

         o    our  annual  report  on Form  10-KSB  for the  fiscal  year  ended
              December 31, 2004;

         o    our  current  reports  on Form 8-K  filed  on  February  3,  2005,
              February 7, 2005, February 14, 2005 and March 30, 2005; and

         o    the  description  of our common  stock  contained in Item 1 of our
              Registration Statement on Form 8-A, dated October 22, 2004;

         The information  about us contained in this  prospectus  should be read
together with the information in the documents  incorporated  by reference.  You
may  request a copy of any or all of these  filings,  at no cost,  by writing or
telephoning us at Callisto  Pharmaceuticals,  Inc., 420 Lexington Avenue,  Suite
1609, New York, New York 10170, Telephone: (212) 297-0010

                                     SUMMARY

         This  summary  highlights   information  contained  elsewhere  in  this
prospectus.  You should read the entire  prospectus  carefully,  including,  the
section  entitled "Risk Factors"  before deciding to invest in our common stock.
Callisto  Pharmaceuticals,  Inc. is referred to  throughout  this  prospectus as
"Callisto," "we" or "us."

         We are a biopharmaceutical  company focused on the development of drugs
to treat relapsed acute  leukemia,  multiple  myeloma (an incurable blood cancer
that invades and proliferates in bone marrow), other cancers and osteolytic bone
disease.  Our lead drug  candidate,  Annamycin,  a drug  from the  anthracycline
family,  earlier completed a Phase I/IIa trial in refractory  leukemia patients.
Annamycin,  originally  developed by scientists at The  University of Texas M.D.
Anderson  Cancer  Center to address the  clinical  limitations  associated  with
anthracycline drugs such as Adriamycin (doxorubicin) to treat cancer, is planned
to begin a Phase IIb trial in adult  relapsed acute  lymphocytic  leukemia (ALL)
patients in mid-2005,  and in pediatric relapsed ALL patients and in combination
with Ara-C  (cytosine  arabinoside)  in relapsed  acute myeloid  leukemia  (AML)
patients in 2005.

         Our second  drug  candidate,  Atiprimod,  is a  small-molecule,  orally
available drug with  antiproliferative  and antiangiogenic  activity.  Atiprimod
commenced a Phase I/IIa open-label  clinical trial in relapsed  multiple myeloma
patients  on May 26,  2004.  These  are  patients  that  no  longer  respond  to
chemotherapy,  and are in  advanced  stages  of the  disease.  The  Phase  I/IIa
clinical  trial is currently  being  enrolled at four sites,  The  University of
Texas  M.D.  Anderson  Cancer  Center  (Houston,  TX),  the  Dana-Farber  Cancer
Institute (Boston, MA), the St. Vincent's Comprehensive Cancer Center (New York,
NY) and the Roswell Park Cancer Institute (Buffalo, NY).

         On January 6, 2004,  we  announced  that the Office of Orphan  Products
Development  of the United  States Food and Drug  Administration  (FDA)  granted
orphan drug designation to Atiprimod for the treatment of multiple myeloma.

RECENT DEVELOPMENTS

         On March 9, 2005 we sold and issued in a private placement an aggregate
1,985,791  shares of common stock at a per share price of $1.52,  for  aggregate
gross proceeds of  approximately  $3.02 million.  Because this  transaction  was
completed with certain existing  institutional  shareholders and certain members
of our  management  we paid no fees to selling  agents and have agreed to file a
registration  statement  covering  resale  of the  shares  within 30 days of the
closing.



         On March 15, 2005 we announced a second Phase I/IIa  clinical  trial of
Atiprimod in advanced cancer patients. The new trial is entitled: "An Open Label
Study of the Safety and  Efficacy  of  Atiprimod  Treatment  for  Patients  with
Advanced Cancer".  The trial protocol received IRB approval on February 22, 2005
at The  University of Texas M.D.  Anderson  Cancer Center.  Site  initiation was
completed on March 3, 2005,  and patient  screening and dosing is anticipated to
begin in April, 2005.

HISTORY

         In  March  2002,  Callisto   Pharmaceuticals,   Inc.  ("Old  Callisto")
purchased  99.7%  of  the  outstanding   common  shares  of  Webtronics,   Inc.,
("Webtronics")  a public company for $400,000.  Webtronics was  incorporated  in
Florida on February 2, 2001 and had limited operations at December 31, 2002.

         On April 30, 2003,  pursuant to an  Agreement  and Plan of Merger dated
March  10,  2003,  as  amended  April 4,  2003,  Synergy  Acquisition  Corp.,  a
wholly-owned  subsidiary of Webtronics merged into Synergy  Pharmaceuticals Inc.
("Synergy")  and  Callisto  Acquisition  Corp.,  a  wholly-owned  subsidiary  of
Webtronics merged into Old Callisto (collectively, the "Merger"). As a result of
the  Merger,  Old  Callisto  and Synergy  became  wholly-owned  subsidiaries  of
Webtronics.  In the Merger  Webtronics  issued  17,318,994  shares of its common
stock in exchange for  outstanding  Old Callisto  common stock and an additional
4,395,684 shares in exchange for outstanding  Synergy common stock. Old Callisto
changed  its name to Callisto  Research  Labs,  LLC  ("Callisto  Research")  and
Webtronics  changed its name to Callisto  Pharmaceuticals,  Inc. and changed its
state of incorporation from Florida to Delaware. Subsequently, 171,818 shares of
common stock issued to former Synergy shareholders were returned to us under the
terms of certain indemnification agreements.

         Our  principal  executive  office is located at 420  Lexington  Avenue,
Suite 1609, New York, New York 10170



                                  RISK FACTORS

         AN  INVESTMENT  IN OUR SHARES  INVOLVES A HIGH  DEGREE OF RISK.  BEFORE
MAKING AN INVESTMENT  DECISION,  YOU SHOULD CAREFULLY  CONSIDER ALL OF THE RISKS
DESCRIBED IN THIS  PROSPECTUS.  IF ANY OF THE RISKS DISCUSSED IN THIS PROSPECTUS
ACTUALLY  OCCUR,  OUR  BUSINESS,  FINANCIAL  CONDITION AND RESULTS OF OPERATIONS
COULD BE MATERIALLY AND ADVERSELY AFFECTED. IF THIS WERE TO HAPPEN, THE PRICE OF
OUR SHARES COULD  DECLINE  SIGNIFICANTLY  AND YOU MAY LOSE ALL OR A PART OF YOUR
INVESTMENT.  THE RISK  FACTORS  DESCRIBED  BELOW  ARE NOT THE ONLY ONES THAT MAY
AFFECT US.  ADDITIONAL  RISKS AND  UNCERTAINTIES  THAT WE DO NOT CURRENTLY  KNOW
ABOUT OR THAT WE  CURRENTLY  DEEM  IMMATERIAL  MAY  ALSO  ADVERSELY  AFFECT  OUR
BUSINESS,  FINANCIAL  CONDITION AND RESULTS OF OPERATIONS.  OUR  FORWARD-LOOKING
STATEMENTS  IN  THIS   PROSPECTUS  ARE  SUBJECT  TO  THE  FOLLOWING   RISKS  AND
UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED
BY OUR  FORWARD-LOOKING  STATEMENTS AS A RESULT OF THE RISK FACTORS  BELOW.  SEE
"FORWARD-LOOKING STATEMENTS."

RISKS RELATED TO OUR BUSINESS

WE ARE AT AN EARLY STAGE OF DEVELOPMENT  AS A COMPANY,  CURRENTLY HAVE NO SOURCE
OF REVENUE AND MAY NEVER BECOME PROFITABLE.

         We are a development stage  biopharmaceutical  company.  Currently,  we
have no  products  approved  for  commercial  sale  and,  to  date,  we have not
generated any revenue. Our ability to generate revenue depends heavily on:

         o    demonstration  in Phase I/IIa and Phase IIb  clinical  trials that
              our  two  product  candidates,  Atiprimod  for  the  treatment  of
              relapsed  multiple  myeloma and  Annamycin  for the  treatment  of
              relapsed acute leukemia, respectively, are safe and effective;

         o    the successful development of our other product candidates;

         o    our  ability to seek and obtain  regulatory  approvals,  including
              with respect to the indications we are seeking;

         o    the successful commercialization of our product candidates; and

         o    market acceptance of our products.

         All  of  our  existing  product   candidates  will  require   extensive
additional clinical evaluation, regulatory review, significant marketing efforts
and substantial  investment  before they could provide us with any revenue.  For
example,  Atiprimod  for the treatment of multiple  myeloma  entered Phase I/IIa
clinical trials in May 2004 and Annamycin for the treatment of acute leukemia is
expected to enter a Phase IIb  clinical  trial in  mid-2005.  Our other  product
candidates  are  in  preclinical  development.   As  a  result,  if  we  do  not
successfully develop and commercialize Atiprimod or Annamycin, we will be unable
to generate any revenue for many years,  if at all. We do not anticipate that we
will  generate  revenue  for several  years,  at the  earliest,  or that we will
achieve  profitability  for at least  several  years after  generating  material
revenue,  if at all.  If we are unable to generate  revenue,  we will not become
profitable, and we may be unable to continue our operations.

WE HAVE INCURRED  SIGNIFICANT LOSSES SINCE INCEPTION AND ANTICIPATE THAT WE WILL
INCUR CONTINUED LOSSES FOR THE FORESEEABLE FUTURE.

         As of December 31, 2004, we had an accumulated  deficit of $33,361,197.
We have incurred  losses in each year since our inception in 1996. We incurred a
net loss of $7,543,467 and $13,106,247 for the years ended December 31, 2004 and
2003, respectively. These losses, among other things, have had and will continue
to have an adverse effect on our  stockholders'  equity and working capital.  We
expect to incur significant and increasing operating losses for the next several
years as we expand our research and development, continue our clinical trials of
Atiprimod for the treatment of multiple myeloma, initiate our clinical trials of
Annamycin for the treatment of acute leukemias, acquire or license technologies,
advance our other product candidates into clinical development,  seek regulatory
approval and, if we receive FDA approval, commercialize our products. Because of
the numerous risks and  uncertainties  associated  with our product  development
efforts,  we are  unable to predict  the extent of any future  losses or when we
will become profitable, if at all. If we are unable to achieve and then maintain
profitability, the market value of our common stock will likely decline.

WE WILL NEED TO RAISE SUBSTANTIAL ADDITIONAL CAPITAL TO FUND OUR OPERATIONS, AND
OUR  FAILURE TO OBTAIN  FUNDING  WHEN  NEEDED  MAY FORCE US TO DELAY,  REDUCE OR
ELIMINATE OUR PRODUCT DEVELOPMENT PROGRAMS OR COLLABORATION EFFORTS.

         Our  operations  have  consumed   substantial  amounts  of  cash  since
inception. We expect to continue to spend substantial amounts to:

         o    complete  the  clinical   development  of  our  two  lead  product
              candidates,  Atiprimod for the  treatment of multiple  myeloma and
              Annamycin for the treatment of acute leukemias;

         o    continue the development of our other product candidates;

         o    finance our general and administrative expenses;

         o    prepare  regulatory  approval  applications and seek approvals for
              Atiprimod and Annamycin and our other product candidates;

         o    license or acquire additional technologies;

         o    launch  and  commercialize  our  product  candidates,  if any such
              product candidates receive regulatory approval; and

         o    develop  and   implement   sales,   marketing   and   distribution
              capabilities.



         In 2004, our cash used in operations increased  significantly over 2003
and we expect that our cash used in operations will increase  significantly  for
the next several years.  We expect that our existing  capital  resources will be
sufficient to fund our  operations  for at least the next 12 months.  We will be
required  to  raise   additional   capital  to  complete  the   development  and
commercialization  of  our  current  product  candidates.   Our  future  funding
requirements will depend on many factors, including, but not limited to:

         o    the rate of  progress  and cost of our  clinical  trials and other
              development activities;

         o    any   future   decisions   we  may  make   about   the  scope  and
              prioritization of the programs we pursue;

         o    the costs of filing,  prosecuting,  defending  and  enforcing  any
              patent claims and other intellectual property rights;

         o    the costs and timing of regulatory approval;

         o    the  costs  of  establishing  sales,  marketing  and  distribution
              capabilities;

         o    the effect of competing technological and market developments;

         o    the terms and  timing of any  collaborative,  licensing  and other
              arrangements that we may establish; and

         o    general market  conditions  for offerings  from  biopharmaceutical
              companies.

         To date, our sources of cash have been primarily limited to the sale of
our equity  securities.  We cannot be certain  that  additional  funding will be
available on acceptable terms, or at all. To the extent that we raise additional
funds by issuing equity securities,  our stockholders may experience significant
dilution.  Any debt financing,  if available,  may involve restrictive covenants
that  impact  our  ability to conduct  our  business.  If we are unable to raise
additional  capital  when  required  or on  acceptable  terms,  we may  have  to
significantly   delay,   scale  back  or  discontinue  the  development   and/or
commercialization  of one or  more of our  product  candidates.  We also  may be
required to:

         o    seek  collaborators for our product candidates at an earlier stage
              than  otherwise  would be  desirable  and on  terms  that are less
              favorable than might otherwise be available; and

         o    relinquish,   license   or   otherwise   dispose   of   rights  to
              technologies,   product  candidates  or  products  that  we  would
              otherwise   seek  to  develop  or   commercialize   ourselves   on
              unfavorable terms.

IF OUR  AGREEMENTS  WITH ANORMED INC. OR THE  UNIVERSITY OF TEXAS M.D.  ANDERSON
CANCER CENTER TERMINATE, OUR BUSINESS WOULD BE ADVERSELY AFFECTED.

         Our business is dependent on rights we have  licensed from AnorMED Inc.
and The University of Texas M.D. Anderson Cancer Center.  Under the terms of the
license agreements,  we are obligated to make specified payments.  If we fail to
fulfill those obligations or other material obligations,  the license agreements
may be terminated.  If either  AnorMED or The University of Texas M.D.  Anderson
Cancer Center  terminates  its agreement with us, we will have no further rights
to utilize the  intellectual  property covered by the terminated  agreement,  we
would not be able to commercialize  Atiprimod or Annamycin,  as the case may be,
and our business  would be adversely  affected,  particularly  if we do not have
rights to other product candidates.

CLINICAL  TRIALS  INVOLVE A LENGTHY  AND  EXPENSIVE  PROCESS  WITH AN  UNCERTAIN
OUTCOME,  AND  RESULTS OF EARLIER  STUDIES AND TRIALS MAY NOT BE  PREDICTIVE  OF
FUTURE TRIAL RESULTS.

         In order to receive regulatory  approval for the  commercialization  of
our product candidates, we must conduct, at our own expense,  extensive clinical
trials to demonstrate safety and efficacy of these product candidates.  Clinical
testing  is  expensive,  can take many  years to  complete  and its  outcome  is
uncertain. Failure can occur at any time during the clinical trial process.

         The results of  preclinical  studies and early  clinical  trials of our
product  candidates  do not  necessarily  predict  the  results  of  later-stage
clinical trials.  Product candidates in later stages of clinical trials may fail
to show the desired safety and efficacy traits despite having progressed through
initial clinical testing. The data collected from clinical trials of our product
candidates  may not be  sufficient  to  support  the  submission  of a new  drug
application or to obtain regulatory  approval in the United States or elsewhere.
Because of the  uncertainties  associated  with drug  development and regulatory
approval,  we cannot  determine if or when we will have an approved  product for
commercialization or achieve sales or profits.

DELAYS IN CLINICAL  TESTING COULD RESULT IN INCREASED  COSTS TO US AND DELAY OUR
ABILITY TO GENERATE REVENUE.

         We may experience delays in clinical testing of our product candidates.
We do not know whether planned  clinical trials will begin on time, will need to
be redesigned or will be completed on schedule,  if at all.  Clinical trials can
be delayed for a variety of reasons,  including  delays in obtaining  regulatory
approval to commence a trial, in reaching agreement on acceptable clinical trial
terms with prospective sites, in obtaining  institutional  review board approval
to conduct a trial at a prospective site, in recruiting  patients to participate
in a trial or in obtaining sufficient supplies of clinical trial materials. Many
factors affect patient enrollment, including the size of the patient population,
the proximity of patients to clinical sites,  the  eligibility  criteria for the
trial,  competing  clinical  trials and new drugs approved for the conditions we
are  investigating.  Prescribing  physicians will also have to decide to use our
product candidates over existing drugs that have established safety and efficacy
profiles.  Any delays in 



completing  our clinical  trials will increase our costs,  slow down our product
development and approval process and delay our ability to generate revenue.

WE MAY BE REQUIRED TO SUSPEND OR DISCONTINUE  CLINICAL  TRIALS DUE TO UNEXPECTED
SIDE EFFECTS OR OTHER SAFETY RISKS THAT COULD  PRECLUDE  APPROVAL OF OUR PRODUCT
CANDIDATES.

         Our  clinical  trials  may be  suspended  at any time  for a number  of
reasons.  For example,  we may  voluntarily  suspend or  terminate  our clinical
trials if at any time we believe that they present an  unacceptable  risk to the
clinical  trial  patients.  In  addition,  regulatory  agencies  may  order  the
temporary or  permanent  discontinuation  of our clinical  trials at any time if
they believe that the clinical trials are not being conducted in accordance with
applicable  regulatory  requirements or that they present an unacceptable safety
risk to the clinical trial patients.

         Administering any product candidates to humans may produce  undesirable
side effects. These side effects could interrupt,  delay or halt clinical trials
of our  product  candidates  and  could  result  in the FDA or other  regulatory
authorities  denying further  development or approval of our product  candidates
for any or all  targeted  indications.  Ultimately,  some or all of our  product
candidates may prove to be unsafe for human use.  Moreover,  we could be subject
to  significant  liability if any  volunteer or patient  suffers,  or appears to
suffer,  adverse  health  effects as a result of  participating  in our clinical
trials.

IF WE ARE  UNABLE  TO  SATISFY  REGULATORY  REQUIREMENTS,  WE MAY NOT BE ABLE TO
COMMERCIALIZE OUR PRODUCT CANDIDATES.

         We need FDA approval  prior to marketing our product  candidates in the
United  States of  America.  We  commenced  in May 2004 a Phase  I/IIa  trial of
Atiprimod for the treatment of multiple  myeloma.  We expect to commence a Phase
IIb clinical  trial of  Annamycin  for the  treatment of acute  leukemias in the
first half of 2005.  If we fail to obtain  FDA  approval  to market our  product
candidates,  we will be  unable to sell our  product  candidates  in the  United
States of America and we will not generate any revenue.

         This regulatory review and approval process,  which includes evaluation
of preclinical studies and clinical trials of a product candidate as well as the
evaluation  of  our  manufacturing  process  and  our  contract   manufacturers'
facilities,  is lengthy,  expensive and uncertain. To receive approval, we must,
among other things,  demonstrate with substantial  evidence from well-controlled
clinical  trials that the product  candidate is both safe and effective for each
indication  where  approval  is  sought.   Satisfaction  of  these  requirements
typically  takes  several  years and the time  needed to  satisfy  them may vary
substantially,  based on the type,  complexity and novelty of the pharmaceutical
product.  We cannot predict if or when we might submit for regulatory review any
of our product  candidates  currently  under  development.  Any approvals we may
obtain may not cover all of the  clinical  indications  for which we are seeking
approval. Also, an approval might contain significant limitations in the form of
narrow indications, warnings, precautions, or contra-indications with respect to
conditions of use.

         The FDA has  substantial  discretion  in the  approval  process and may
either refuse to file our  application  for  substantive  review or may form the
opinion after review of our data that our  application is  insufficient to allow
approval  of our  product  candidates.  If the FDA does not file or approve  our
application, it may require that we conduct additional clinical,  preclinical or
manufacturing  validation studies and submit that data before it will reconsider
our application. Depending on the extent of these or any other studies, approval
of any  applications  that we submit may be delayed  by  several  years,  or may
require us to expend more resources than we have available.  It is also possible
that  additional  studies,  if performed  and  completed,  may not be considered
sufficient  by the FDA to make  our  applications  approvable.  If any of  these
outcomes occur, we may be forced to abandon our applications for approval, which
might cause us to cease operations.

         We will  also be  subject  to a wide  variety  of  foreign  regulations
governing the development, manufacture and marketing of our products. Whether or
not FDA  approval  has been  obtained,  approval of a product by the  comparable
regulatory  authorities  of foreign  countries  must still be obtained  prior to
manufacturing or marketing the product in those countries.  The approval process
varies from  country to country and the time  needed to secure  approval  may be
longer or shorter than that required for FDA approval. We cannot assure you that
clinical trials  conducted in one country will be accepted by other countries or
that approval in one country will result in approval in any other country.


THE COMMERCIAL  SUCCESS OF OUR PRODUCT CANDIDATES WILL DEPEND UPON THE DEGREE OF
MARKET  ACCEPTANCE OF THESE PRODUCTS  AMONG  PHYSICIANS,  PATIENTS,  HEALTH CARE
PAYORS AND THE MEDICAL COMMUNITY.

         Our  product   candidates  have  never  been   commercialized  for  any
indication. Even if approved for sale by the appropriate regulatory authorities,
physicians may not prescribe our product candidates,  in which case we could not
generate revenue or become  profitable.  Market  acceptance of Atiprimod for the
treatment of multiple  myeloma,  Annamycin for the treatment of acute  leukemias
and our other product  candidates by physicians,  healthcare payors and patients
will depend on a number of factors, including:

         o    acceptance  by  physicians  and patients of each such product as a
              safe and effective treatment;

         o    cost effectiveness;

         o    adequate reimbursement by third parties;

         o    potential advantages over alternative treatments;

         o    relative convenience and ease of administration; and

         o    prevalence and severity of side effects.



IF OUR PRODUCT CANDIDATES ARE UNABLE TO COMPETE EFFECTIVELY WITH MARKETED CANCER
DRUGS, OUR COMMERCIAL OPPORTUNITY WILL BE REDUCED OR ELIMINATED.

         We face competition from established  pharmaceutical  and biotechnology
companies,  as well as  from  academic  institutions,  government  agencies  and
private  and  public  research  institutions.   Many  of  our  competitors  have
significantly   greater  financial  resources  and  expertise  in  research  and
development,  manufacturing,  preclinical  testing,  conducting clinical trials,
obtaining  regulatory  approvals  and  marketing  approved  products than we do.
Smaller or early-stage  companies may also prove to be significant  competitors,
particularly  through   collaborative   arrangements  with  large,   established
companies.  Our  commercial  opportunity  will be reduced or  eliminated  if our
competitors  develop  and  commercialize  cancer  drugs  that  are  safer,  more
effective,  have  fewer  side  effects or are less  expensive  than our  product
candidates.  These third  parties  compete with us in  recruiting  and retaining
qualified scientific and management personnel, establishing clinical trial sites
and  patient   registration  for  clinical  trials,  as  well  as  in  acquiring
technologies   and  technology   licenses   complementary  to  our  programs  or
advantageous to our business.

         We expect that our ability to compete  effectively will depend upon our
ability to:

         o    successfully and rapidly  complete  clinical trials and submit for
              and obtain all requisite  regulatory approvals in a cost-effective
              manner;

         o    maintain a proprietary position for our products and manufacturing
              processes and other related product technology;

         o    attract and retain key personnel;

         o    develop relationships with physicians  prescribing these products;
              and

         o    build an  adequate  sales  and  marketing  infrastructure  for our
              product candidates.

         Because we will be competing  against  significantly  larger  companies
with established track records,  we will have to demonstrate to physicians that,
based on experience,  clinical data, side-effect profiles and other factors, our
products are  preferable to existing  cancer drugs.  If we are unable to compete
effectively  in the cancer  drug  market and  differentiate  our  products  from
currently marketed cancer drugs, we may never generate meaningful revenue.

WE  CURRENTLY  HAVE NO SALES AND  MARKETING  ORGANIZATION.  IF WE ARE  UNABLE TO
ESTABLISH A DIRECT SALES FORCE IN THE UNITED STATES TO PROMOTE OUR PRODUCTS, THE
COMMERCIAL OPPORTUNITY FOR OUR PRODUCTS MAY BE DIMINISHED.

         We currently  have no sales and marketing  organization.  If any of our
product  candidates  are  approved by the FDA, we intend to market that  product
directly  to  hospitals  in the United  States of America  through our own sales
force.  We will incur  significant  additional  expenses and commit  significant
additional  management  resources to establish  this sales force.  We may not be
able to establish these capabilities despite these additional  expenditures.  We
will also have to compete with other pharmaceutical and biotechnology  companies
to recruit, hire and train sales and marketing personnel. If we elect to rely on
third  parties  to sell our  product  candidates  in the United  States,  we may
receive less revenue than if we sold our products directly.  In addition, we may
have little or no control over the sales efforts of those third parties.  In the
event we are unable to develop our own sales force or  collaborate  with a third
party to sell our product  candidates,  we may not be able to commercialize  our
product  candidates  which  would  negatively  impact our  ability  to  generate
revenue.

WE MAY NEED  OTHERS  TO MARKET  AND  COMMERCIALIZE  OUR  PRODUCT  CANDIDATES  IN
INTERNATIONAL MARKETS.

         In the future,  if appropriate  regulatory  approvals are obtained,  we
intend  to  commercialize  our  product  candidates  in  international  markets.
However,  we have not decided how to  commercialize  our product  candidates  in
those  markets.  We may decide to build our own sales force or sell our products
through  third  parties.  If  we  decide  to  sell  our  product  candidates  in
international  markets  through a third party,  we may not be able to enter into
any  marketing  arrangements  on favorable  terms or at all. In addition,  these
arrangements  could  result in lower  levels of income to us than if we marketed
our  product  candidates  entirely  on our own. If we are unable to enter into a
marketing  arrangement for our product candidates in international  markets,  we
may  not  be  able  to  develop  an  effective   international  sales  force  to
successfully  commercialize those products in international  markets. If we fail
to enter into marketing  arrangements for our products and are unable to develop
an effective international sales force, our ability to generate revenue would be
limited.

IF THE FDA DOES NOT APPROVE OUR CONTRACT  MANUFACTURERS'  FACILITIES,  WE MAY BE
UNABLE TO DEVELOP OR COMMERCIALIZE OUR PRODUCT CANDIDATES.

         We  rely on  third-party  contract  manufacturers  to  manufacture  our
product candidates, and currently have no plans to develop our own manufacturing
facility.  The facilities used by our contract  manufacturers to manufacture our
product  candidates  must be  approved  by the FDA.  If the FDA does not approve
these  facilities  for  the  manufacture  of our  product,  we may  need to fund
additional  modifications  to  our  manufacturing  process,  conduct  additional
validation studies, or find alternative manufacturing  facilities,  any of which
would result in significant cost to us as well as a delay of up to several years
in  obtaining  approval  for and  manufacturing  of our product  candidates.  In
addition,  our  contract  manufacturers  will be  subject  to  ongoing  periodic
unannounced   inspection  by  the  FDA  and  corresponding  state  agencies  for
compliance with good manufacturing practices regulations,  or cGMPs, and similar
foreign  standards.  These regulations  cover all aspects of the  manufacturing,
testing,  quality control and record keeping relating to our product candidates.
We do not have control over our contract  manufacturers'  compliance  with these
regulations and standards.  Failure by our contract manufacturers to comply with
applicable  regulations could result in sanctions being imposed on us, including
fines, injunctions,  civil penalties,  failure of the government to grant market
approval of drugs,  delays,  suspension or withdrawals  of approvals,  operating
restrictions and criminal  prosecutions,  any of which could  significantly  and
adversely affect our business. In addition, we have no control over our contract
manufacturers'  ability to maintain adequate quality control,  quality assurance
and qualified personnel. Failure by our contract manufacturers to comply with or
maintain any of these standards  could  adversely  affect the development of our
product candidates and our business.



IF PRODUCT LIABILITY LAWSUITS ARE SUCCESSFULLY  BROUGHT AGAINST US, WE MAY INCUR
SUBSTANTIAL  LIABILITIES AND MAY BE REQUIRED TO LIMIT  COMMERCIALIZATION  OF OUR
PRODUCT CANDIDATES.

         We face an inherent risk of product  liability  lawsuits related to the
testing of our product candidates, and will face an even greater risk if we sell
our  product  candidates  commercially.  Currently,  we  are  not  aware  of any
anticipated product liability claims with respect to our product candidates.  In
the future,  an individual may bring a liability  claim against us if one of our
product  candidates  causes,  or merely appears to have caused, an injury. If we
cannot successfully defend ourselves against the product liability claim, we may
incur  substantial  liabilities.   Regardless  of  merit  or  eventual  outcome,
liability claims may result in:

         o    decreased demand for our product candidates;

         o    injury to our reputation;

         o    withdrawal of clinical trial participants;

         o    costs of related litigation;

         o    substantial monetary awards to patients;

         o    product recalls;

         o    loss of revenue; and

         o    the inability to commercialize our product candidates.

         We have "clinical trial" liability  insurance with a $3,000,000  annual
aggregate  limit  for  up to 40  patients  participating  in our  Atiprimod  and
prospective  Annamycin  clinical  trials.  We  intend to  expand  our  insurance
coverage to include the sale of  commercial  products if  marketing  approval is
obtained for our product  candidates.  Our current insurance  coverage may prove
insufficient  to cover any  liability  claims  brought  against us. In addition,
because of the  increasing  costs of insurance  coverage,  we may not be able to
maintain  insurance  coverage at a reasonable cost or obtain insurance  coverage
that will be adequate to satisfy any liability that may arise.

EVEN IF WE RECEIVE REGULATORY  APPROVAL FOR OUR PRODUCT  CANDIDATES,  WE WILL BE
SUBJECT TO ONGOING SIGNIFICANT REGULATORY OBLIGATIONS AND OVERSIGHT.

         If we receive regulatory approval to sell our product  candidates,  the
FDA and foreign  regulatory  authorities may,  nevertheless,  impose significant
restrictions  on the  indicated  uses or marketing of such  products,  or impose
ongoing  requirements  for  post-approval  studies.   Following  any  regulatory
approval of our product candidates,  we will be subject to continuing regulatory
obligations,   such   as   safety   reporting   requirements,   and   additional
post-marketing obligations,  including regulatory oversight of the promotion and
marketing of our  products.  If we become aware of previously  unknown  problems
with  any  of  our  product   candidates   here  or  overseas  or  our  contract
manufacturers'  facilities,  a regulatory agency may impose  restrictions on our
products,  our  contract  manufacturers  or on  us,  including  requiring  us to
reformulate our products,  conduct additional  clinical trials,  make changes in
the labeling of our products, implement changes to or obtain re-approvals of our
contract  manufacturers'  facilities or withdraw the product from the market. In
addition,  we may  experience  a  significant  drop in the sales of the affected
products,  our  reputation in the  marketplace  may suffer and we may become the
target of lawsuits, including class action suits. Moreover, if we fail to comply
with applicable regulatory requirements,  we may be subject to fines, suspension
or withdrawal of regulatory  approvals,  product  recalls,  seizure of products,
operating restrictions and criminal prosecution.  Any of these events could harm
or prevent sales of the affected  products or could  substantially  increase the
costs and expenses of commercializing and marketing these products.

WE RELY ON THIRD PARTIES TO CONDUCT OUR CLINICAL TRIALS.  IF THESE THIRD PARTIES
DO NOT  SUCCESSFULLY  CARRY  OUT  THEIR  CONTRACTUAL  DUTIES  OR  MEET  EXPECTED
DEADLINES,  WE MAY NOT BE ABLE TO SEEK OR OBTAIN  REGULATORY  APPROVAL  FOR,  OR
COMMERCIALIZE OUR PRODUCT CANDIDATES.

         We have agreements with third-party contract research organizations, or
CROs, to provide monitors for and to manage data for our clinical  programs.  We
and our CROs are  required to comply with current Good  Clinical  Practices,  or
GCPs,  regulations and guidelines enforced by the FDA for all of our products in
clinical  development.  The FDA enforces GCPs through  periodic  inspections  of
trial sponsors, principal investigators and trial sites. In the future, if we or
our CROs fail to comply with applicable GCPs, the clinical data generated in our
clinical  trials may be deemed  unreliable and the FDA may require us to perform
additional  clinical  trials before  approving our  marketing  applications.  We
cannot assure you that, upon inspection,  the FDA will determine that any of our
clinical  trials for  products in  clinical  development  comply  with GCPs.  In
addition, our clinical trials must be conducted with product produced under cGMP
regulations,  and will require a large number of test  subjects.  Our failure to
comply with these  regulations may require us to repeat clinical  trials,  which
would delay the regulatory approval process.

         If any of our relationships  with these third-party CROs terminate,  we
may not be able to enter into arrangements with alternative CROs. If CROs do not
successfully  carry out their contractual duties or obligations or meet expected
deadlines,  if they need to be  replaced,  or if the  quality or accuracy of the
clinical  data they  obtain is  compromised  due to the failure to adhere to our
clinical protocols,  regulatory  requirements or for other reasons, our clinical
trials may be extended,  delayed or terminated, and we may not be able to obtain
regulatory approval for or successfully commercialize our product candidates. As
a result,  our financial  results and the  commercial  prospects for our product
candidates  would be  harmed,  our costs  could  increase,  and our  ability  to
generate revenue could be delayed.

IF WE FAIL TO ATTRACT AND KEEP SENIOR  MANAGEMENT AND KEY SCIENTIFIC  PERSONNEL,
WE MAY BE UNABLE TO  SUCCESSFULLY  DEVELOP OUR PRODUCT  CANDIDATES,  CONDUCT OUR
CLINICAL TRIALS AND COMMERCIALIZE OUR PRODUCT CANDIDATES.



         Our success depends in part on our continued ability to attract, retain
and motivate highly qualified management,  clinical and scientific personnel and
on our ability to develop and  maintain  important  relationships  with  leading
academic institutions,  clinicians and scientists.  We are highly dependent upon
our senior  management and scientific  staff,  particularly  Gary S. Jacob,  our
Chief Executive Officer,  and Donald Picker, our Executive Vice President,  R&D.
The loss of  services  of Dr.  Jacob,  Dr.  Picker  or one or more of our  other
members of senior management could delay or prevent the successful completion of
our planned clinical trials or the commercialization of our product candidates.

         The  competition  for  qualified  personnel  in the  biotechnology  and
pharmaceuticals  field is intense. We will need to hire additional  personnel as
we expand our clinical development and commercial activities. We may not be able
to  attract  and  retain  quality   personnel  on  acceptable  terms  given  the
competition for such personnel  among  biotechnology,  pharmaceutical  and other
companies.  We do not carry "key person"  insurance  covering any members of our
senior management.

IF WE FAIL TO ACQUIRE AND DEVELOP OTHER PRODUCTS OR PRODUCT  CANDIDATES,  WE MAY
BE UNABLE TO GROW OUR BUSINESS.

         To date,  we have  in-licensed  or  acquired  the rights to each of our
product  candidates.  As part of our  growth  strategy,  we intend to license or
acquire   additional   products  and  product  candidates  for  development  and
commercialization.  Because we have limited internal research  capabilities,  we
are  dependent  upon  pharmaceutical  and  biotechnology   companies  and  other
researchers  to sell or license  products  to us. The  success of this  strategy
depends   upon  our   ability  to   identify,   select  and  acquire  the  right
pharmaceutical product candidates and products.

         Any product  candidate  we license or acquire  may  require  additional
development  efforts  prior to commercial  sale,  including  extensive  clinical
testing and approval by the FDA and applicable foreign  regulatory  authorities.
All  product   candidates  are  prone  to  the  risks  of  failure  inherent  in
pharmaceutical  product development,  including the possibility that the product
candidate will not be shown to be  sufficiently  safe and effective for approval
by regulatory  authorities.  In addition, we cannot assure you that any products
that we license or acquire that are approved  will be  manufactured  or produced
economically, successfully commercialized or widely accepted in the marketplace.

         Proposing,  negotiating and implementing an economically viable product
acquisition  or license  is a lengthy  and  complex  process.  Other  companies,
including  those  with  substantially  greater  financial,  marketing  and sales
resources,  may  compete  with us for the  acquisition  or  license  of  product
candidates and approved  products.  We may not be able to acquire or license the
rights to additional  product  candidates and approved products on terms that we
find acceptable, or at all.

WE  MAY  UNDERTAKE  ACQUISITIONS  IN  THE  FUTURE,  AND  ANY  DIFFICULTIES  FROM
INTEGRATING  THESE  ACQUISITIONS  COULD DAMAGE OUR ABILITY TO ATTAIN OR MAINTAIN
PROFITABILITY.

         We may acquire  additional  businesses,  products or product candidates
that complement or augment our existing business. Integrating any newly acquired
business or product could be expensive and time-consuming. We may not be able to
integrate any acquired business or product  successfully or operate any acquired
business  profitably.  Moreover,  we many need to raise additional funds through
public or  private  debt or equity  financing  to make  acquisitions,  which may
result in dilution to stockholders  and the incurrence of indebtedness  that may
include restrictive covenants.

WE WILL NEED TO INCREASE  THE SIZE OF OUR  ORGANIZATION,  AND WE MAY  EXPERIENCE
DIFFICULTIES IN MANAGING GROWTH.

         We are a small company with 5 full-time and 2 part-time employees as of
March 31, 2005. To continue our clinical  trials and  commercialize  our product
candidates,   we  will  need  to  expand  our  employee  base  for   managerial,
operational,   financial  and  other   resources.   Future  growth  will  impose
significant added responsibilities on members of management,  including the need
to identify,  recruit,  maintain and integrate additional employees.  Our future
financial  performance and our ability to commercialize  our product  candidates
and to compete  effectively  will depend,  in part, on our ability to manage any
future growth effectively. To that end, we must be able to:

         o    manage our clinical trials effectively;

         o    manage our development efforts effectively;

         o    integrate additional management, administrative, manufacturing and
              sales and marketing personnel;

         o    maintain  sufficient  administrative,  accounting  and  management
              information systems and controls; and

         o    hire and train additional qualified personnel.

         We may  not be able to  accomplish  these  tasks,  and our  failure  to
accomplish any of them could harm our financial results.

REIMBURSEMENT  MAY NOT BE  AVAILABLE  FOR OUR  PRODUCT  CANDIDATES,  WHICH COULD
DIMINISH OUR SALES.

         Market  acceptance  and sales of our product  candidates  may depend on
reimbursement  policies  and health  care reform  measures.  The levels at which
government  authorities and third-party  payors, such as private health insurers
and health maintenance organizations,  reimburse patients for the price they pay
for our  products  could  affect  whether  we are  able to  commercialize  these
products.  We cannot be sure that  reimbursement  will be  available  for any of
these  products.  Also,  we cannot be sure that  reimbursement  amounts will not
reduce the demand  for,  or the price of, our  products.  We have not  commenced
efforts to have our product  candidates  reimbursed by government or third party
payors.  If  reimbursement  is not  available  or is  available  only to limited
levels, we may not be able to commercialize our products.



         In recent years,  officials have made numerous  proposals to change the
health care system in the United States.  These proposals  include measures that
would limit or prohibit  payments for certain medical  treatments or subject the
pricing of drugs to government control. In addition,  in many foreign countries,
particularly  the countries of the European  Union,  the pricing of prescription
drugs is subject to government control. If our products are or become subject to
government regulation that limits or prohibits payment for our products, or that
subject the price of our products to governmental control, we may not be able to
generate revenue, attain profitability or commercialize our products.

         As a result of  legislative  proposals  and the trend  towards  managed
health care in the United States, third-party payers are increasingly attempting
to  contain  health  care  costs by  limiting  both  coverage  and the  level of
reimbursement of new drugs. They may also refuse to provide any coverage of uses
of approved products for medical  indications other than those for which the FDA
has granted market approvals. As a result,  significant uncertainty exists as to
whether and how much third-party payers will reimburse patients for their use of
newly-approved drugs, which in turn will put pressure on the pricing of drugs.

LEGISLATIVE OR REGULATORY REFORM OF THE HEALTHCARE SYSTEM MAY AFFECT OUR ABILITY
TO SELL OUR PRODUCTS PROFITABLY.

         In both the United States and certain foreign jurisdictions, there have
been a number of legislative  and regulatory  proposals to change the healthcare
system  in ways  that  could  impact  upon  our  ability  to sell  our  products
profitably.  In recent years,  new  legislation  has been proposed in the United
States at the federal and state levels that would  effect  major  changes in the
healthcare system, either nationally or at the state level.

         These proposals have included  prescription  drug benefit proposals for
Medicare   beneficiaries   introduced  in  Congress.   Legislation   creating  a
prescription  drug benefit and making certain changes in Medicaid  reimbursement
has recently  been enacted by Congress and signed by the  President.  Given this
legislation's recent enactment, it is still too early to determine its impact on
the  pharmaceutical  industry  and  our  business.  Further  federal  and  state
proposals are likely.  The potential for adoption of these proposals  affects or
will affect our ability to raise capital,  obtain  additional  collaborators and
market our  products.  We expect to experience  pricing  pressures in connection
with the sale of our products due to the trend toward  managed  health care, the
increasing   influence  of  health  maintenance   organizations  and  additional
legislative proposals.  Our results of operations could be adversely affected by
future healthcare reforms.

RISKS RELATED TO OUR INTELLECTUAL PROPERTY

IT IS DIFFICULT AND COSTLY TO PROTECT OUR PROPRIETARY  RIGHTS, AND WE MAY NOT BE
ABLE TO ENSURE THEIR PROTECTION.

         Our commercial success will depend in part on obtaining and maintaining
patent protection and trade secret protection of our product candidates, and the
methods  used to  manufacture  them,  as well as  successfully  defending  these
patents  against  third-party  challenges.  We will only be able to protect  our
product candidates from unauthorized making, using, selling, offering to sell or
importation  by third  parties to the extent that we have rights under valid and
enforceable patents or trade secrets that cover these activities.

         As of March 31, 2005, we own 4 issued  United  States  patents and have
licensed rights to 8 issued United States patents and 78 issued foreign patents,
and to 3 pending United States patent applications and 39 pending foreign patent
applications.  We do not and  have  not had  any  control  over  the  filing  or
prosecution  of these  patents or patent  applications.  We may file  additional
patent applications and extensions.

         The patent positions of pharmaceutical and biotechnology  companies can
be highly  uncertain and involve  complex legal and factual  questions for which
important legal principles remain unresolved. No consistent policy regarding the
breadth of claims  allowed in  biotechnology  patents has emerged to date in the
United States.  The biotechnology  patent situation outside the United States is
even more uncertain.  Changes in either the patent laws or in interpretations of
patent laws in the United  States and other  countries may diminish the value of
our intellectual property.  Accordingly, we cannot predict the breadth of claims
that may be allowed  or  enforced  in our  licensed  patents  or in  third-party
patents.

         The degree of future protection for our proprietary rights is uncertain
because  legal  means  afford only  limited  protection  and may not  adequately
protect our rights or permit us to gain or keep our competitive  advantage.  For
example:

         o    others may be able to make compounds that are competitive with our
              product  candidates  but that are not covered by the claims of our
              licensed  patents,  or for  which we are not  licensed  under  our
              license agreements;

         o    we or our  licensors  might  not have  been the  first to make the
              inventions  covered  by  our  pending  patent  application  or the
              pending patent applications and issued patents of our licensors;

         o    we or our  licensors  might not have been the first to file patent
              applications for these inventions;

         o    others  may   independently   develop   similar   or   alternative
              technologies or duplicate any of our technologies;

         o    it is possible that our pending patent  application or one or more
              of the  pending  patent  applications  of our  licensors  will not
              result in issued patents;

         o    the issued  patents of our  licensors  may not provide us with any
              competitive advantages, or may be held invalid or unenforceable as
              a result of legal challenges by third parties;

         o    we may not develop  additional  proprietary  technologies that are
              patentable; or

         o    the patents of others may have an adverse effect on our business.



         We also may rely on trade secrets to protect our technology, especially
where we do not believe patent protection is appropriate or obtainable. However,
trade  secrets are  difficult  to protect.  While we use  reasonable  efforts to
protect our trade secrets,  our  employees,  consultants,  contractors,  outside
scientific  collaborators  and other advisors may  unintentionally  or willfully
disclose our  information to  competitors.  Enforcing a claim that a third party
illegally  obtained  and is  using  our  trade  secrets  is  expensive  and time
consuming,  and the outcome is  unpredictable.  In addition,  courts outside the
United States are sometimes less willing to protect trade secrets. Moreover, our
competitors  may  independently  develop  equivalent   knowledge,   methods  and
know-how.

WE MAY INCUR  SUBSTANTIAL  COSTS AS A RESULT OF LITIGATION OR OTHER  PROCEEDINGS
RELATING TO PATENT AND OTHER  INTELLECTUAL  PROPERTY RIGHTS AND WE MAY BE UNABLE
TO PROTECT OUR RIGHTS TO, OR USE, OUR TECHNOLOGY.

         If we  choose  to go to court  to stop  someone  else  from  using  the
inventions  claimed in our licensed patents,  that individual or company has the
right to ask the court to rule that these patents are invalid  and/or should not
be enforced  against that third party.  These  lawsuits are  expensive and would
consume  time and other  resources  even if we were  successful  in stopping the
infringement of these patents. In addition,  there is a risk that the court will
decide  that  these  patents  are not valid and that we do not have the right to
stop the other  party  from using the  inventions.  There is also the risk that,
even if the validity of these  patents is upheld,  the court will refuse to stop
the other party on the ground that such other party's activities do not infringe
our rights to these patents.

         Furthermore,  a third  party  may claim  that we are  using  inventions
covered by the third  party's  patent rights and may go to court to stop us from
engaging in our normal  operations and activities,  including  making or selling
our product  candidates.  These lawsuits are costly and could affect our results
of operations  and divert the attention of managerial  and technical  personnel.
There is a risk  that a court  would  decide  that we are  infringing  the third
party's  patents  and  would  order us to stop  the  activities  covered  by the
patents.  In  addition,  there is a risk that a court  will  order us to pay the
other  party  damages  for  having  violated  the  other  party's  patents.  The
biotechnology  industry has produced a proliferation  of patents,  and it is not
always clear to industry participants, including us, which patents cover various
types of  products  or methods  of use.  The  coverage  of patents is subject to
interpretation by the courts, and the  interpretation is not always uniform.  If
we are sued for  patent  infringement,  we would  need to  demonstrate  that our
products  or  methods  of use either do not  infringe  the patent  claims of the
relevant  patent  and/or that the patent  claims are invalid,  and we may not be
able to do this.  Proving  invalidity,  in  particular,  is  difficult  since it
requires a showing of clear and convincing  evidence to overcome the presumption
of validity enjoyed by issued patents.

         Because some patent applications in the United States of America may be
maintained in secrecy until the patents are issued,  because patent applications
in the United States of America and many foreign jurisdictions are typically not
published  until eighteen months after filing,  and because  publications in the
scientific literature often lag behind actual discoveries,  we cannot be certain
that others have not filed patent  applications  for  technology  covered by our
licensors' issued patents or our pending  applications or our licensors' pending
applications  or  that  we or  our  licensors  were  the  first  to  invent  the
technology.  Our competitors may have filed, and may in the future file,  patent
applications  covering  technology  similar to ours. Any such patent application
may have  priority  over our or our  licensors'  patent  applications  and could
further   require  us  to  obtain  rights  to  issued   patents   covering  such
technologies.  If another party has filed a United States patent  application on
inventions  similar  to ours,  we may  have to  participate  in an  interference
proceeding  declared  by the  United  States  Patent  and  Trademark  Office  to
determine  priority  of  invention  in the  United  States.  The  costs of these
proceedings could be substantial,  and it is possible that such efforts would be
unsuccessful,  resulting in a loss of our United  States  patent  position  with
respect to such inventions.

         Some of our  competitors  may be able to  sustain  the costs of complex
patent  litigation more effectively than we can because they have  substantially
greater resources.  In addition, any uncertainties resulting from the initiation
and  continuation of any litigation  could have a material adverse effect on our
ability to raise the funds necessary to continue our operations.

RISKS RELATED TO OUR COMMON STOCK

MARKET VOLATILITY MAY AFFECT OUR STOCK PRICE AND THE VALUE OF YOUR INVESTMENT.

         The market  prices for  securities  of  biopharmaceutical  companies in
general have been highly  volatile and may continue to be highly volatile in the
future.  The following  factors,  in addition to other risk factors described in
this section,  may have a  significant  impact on the market price of our common
stock:

         o    announcements of  technological  innovations or new products by us
              or our competitors;

         o    announcement  of FDA  approval  or  non-approval  of  our  product
              candidates or delays in the FDA review process;

         o    actions taken by  regulatory  agencies with respect to our product
              candidates,  clinical trials,  manufacturing  process or sales and
              marketing activities;

         o    regulatory  developments  in the  United  States  of  America  and
              foreign countries;

         o    the success of our development efforts and clinical trials;

         o    the  success of our  efforts to acquire or  in-license  additional
              products or product candidates;

         o    any  intellectual  property  infringement  action,  or  any  other
              litigation, involving us;

         o    announcements concerning our competitors,  or the biotechnology or
              biopharmaceutical industries in general;



         o    actual or anticipated fluctuations in our operating results;

         o    changes in financial  estimates or  recommendations  by securities
              analysts;

         o    sales of large blocks of our common stock;

         o    sales of our common stock by our executive officers, directors and
              significant stockholders; and

         o    the loss of any of our key scientific or management personnel.

         The  occurrence  of one or more of these  factors  may  cause our stock
price to decline,  and you may not be able to resell your shares at or above the
price you paid for your shares. In addition,  the stock markets in general,  and
the markets for biotechnology and biopharmaceutical  stocks in particular,  have
experienced  extreme  volatility  that has often been unrelated to the operating
performance  of  particular  companies.  These  broad  market  fluctuations  may
adversely affect the trading price of our common stock.

WE ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION.

         In the past,  securities class action litigation has often been brought
against a company  following  a decline in the market  price of its  securities.
This  risk  is   especially   relevant   for  us   because   biotechnology   and
biopharmaceutical  companies have experienced significant stock price volatility
in recent years.  If we faced such  litigation,  it could result in  substantial
costs and a diversion of management's attention and resources,  which could harm
our business.

WE HAVE NOT PAID  CASH  DIVIDENDS  IN THE  PAST  AND DO NOT  EXPECT  TO PAY CASH
DIVIDENDS IN THE FUTURE. ANY RETURN ON INVESTMENT MAY BE LIMITED TO THE VALUE OF
OUR STOCK.

         We have never paid cash  dividends  on our stock and do not  anticipate
paying cash  dividends on our stock in the  foreseeable  future.  The payment of
cash dividends on our stock will depend on our earnings, financial condition and
other  business and economic  factors  affecting us at such time as the board of
directors may consider relevant. If we do not pay cash dividends,  our stock may
be less  valuable  because a return on your  investment  will only  occur if our
stock price appreciates.

                           FORWARD-LOOKING STATEMENTS

         The  Private  Securities  Litigation  Reform  Act of 1995  (the  "Act")
provides  a safe  harbor  for  forward-looking  statements  made by us or on our
behalf.  We and our  representatives  may from time to time make written or oral
statements that are  "forward-looking,"  including  statements contained in this
prospectus  and other  filings  with the  Securities  and  Exchange  Commission,
reports to our  stockholders  and news  releases.  All  statements  that express
expectations, estimates, forecasts or projections are forward-looking statements
within the meaning of the Act. In  addition,  other  written or oral  statements
which constitute  forward-looking statements may be made by us or on our behalf.
Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates,"  "projects," "forecasts," "may," "should," variations of such words
and  similar   expressions   are  intended  to  identify  such   forward-looking
statements.  These  statements  are not  guarantees  of future  performance  and
involve risks,  uncertainties  and  assumptions  which are difficult to predict.
Therefore,  actual  outcomes  and  results  may differ  materially  from what is
expressed or forecasted in or suggested by such forward-looking  statements.  We
undertake  no  obligation  to update  publicly any  forward-looking  statements,
whether as a result of new  information,  future events or otherwise.  Among the
important factors on which such statements are based are assumptions  concerning
our ability to complete ongoing clinical trials, results of our clinical trials,
the  timing of  approval  of our  products  by the United  States  Food and Drug
Administration,  our  ability to obtain  additional  financing,  our  ability to
attract and retain key employees,  our ability to protect intellectual property,
and our  ability  to adapt to  economic,  political  and  regulatory  conditions
affecting the healthcare industry.

                                 USE OF PROCEEDS

         We will not receive any of the proceeds  from the resale of the shares.
All  proceeds  from the sale of these  shares will be solely for the accounts of
the selling stockholders.



                              SELLING STOCKHOLDERS

            On March 9,  2005,  we sold and  issued  1,985,791  shares of common
stock in a private  placement.  This prospectus only covers the 1,985,791 shares
of common  stock  issued in the private  placement.  The  following  table lists
certain  information  with respect to the selling  stockholders as follows:  (i)
each selling stockholder's name, (ii) the number of outstanding shares of common
stock  beneficially  owned by the selling  stockholders  prior to this offering;
(iii) the number of shares being  offered in this  offering,  (iv) the number of
shares of common  stock to be  beneficially  owned by each  selling  stockholder
after the completion of this offering  assuming the sale of all of the shares of
the common stock offered by each selling stockholder;  and (v) if one percent or
more, the percentage of  outstanding  shares of common stock to be  beneficially
owned by each selling stockholder after the completion of this offering assuming
the  sale  of all of  the  shares  of  common  stock  offered  by  each  selling
stockholder.  Except as noted,  none of the  selling  stockholders  have had any
position,  office,  or  other  material  relationship  with  us or  any  of  our
predecessors or affiliates within the past three years.

         The selling  stockholders may sell all, or none of their shares in this
offering. See "Plan of Distribution."



                                                                                                  After the Offering
------------------------------------------------------------------------------------------------------------------------------------
Selling Stockholder                         Number of Shares         Number of Shares   Number of Shares        Percent of Shares
-------------------                         Beneficially Owned       Being Offered      Beneficially Owned      Beneficially
                                            Prior to the Offering                                               Owned
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    
The Pharmaceutical/Medical
Technology Fund, L.P.                          694,444 (1)            250,000             444,444               1.4
------------------------------------------------------------------------------------------------------------------------------------
Atlas Equity I, Ltd.                           700,000                500,000             200,000               *
------------------------------------------------------------------------------------------------------------------------------------
Orion Biomedical Fund, L..P                    905,572                540,461             365,111               1.2      
------------------------------------------------------------------------------------------------------------------------------------
Orion Biomedical Offshore Fund, L..P           196,767                117,434              79,333               *        
------------------------------------------------------------------------------------------------------------------------------------
Alexandra Global Master Fund Ltd.              750,000                500,000             250,000               *        
------------------------------------------------------------------------------------------------------------------------------------
Panetta Partners, Ltd. (2)                   2,101,237                 25,000           2,076,237               6.6      
------------------------------------------------------------------------------------------------------------------------------------
Gary S. Jacob (3)                              274,745 (4)             16,448             258,297               *        
------------------------------------------------------------------------------------------------------------------------------------
Christoph Bruening (5)                         460,699 (6)             20,000             440,699               1.4      
------------------------------------------------------------------------------------------------------------------------------------
Daniel D'Agostino (7)                           16,448                 16,448                  --               --       
------------------------------------------------------------------------------------------------------------------------------------



*   less than 1%.

(1)  Includes  444,444  shares of common  stock owned by  Greenberg  Health Care
Partners LLC, a related entity.

(2) Gabriele M. Cerrone,  our Chairman,  is the sole general  partner of Panetta
and in  such  capacity  only  exercises  voting  and  dispositive  control  over
securities  owned by Panetta.  As such,  Mr.  Cerrone may be deemed,  solely for
purposes of Section 13(d) of the Securities  Exchange Act of 1934 as amended, to
"beneficially"  own  securities  in which he has no  pecuniary  interest  and he
therefore disclaims such beneficial interest.

(3) Mr. Jacob is our Chief Executive Officer

(4) Includes  150,000  shares of common stock  issuable  upon  exercise of stock
options.

(5) Mr. Bruening is a director of our company.

(6) Includes  25,000  shares of common  stock  issuable  upon  exercise of stock
options.

(7) Mr. D'Agostino is a consultant to our company.


                              PLAN OF DISTRIBUTION

         The selling stockholders,  or their pledgees, donees,  transferees,  or
any of their successors in interest selling shares received from a named selling
stockholder  as a  gift,  partnership  distribution  or  other  non-sale-related
transfer  after  the  date  of this  prospectus  (all  of  whom  may be  selling
stockholders)  may sell the common stock offered by this prospectus from time to
time on any stock exchange or automated  interdealer  quotation  system on which
the   common   stock  is  listed  or  quoted  at  the  time  of  sale,   in  the
over-the-counter  market, in privately negotiated  transactions or otherwise, at
fixed prices that may be changed,  at market  prices  prevailing  at the time of
sale,  at prices  related to  prevailing  market  prices or at prices  otherwise
negotiated. The selling stockholders may sell the common stock by one or more of
the following methods, without limitation:

         o        Block  trades in which the  broker or dealer so  engaged  will
                  attempt to sell the common stock as agent but may position and
                  resell a portion of the block as principal to  facilitate  the
                  transaction;

         o        An exchange  distribution  in accordance with the rules of any
                  stock exchange on which the common stock is listed;

         o        Ordinary brokerage  transactions and transactions in which the
                  broker solicits purchases;

         o        Privately negotiated transactions;



         o        In connection with short sales of company shares;

         o        Through  the  distribution  of  common  stock  by any  selling
                  stockholder to its partners, members or stockholders;

         o        By pledge to secure debts of other obligations;

         o        In   connection   with   the   writing   of   non-traded   and
                  exchange-traded  call options,  in hedge  transactions  and in
                  settlement   of  other   transactions   in   standardized   or
                  over-the-counter options;

         o        Purchases by a  broker-dealer  as principal  and resale by the
                  broker-dealer for its account; or

         o        In a combination of any of the above.

     These transactions may include crosses, which are transactions in which the
same  broker  acts  as an  agent  on  both  sides  of  the  trade.  The  selling
stockholders  may also  transfer the common stock by gift. We do not know of any
arrangements  by the  selling  stockholders  for the  sale of any of the  common
stock.

     The selling stockholders may engage brokers and dealers, and any brokers or
dealers may arrange for other  brokers or dealers to  participate  in  effecting
sales of the common stock. These brokers or dealers may act as principals, or as
an agent of a  selling  stockholder.  Broker-dealers  may  agree  with a selling
stockholder to sell a specified  number of the stocks at a stipulated  price per
share. If the broker-dealer is unable to sell common stock acting as agent for a
selling  stockholder,  it may  purchase as  principal  any unsold  shares at the
stipulated  price.  Broker-dealers  who acquire  common stock as principals  may
thereafter  resell the  shares  from time to time in  transactions  in any stock
exchange or automated  interdealer quotation system on which the common stock is
then  listed,  at prices and on terms then  prevailing  at the time of sale,  at
prices related to the then-current  market price or in negotiated  transactions.
Broker-dealers   may  use  block   transactions   and   sales  to  and   through
broker-dealers,  including  transactions  of the  nature  described  above.  The
selling  stockholders may also sell the common stock in accordance with Rule 144
or Rule 144A under the Securities Act, rather than pursuant to this  prospectus.
In order to comply with the securities laws of some states,  if applicable,  the
shares  of  common  stock  may be  sold  in  these  jurisdictions  only  through
registered or licensed brokers or dealers.

     From time to time,  one or more of the  selling  stockholders  may  pledge,
hypothecate  or grant a security  interest in some or all of the shares owned by
them.  The  pledgees,  secured  parties or person to whom the  shares  have been
hypothecated  will,  upon  foreclosure in the event of default,  be deemed to be
selling stockholders. The number of a selling stockholder's shares offered under
this  prospectus  will decrease as and when it takes such  actions.  The plan of
distribution  for  that  selling  stockholder's  shares  will  otherwise  remain
unchanged.  In addition,  a selling stockholder may, from time to time, sell the
shares  short,  and, in those  instances,  this  prospectus  may be delivered in
connection with the short sales and the shares offered under this prospectus may
be used to cover short sales.

     To the extent  required under the Securities  Act, the aggregate  amount of
selling  stockholders'  shares being offered and the terms of the offering,  the
names of any agents, brokers, dealers or underwriters, any applicable commission
and other material facts with respect to a particular offer will be set forth in
an  accompanying  prospectus  supplement  or a  post-effective  amendment to the
registration  statement of which this prospectus is a part, as appropriate.  Any
underwriters,  dealers,  brokers or agents  participating in the distribution of
the common stock may receive compensation in the form of underwriting discounts,
concessions, commissions or fees from a selling stockholder and/or purchasers of
selling  stockholders' shares, for whom they may act (which compensation as to a
particular   broker-dealer  might  be  less  than  or  in  excess  of  customary
commissions).  Neither we nor any selling stockholder can presently estimate the
amount of any such compensation.

     The selling stockholders and any underwriters,  brokers,  dealers or agents
that  participate  in the  distribution  of the common stock may be deemed to be
"underwriters"  within the meaning of the  Securities  Act,  and any  discounts,
concessions,  commissions  or fees received by them and any profit on the resale
of the securities  sold by them may be deemed to be  underwriting  discounts and
commissions.  If a  selling  stockholder  is deemed  to be an  underwriter,  the
selling stockholder may be subject to certain statutory  liabilities  including,
but not limited to Sections 11, 12 and 17 of the  Securities  Act and Rule 10b-5
under the Exchange Act. Selling  stockholders who are deemed underwriters within
the meaning of the  Securities  Act will be subject to the  prospectus  delivery
requirements  of the  Securities  Act.  The SEC staff is of a view that  selling
stockholders  who are  registered  broker-dealers  or  affiliates  of registered
broker-dealers may be underwriters under the Securities Act. We will not pay any
compensation  or  give  any  discounts  or  commissions  to any  underwriter  in
connection with the securities being offered by this prospectus.

     A  selling   stockholder   may  enter  into   hedging   transactions   with
broker-dealers  and the  broker-dealers  may engage in short sales of the common
stock in the course of hedging  the  positions  they  assume  with that  selling
stockholder,  including, without limitation, in connection with distributions of
the common stock by those  broker-dealers.  A selling stockholder may enter into
option  or  other  transactions  with  broker-dealers,  who may then  resell  or
otherwise  transfer those common stock. A selling  stockholder  may also loan or
pledge the common stock offered hereby to a broker-dealer  and the broker-dealer
may sell the common stock offered by this prospectus so loaned or upon a default
may  sell or  otherwise  transfer  the  pledged  common  stock  offered  by this
prospectus.

     The selling  stockholders  and other persons  participating  in the sale or
distribution of the common stock will be subject to applicable provisions of the
Exchange Act, and the rules and  regulations  under the Exchange Act,  including
Regulation M. This regulation may limit the timing of purchases and sales of any
of the  common  stock by the  selling  stockholders  and any other  person.  The
anti-manipulation  rules  under  the  Exchange  Act may apply to sales of common
stock in the market and to the activities of the selling  stockholders and their
affiliates.  Regulation M may restrict the ability of any person  engaged in the
distribution  of the common  stock to engage in  market-making  activities  with
respect to the particular  



common stock being  distributed  for a period of up to five business days before
the distribution.  These restrictions may affect the marketability of the common
stock and the  ability  of any  person  or  entity  to  engage in  market-making
activities with respect to the common stock.

     We have agreed to indemnify the selling  stockholders  who  participated in
our March 9, 2005 private placement (the "Private  Placement  Stockholders") and
any brokers, dealers and agents who may be deemed to be underwriters, if any, of
the common stock  offered by this  prospectus,  against  specified  liabilities,
including   liabilities   under  the  Securities  Act.  The  Private   Placement
Stockholders have agreed to indemnify us against specified liabilities.

     The common stock offered by this  prospectus was  originally  issued to the
Private  Placement  Stockholders  pursuant to an exemption from the registration
requirements of the Securities Act, as amended. We agreed to register the common
stock issued to the Private Placement Stockholders under the Securities Act, and
to keep the registration  statement of which this prospectus is a part effective
until three years after the effective  date of the  registration  statement.  We
have agreed to pay all expenses incident to the registration of the common stock
held by the Private Placement Stockholders in connection with this offering, but
all selling expenses related to the securities  registered shall be borne by the
individual  holders  of such  securities  pro rata on the basis of the number of
shares of securities so registered on their behalf.

     We cannot  assure you that the  selling  stockholders  will sell all or any
portion of the common stock offered by this prospectus.  In addition,  we cannot
assure you that a selling stockholder will not transfer the shares of our common
stock by other means not described in this prospectus.

                                  LEGAL MATTERS

         The validity of the common stock will be passed upon by Sichenzia  Ross
Friedman  Ference LLP, New York, New York.  Sichenzia Ross Friedman  Ference LLP
owns an aggregate of 22,000 shares of Callisto's common stock.

                                     EXPERTS

         The financial  statements  incorporated by reference in this prospectus
have  been  audited  by BDO  Seidman,  LLP,  an  independent  registered  public
accounting  firm,  to the extent and for the periods  set forth in their  report
incorporated  herein by reference,  and are incorporated herein in reliance upon
such report  given upon the  authority  of said firm as experts in auditing  and
accounting.



         PART II

                   INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

         The  following  table sets forth an estimate of the costs and  expenses
payable by  Callisto  Pharmaceuticals,  Inc.  in  connection  with the  offering
described in this registration statement. All of the amounts shown are estimates
except the Securities and Exchange Commission ("SEC") registration fee:

                   Securities and Exchange Commission Registration Fee   $   332
                   Printing and Engraving Expenses                         2,500
                   Accounting Fees and Expenses                            5,000
                   Legal Fees and Expenses                                15,000
                   Miscellaneous                                             168
                                                                         -------
                             Total                                       $23,000


ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

         Callisto Pharmaceuticals,  Inc.'s Certificate of Incorporation provides
that to the fullest extent permitted by the Delaware General  Corporation Law, a
director of the  company  shall not be  personally  liable to the company or its
stockholders  for monetary  damages for breach of fiduciary  duty as a director.
Under current  Delaware law,  liability of a director may not be limited (i) for
any breach of the director's duty of loyalty to the company or its stockholders,
(ii)  for  acts or  omissions  not in good  faith  or that  involve  intentional
misconduct  or a knowing  violation of law, and (iii) for any  transaction  from
which the director derives an improper personal benefit.


         The effect of the provision of Callisto's  Certificate of Incorporation
is to  eliminate  the  rights  of the  company  and  its  stockholders  (through
stockholders'  derivative  suits on behalf of the  company) to recover  monetary
damages  against  a  director  for  breach  of the  fiduciary  duty of care as a
director  (including  breaches  resulting  from  negligent or grossly  negligent
behavior) except in the situations described in clauses (i) through (iii) above.
This  provision  does not limit or  eliminate  the rights of the  company or any
stockholder  to seek  nonmonetary  relief such as an injunction or rescission in
the event of a breach of a  director's  duty of care.  In  addition,  Callisto's
Certificate of  Incorporation  provides that the company shall  indemnify to the
fullest extent  permitted by law its  directors,  officers and employees and any
other  persons  to  which   Delaware  law  permits  a  corporation   to  provide
indemnification against losses incurred by any such person by reason of the fact
that such person was acting in such capacity.


         Callisto  has an  insurance  policy  that  insures  its  directors  and
officers,  within the  limits and  subject  to the  limitations  of the  policy,
against  certain  expenses in connection  with the defense of actions,  suits or
proceedings,  and certain  liabilities that might be imposed as a result of such
actions,  suits or proceedings,  to which they are parties by reason of being or
having been directors or officers.


ITEM 16. EXHIBITS

                        
EXHIBIT
 NUMBER      DESCRIPTION
--------     -------------------------------------------------------------------
     5.1     Opinion of Sichenzia Ross Friedman Ference LLP  
    23.1     Consent of BDO Seidman, LLP                     
    23.2     Consent of Sichenzia Ross Freidman Ference LLP  
             (included in Exhibit 5.1)                       
      24     Power of Attorney (included on Page II-3)*      

* Previously filed.

ITEM 17. UNDERTAKINGS

      1. The  undersigned  registrant  hereby  undertakes  to  file,  during any
period in which  offers or sales are being made, a  post-effective  amendment to
this registration statement:


                  (i) To include any prospectus  required by Section 10(a)(3) of
         the Securities Act of 1933.

                 (ii) To reflect in the  prospectus  any facts or events arising
         after the  effective  date of the  registration  statement (or the most
         recent post-effective amendment thereof) which,  individually or in the
         aggregate,  represent a fundamental change in the information set forth
         in the  registration  statement.  Notwithstanding  the  foregoing,  any
         increase  or  decrease  in volume of  securities  offered (if the total
         dollar  value of  securities  offered  would not exceed  that which was
         registered) and any deviation from the low or high end of the estimated
         maximum offering range may be reflected in the form of prospectus filed
         with the Commission  pursuant to Rule 424(b) if, in the aggregate,  the
         changes in volume and price represent no more than 20 percent change in
         the maximum  aggregate  offering price set forth in the "Calculation of
         Registration Fee" table in the effective registration statement.



                 (iii) To include any material  information  with respect to the
         plan of  distribution  not  previously  disclosed  in the  registration
         statement  or  any  material   change  to  such   information   in  the
         registration statement.

         Provided,  however,  that  paragraphs  (B)(1)(i) and (B)(1)(ii) of this
         section do not apply if the registration statement is on Form S-3, Form
         S-8 or Form F-3,  and the  information  required  to be  included  in a
         post-effective  amendment by those  paragraphs is contained in periodic
         reports  filed with or furnished to the  Commission  by the  Registrant
         pursuant to Section 13 or Section  15(d) of the  Exchange  Act that are
         incorporated by reference in the registration statement.


      2. The  undersigned  registrant  hereby  undertakes  that, for the purpose
of determining any liability under the Securities Act of 1933, as amended,  each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.


      3.  The   undersigned   registrant  hereby   undertakes  to   remove  from
registration by means of a post-effective  amendment any of the securities being
registered that remain unsold at the termination of the offering.


      4. The  undersigned  registrant  hereby  undertakes  that, for purposes of
determining  any  liability  under  the  Securities  Act,  each  filing  of  the
registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Exchange Act (and, where  applicable,  each filing of an employee benefit plan's
annual  report   pursuant  to  Section  15(d)  of  the  Exchange  Act)  that  is
incorporated by reference in the registration  statement shall be deemed to be a
new registration  statement relating to the securities offered therein,  and the
offering of such  securities at that time shall be deemed to be the initial bona
fide offering thereof.


      5.  Insofar   as  indemnification   for   liabilities  arising  under  the
Securities Act of 1933, as amended, may be permitted to directors,  officers and
controlling  persons  of the  undersigned  registrant  according  the  foregoing
provisions,  or otherwise,  the undersigned  registrant has been advised that in
the opinion of the Securities and Exchange  Commission such  indemnification  is
against public policy as expressed in the Act and is, therefore,  unenforceable.
In the event that a claim for  indemnification  against such liabilities  (other
than the payment by the  Registrant of expenses  incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered,  the registrant will,
unless in the opinion of its counsel the matter has been settled by  controlling
precedent,  submit to a court of appropriate  jurisdiction  the question whether
such  indemnification  by it is  against  public  policy  as  expressed  in  the
Securities  Act of  1933,  as  amended,  and  will  be  governed  by  the  final
adjudication of such issue.

      6. The undersigned registrant hereby undertakes that:


         (i) For purposes of determining  any liability under the Securities Act
         of 1933, the information  omitted from the form of prospectus  filed as
         part of this  registration  statement  in  reliance  upon Rule 430A and
         contained in a form of prospectus  filed by the registrant  pursuant to
         Rule 424(b)(1)or (4) or 497(h) under the Securities Act shall be deemed
         to be  part  of  this  registration  statement  as of the  time  it was
         declared effective.


         (ii) For the purpose of determining  any liability under the Securities
         Act of 1933,  each  post-effective  amendment  that  contains a form of
         prospectus shall be deemed to be a new registration  statement relating
         to the securities offered therein,  and the offering of such securities
         at that  time  shall be  deemed to be the  initial  bona fide  offering
         thereof.



                                   SIGNATURES

        In accordance  with the  requirements  of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,  thereunto
duly authorized, in the City of New York, State of New York, on April 5, 2005.

                                          CALLISTO PHARMACEUTICALS, INC.

                                          By:  /s/ Gary S. Jacob
                                              ----------------------------------
                                              Gary S. Jacob,
                                              CHIEF EXECUTIVE OFFICER



                                POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS,  that each person whose signature  appears below
constitutes  and  appoints  Gabriele M.  Cerrone and Gary S. Jacob,  and each of
them,  his true and  lawful  attorneys-in-fact  and  agents,  with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all  capacities,  to sign any and all amendments  (including  post-effective
amendments) to this  Registration  Statement,  and any  subsequent  registration
statements  pursuant to Rule 462 of the  Securities  Act of 1933 and to file the
same, with all exhibits  thereto,  and other documents in connection  therewith,
with   the   Securities   and   Exchange   Commission,    granting   unto   said
attorneys-in-fact  and agents,  and each of them, full power and authority to do
and perform each and every act and thing  requisite  and necessary to be done in
and about the  premises,  as fully to all  intents  and  purposes as he might or
could do in  person,  hereby  ratifying  and  confirming  all that  each of said
attorney-in-fact  or his substitute or substitutes,  may lawfully do or cause to
be done by virtue hereof.

        In accordance  with the  requirements  of the Securities Act of 1933, as
amended,  this  registration  statement  has been signed below by the  following
persons in the capacities and on the dates indicated.



            SIGNATURE                                           TITLE                                       DATE
----------------------------------          -----------------------------------------------       -------------------------
                                                                                                  
       /s/ Gary S. Jacob                    Chief Executive Officer and Director                        April 5, 2005
----------------------------------          (Principal Executive Officer)
         Gary S. Jacob

      /s/ Bernard Denoyer                   Vice President, Finance                                     April 5, 2005
----------------------------------          (Principal Financial and Accounting Officer)
        Bernard Denoyer

    /s/ Gabriele M. Cerrone                 Chairman of the Board                                       April 5, 2005
----------------------------------
      Gabriele M. Cerrone

                                            Director                                                    April 5, 2005
----------------------------------
          Edwin Snape

     /s/ Christoph Bruening                 Director                                                    April 5, 2005
----------------------------------
       Christoph Bruening

     /s/ John P. Brancaccio                 Director                                                    April 5, 2005
----------------------------------
       John P. Brancaccio

       /s/ Stephen Carter                   Director                                                    April 5, 2005
----------------------------------
         Stephen Carter

     /s/ Randall K. Johnson                 Director                                                    April 5, 2005
----------------------------------
       Randall K. Johnson