4SC AG — Interim / Quarterly Report 2007

May 10, 2007

INTERIM REPORT AND QUARTERLY MANAGEMENT REPORT BY 31 MARCH 2007

Table of contents

General information	2
Development of important key figures	3
Shareholders' letter	4
Quarterly management report	5
Income statement	11
Balance sheet	12
Cash flow statement	14
Statement of changes in equity	16
Notes	17
1. Basis of valuation and significant accounting and valuation policies	17
2. Segment report	17
3. Earnings per share	19
4. Share property and directors' dealings	19
5. Employees' subscription rights	20
6. Events after the end of the reporting period	20
Financial calendar / Imprint	21

General information

Security code
number	575381
ISIN	DE0005753818
SE code	VSC
Management Board	Dr Ulrich Dauer, CEO Dr Gerhard Keilhauer, CDO Dipl.-Kfm. Enno Spillner, CFO Dr Daniel Vitt, CSO
Principal Office	4SC AG Am Klopferspitz 19a 82152 Planegg-Martinsried Germany
IR Contact	Bettina von Klitzing E-Mail: Bettina.von.Klitzing@4SC.com Phone 0049 (0) 89 700 763 - 0 www.4SC.com

Development of important key figures

in KEUR	2007-01-01 - 2007-03-31 resp. 2007-03-31	2006-01-01 - 2006-03-31 resp. 2006-03-31
Net sales	287	503
Result from operating activities	- 2,158	- 1,737
Period result	- 2,156	- 1,742
Equity	5,753	7,432
Equity ratio	71.9%	78.9%
Balance sheet total	7,998	9,414
Cash flows from operating and investing activities	- 308	- 2,350
Cash flows from financing activities	0	0
Net change in cash and cash equivalents	- 308	- 2,350
Cash and cash equivalents	2,214	4,528
Employees (at end of period)	60	53
The 4SC share:
Earnings per share (undiluted and diluted) [EUR]	- 0.19	- 0.17
Shares in circulation (average; in thousands)	11,461	10,530
Percentage of freely tradable shares	64%1	25%1
3 month high (Xetra) [EUR]	3.85	5.25
3 month low (Xetra) [EUR]	3.33	4.20
Open at beginning of period (Xetra) [EUR]	3.69	4.40
Close at end of period (Xetra) [EUR]	3.40	4.79
Market capitalisation at end of period	38.969	50.439
Daily turnover (units; Xetra)	2.905	8.225

1: In accordance with the regulations of Deutsche Börse (stock exchange) in Frankfurt concerning the determination of the percentage of freely tradable shares, the free float of 4SC AG is only about 23%. Accordingly, all of shareholder's shares that make up an aggregate of at least 5% of a corporation's capital stock allocable to a share category are deemed to be largely held.

Dear Shareholder,

In the first quarter of the financial year 2007, 4SC AG has progressed largely as planned. As expected, net sales were lower than in the reference quarter, because net sales in the first quarter of the previous year were primarily generated in two cooperations which we have meanwhile completed successfully.

The present net sales resulted predominately from our newly started research and development activities for our American partner Quo-Nova LLC., to whom 4SC AG is providing substantial resources for further developing the QSB substances against biofilms. Here, the joint work plan for the present year has even been expanded recently as to achieve Quo-Nova's project targets in the shortest possible time.

In addition, we are currently engaged in promising contract negotiations with a new potential partner regarding a wide-ranging research cooperation.

Progress of the pipeline

In our most important business segment "Drug Discovery & Development", the focus has been and still is on completing the phase IIa clinical study on drug candidate SC12267 for the treatment of rheumatoid arthritis. Here, we are progressing according to schedule and have already been able to recruit more than half of the targeted 120 patients. Thus, it can be expected that the report on the study results will be available in the fourth quarter 2007 as planned and that – if successful – this will lay the foundation for a significant company value enhancement.

Our drug candidate SC75741 against influenza virus infections created news. In co-operation with the University of Munster,

we very recently passed successfully an important milestone: we were able to provide the preclinical proof of concept. Mice infected with influenza viruses were effectively treated and cured with 4SC's drug candidate SC75741. This drug candidate and related substances are now advanced with the aim of creating a suitable drug candidate for clinical development. Simultaneously, we are already holding initial talks with possible development partners from the pharmaceutical industry and with European and US governmental organisations regarding funded projects on pandemic prophylaxis.

Our other pipeline projects – including the two drug candidates SC68896 and SC71570 which have recently be nominated for clinical development – are progressing as planned; however, because of the very nature of drug development, developmental progress is not necessarily made in quarterly intervals. Altogether, 4SC AG is actively promoting six projects from its own research pipeline at present.

Expansion of the pipeline

In addition, we will include further projects in our development pipeline in the near future. Recent research work of 4SC AG has shown that our drug candidate SC12267 is an excellent platform for further projects targeting various diseases. Supported by external partners, we are currently investigating the development opportunities with regards to the indications atopic dermatitis and psoriasis, as well as chronic inflammatory bowl diseases. For the above-named skin diseases, bioavailability studies are presently being conducted; for the chronic bowl inflammation indication, researchers of the University of Regensburg

Dr Ulrich Dauer, Chief Executive Officer

are investigating the therapeutic effects of SC12267 in animal studies. In addition, multiple sclerosis may be a possible further indication. For this indication, the available proof of concept data from animal experiments is sufficient to allow for the filing of a clinical trial application.

There is a significant additional market potential for SC12267 with regards to the indications described above. And thanks to our experiences to date and the data available for this drug candidate, the clinical development can be undertaken with comparatively moderate efforts and within a relatively short timeframe. However, as a research-intensive and by its very nature not yet profitable company, additional funding will be required to realise this. We are confident that the present capital increase will serve as an adequate base in this respect.

I would like to thank you, also in the name of my colleagues, for the confidence you shown in 4SC AG.

Dr Ulrich Dauer Chief Executive Officer

1. Presentation of the course of business

1.1 Economic development and the development of stock exchange segments

The world economy continued in its upward trend in the first quarter of 2007. Even though the production upsurge in the US, and therefore world economic growth overall, has slackened somewhat, the upturn in the Euro zone and Japan continues. The experts believe that this is because monetary policies in these countries are still having an reflationary effect, and the favourable development in international financial markets is a further boost to the economic situation.

The German economy as well is experiencing a steady economic upturn, which is set to continue in the coming year, according to the five economic research institutes. While at the end of 2006 a further increase in gross domestic product of 1.0 to 1.8% was forecast for 2007, the majority of research institutes raised their prognosis to 2.4% in their spring estimate, among other things, against the background of continuing growth in domestic demand.

In spite of what were initially somewhat mixed expectations for future share performance in Germany, the upward trend on the German stock market experienced since 2006 has proved to be largely stable in the first quarter as well, despite an interim trough at the end of February. Thus the German stock market's leading share index, the DAX, has been able to continue to climb significantly since the beginning of the year, and closed up 4.6% on its level at the beginning of the quarter at 6,917.03 points. Moreover, immediately after the end of the quarter it passed the 7,000 point mark.

As barometers for the biotechnology segment, the AMEX Biotechnology Index has been able to grow by 1.3% to 764.18 points and the German Prime IG Biotechnology Performance Index by 5.3% to 213.19 points since the beginning of the year. Only the NASDAQ Biotechnology Index fell 3.2% to 776.95 points. Overall, biotech indexes put in a slightly below-average performance in the first quarter of 2007 compared with interbranch indexes.

The biotechnology and pharmaceutical industry in Europe, and particularly in Germany, continued to make significant headway in the first quarter of 2007. A number of positive reports, including those concerning patents permitted, research and development partnerships entered into, clinical trials begun, applications for market approval filed, successful public and private financial negotiations and company acquisitions, support the impression that the industry is set on a growth path and is becoming increasingly stable.

1.2 Development of the company 1.2.1 Research and Development (Drug Discovery & Development)

In its promising segment "Drug Discovery & Development", 4SC AG has continued to concentrate on actively developing its portfolio, which currently consists of six research and development projects for the indications of autoimmune diseases and cancer.

For the most advanced project SC12267, for the treatment of rheumatoid arthritis, the company has started the phase IIa proof of concept study on patients according to plan, after obtaining trial approvals. 13 trial centres in the trial countries of Germany, Poland and Serbia are taking part. A total of 120 patients are treated with a daily oral dose of SC12267 in two dosages or placebo for three months altogether and the anti-arthritic effect, as well as the safety of the treatment, is then assessed. The final report should be available in the fourth quarter of 2007 if everything runs according to plan.

The proteasome inhibitor SC68896, nominated by 4SC AG on the basis of its activity in in vivo and ex vivo models as a development substance, has been characterised further with regard to its activity and toxicity. Ongoing work is concerned primarily with the production and formulation of the substance for a clinical trial in the area of oncological diseases.

In the context of its NFκB project, 4SC AG has nominated the drug candidate SC71570 for further development, based on the highly promising results of a predictive animal model for rheumatoid arthritis. Studies are currently being carried out into the characterisation of the activity of SC71570 in other models for autoimmune diseases.

As a result of this NFκB project, it was possible to identify another interesting molecule in addition to SC71570 for the treatment of influenza virus infections in the period under review. SC75741 is an inhibitor of the NFκB signal path, which actively prevents the proliferation of influenza A viruses. At the same time, this substance prevents the proliferation of factors leading to inflammation, and therefore has the unique potential of being launched on the market as a novel therapy to combat infections through highly pathogenic flu and avian flu viruses. In this context it was also recently possible to demonstrate its efficacy in a corresponding animal model: mice infected with the avian flu virus were protected after treatment with SC75741. Further investigations into its safety, and tolerance of it, are being prepared.

The treatment of cancers is the focus of 4SC's 4iP project. After the leading substance SC71710, a multi-specific protein kinase inhibitor, recently showed itself to be highly promising, proving efficient in a cancer animal model, data on the safety of the substance is now being finalised. The SC71710 molecule is highly effective against acute myeloid leukaemia (AML) tumour cells, due to its unique activity profile, but at the same time is highly selective in its behaviour towards other cells. At the same time, SC71710 is a potent angiogenesis inhibitor, which considerably broadens the possible application spectrum.

It was recently possible to demonstrate its efficacy in a corresponding animal model: mice infected with the avian flu virus were protected after treatment with SC75741.

The aim of the latest of 4SC AG's six pipeline projects, the Kv1.3 project, is to treat multiple sclerosis. In the first quarter of 2007, it was possible to produce new substances which inhibit the potassium channel Kv1.3. This project is supported by the Federal Ministry for Education and Research (BMBF) as part of its "BioChancePLUS" project.

1.2.2 Research collaborations (Collaborative Business)

In addition to the research collaboration with Schwarz Pharma AG, which began in October 2006 in the area of the central nervous system, the company was able to find another partner in collaborative business, QuoNova LLC., Melbourne, Florida, USA. This collaboration is based on the quorum sensing modulators developed by 4SC AG sold to the newly founded QuoNova LLC. in December of last year. 4SC AG provides QuoNova with substantial research capacity for the further development of this modulator.

1.2.3 Personnel

The company has taken on three new employees in the quarter under review, one for each of the areas of science, quality management and administration. On 31 March 2007, 4SC AG therefore employed a total of 60 members of staff (not including the Management Board); on the same date in the previous year it was 53.

There were 45 members of staff working in the area of Research & Development, 13 employees in the area of Sales and Administration and two employees in the area of Information Technology.

INTERIM REPORT 2007-03-31 06

2. Presentation of the situation

2.1 Earnings position

Net sales in the first quarter of 2007 originated in the "Collaborative Business" segment and amounted to KEUR 287. As expected, they were therefore 42.9% below net sales in the same period of 2006 (KEUR 503). The current net sales were achieved in the context of Research & Development work for the American partner QuoNova LLC., Melbourne, Florida, USA, which got off to a successful start.

Research and development costs rose by 12.9% in the first quarter of 2007 to KEUR 1,581 (previous year's quarter: KEUR 1,400). This was against a background of increased costs for external services resulting from the further development of the project pipeline – and, in this area particularly, from the SC12267 project currently in clinical trial phase IIa. Moreover, an increase in the cost of patents must be reported, primarily due to the started national application procedures.

The current net sales were achieved in the context of Research & Development work for the American partner QuoNova LLC., which got off to a successful start.

Administrative costs were up 20.2% compared with the same quarter of the previous year, from KEUR 555 to KEUR 667. This was mainly against a background of provisions for legal and consultancy costs connected, amongst other things, with the capital increase planned for the second quarter of 2007.

The result from operating activities in the first quarter of 2007 amounts to KEUR - 2,158 compared with KEUR - 1,737 in the same period of 2006, and has therefore turned out to be better than expected.

Financial result improved from KEUR - 5 in the same quarter of 2006 to KEUR 2 in the quarter under review. In the first quarter of 2007, finance income which have increased to KEUR 64 (KEUR 38 in the first quarter of 2006) therefore contrast with finance expenses, which have fallen to KEUR - 25 ( KEUR - 43 in the first quarter of 2006) as well as a proportionate loss amounting to KEUR 37 (previous year: KEUR 0) resulting from investments accounted for by the equity method in connection with the associated company QuoNova LLC.

The period result for the first quarter of 2007 stands at KEUR - 2,156 compared with KEUR - 1,742 for the same quarter of the previous year.

2.2 Net assets position

In the quarter under review, non-current assets fell from KEUR 4,177 to KEUR 3,688 compared with their level as of 31 December 2006. With intangible and tangible assets remaining nearly unchanged, this decrease can be attributed to the reduction in noncurrent receivables from associated companies and the lower assessment of investments accounted for by the equity method.

Current assets fell from KEUR 5,796 on 31 December 2006 to KEUR 4,310 on 31 March 2007. As of the balance sheet date, both a reduction in trade accounts receivables and a decrease in current receivables from associated companies can be reported. The fall in cash and securities from KEUR 4,471 to KEUR 3,264 is a result of 4SC AG's business operations, which are currently largely financed from the company's liquid reserves.

Due to the negative period result, shareholders' equity in 4SC AG fell from KEUR 7,854 on 31 December 2006 to KEUR 5,753 on 31 March 2007. The equity ratio at the end of the quarter under review amounts to 71.9% compared with 78.8% on 31 December 2006.

Whereas long-term loans fell to KEUR 818 in the quarter under review (31 December 2006: KEUR 830), current liabilities increased from KEUR 1,289 on 31 December 2006 to KEUR 1,427 on 31 March 2007. This increase is largely due to the increase in provisions to KEUR 898 on 31 March 2007 (31 December 2006: KEUR 564), mainly due to the existing obligations from contracts for external services and legal and consultancy services not yet paid for.

The balance sheet total of 4SC AG reduced from KEUR 9,973 on 31 December 2006 to KEUR 7,998 on 31 March 2007, which was primarily due to the negative quarterly result of KEUR - 2,156.

2.3 Financial positions

At the end of the quarter under review, the amount of cash and cash equivalents stood at KEUR 2,214 (KEUR 2,522 on 31 December 2006). Other funds amounting to KEUR 1,050 were invested in fixed and floating-rate securities with issuers of sound financial standing (31 December 2006: KEUR 1,949 ).

Cash flows from operating activities ran to only KEUR - 1,190 in the first quarter, in spite of the negative result of KEUR - 2,156 for the period (same quarter of the previous year: KEUR - 1,444 with a negative period result of KEUR - 1,742). This was largely due to the reduction in receivables, as well as an increase in provisions.

From investing activities it was possible in the quarter under review, to generate a cash inflow amounting to KEUR 882 mainly by selling securities. In the same period of the previous year, largely securities were purchased, so that a cash outflow amounting to KEUR 906 was reported.

No cash flows were generated from financing activities, either in the quarter under review or in the same period of the previous year.

3. Risk report

The risks and opportunities for the company remain to a great degree unchanged, in comparison with the last report in the context of the annual report of 31 December 2006.

Clinical trial phase IIa for the most advanced drug candidate SC12267 is also being carried out on schedule. There are currently more than 60 patients suffering from active rheumatoid arthritis taking part in the study, which means that it has already been possible to recruit over 50 percent of the target number of 120 patients required for the study. This increases the chances of the trial

phase being successfully completed in the fourth quarter of 2007, and therefore of this result having a positive effect on company's financial performance. However, it still cannot rule out the possibility that SC12267 may not be demonstrated to have a sufficiently strong effect on patients, or have unexpected side effects with safety implications when the substance is tried out on patients for the first time, which could considerably delay the trial or even lead to it being called off altogether.

4. Events after the end of the reporting period

On 4 April 2007, based on provisional estimates of the financial figures for the first quarter of 2007, the company reported that on the basis of the HGB (German Commercial Code) figures as of 31 March 2007, the company is likely to have incurred a loss of over half of its nominal capital. This was largely against a background of accumulated losses carried forward from previous years. In connection with this, on 17 April 2007 the company published an invitation to an extraordinary shareholders' meeting on 31 May 2007 as per § 92 (1) of the AktG (German Stock Corporation Act), at which the loss should be announced and appropriate measures reported in the light of current developments.

On 2 May 2007, the company announced its decision to carry out a capital increase with subscription rights, after the relevant prospectus of 4SC had previously been approved by the Federal Financial Supervisory Authority (BaFin). The rights offering was published that same day on 4SC AG's homepage, as well as on 3 May 2007 in the electronic federal journal and the financial gazette. The period for offering subscription rights will probably run until 16 May 2007.

INTERIM REPORT 2007-03-31 08

5. Outlook of further business development

In the first quarter of the financial year 2007, 4SC AG has largely developed according to plan and targets set for the current financial year remain unchanged.

In the most important "Drug Discovery & Development" business segment, the focus this year is on completing the clinical trial phase IIa for drug candidate SC12267 to combat rheumatoid arthritis. Should the anticipated trial results for the fourth quarter turn out as expected, that may further increase the attractiveness of the drug candidate to potential licensees in the pharmaceutical industrial significantly. Moreover, two further projects are at the advanced pre-clinical trial stage, for which clinical trial approvals could yet be applied for in 2007 if everything remains on schedule.

In addition, 4SC AG will in the short term incorporate other projects arising from its own research into the development pipeline, which have extra value-added potential and moreover ensure a greater spread of risk in the project portfolio. The drug candidate SC12267, which is currently already being clinically tested for the indication rheumatoid arthritis, should act as a platform for further projects in the indication of atopic dermatitis and psoriasis, as well as chronic inflammatory bowel disease and multiple sclerosis. In these indication areas, clinical development will be carried out in a relatively short time at a reasonable cost, on the basis of the knowledge of SC12267 obtained up until now. The company is convinced of the market potential of these additional projects and determined to take advantage of these opportunities. This has also played a major role in the decision to go ahead with the capital increase.

4SC AG is therefore being consistent in pursuing its strategy, of building up an extensive pipeline of drug candidates in close cooperation with the pharmaceutical industry, and thereby significantly increasing the value of the company step by step. Furthermore, in the short term and particularly in the medium term, the signing of further sales-relevant licensing contracts with pharmaceutical partners, as well as additional service and research cooperative projects are to be expected.

Planegg-Martinsried, 7 May 2007

Management Board of 4SC AG (from left to right): Dr Daniel Vitt, Dr Ulrich Dauer, Dipl.-Kfm. Enno Spillner and Dr Gerhard Keilhauer

Dr Ulrich Dauer, CEO

Dipl.-Kfm. Enno Spillner, CFO

Dr Gerhard Keilhauer, CDO

Dr Daniel Vitt, CSO

INTERIM REPORT | OVERVIEW

INTERIM REPORT OF 4SC AG (IFRS)

Income statement	11
Balance sheet	12
Cash flow statement	14
Statement of changes in equity	16
Notes	17

Income statement

for the period from 01 January to 31 March 2007 (unaudited)

in KEUR	2007-01-01 - 2007-03-31	2006-01-01 - 2006-03-31	Notes
Net sales	287	503
Cost of sales	- 105	- 151
Gross profit	182	352
Distribution costs	- 81	- 108
Research and development costs	- 1,581	- 1,400
Administrative costs	- 667	- 555
Other operating income	21	5
Other operating expenses	- 32	- 31
Result from operating activities	- 2,158	- 1,737
Financial result
Loss from an associate accounted for by the equity method	- 37	0
Finance income	64	38
Finance expenses	- 25	- 43
Financial result	2	- 5
Period result	- 2,156	- 1,742
Earnings per share
(undiluted and diluted) [EUR]	- 0.19	- 0.17	3.

INTERIM REPORT 2007-03-31 11

Balance sheet – Assets

for the period ended 31 March 2007 (unaudited)

in KEUR	2007-03-31	2006-12-31
ASSETS
Non-current assets
Intangible assets	1,871	1,875
Fixed assets	1,125	1,230
Investments accounted for by the equity-method	14	51
Accounts receivables from associated companies	678	1,021
Total non-current assets	3,688	4,177
Current assets
Inventories	20	17
Trade accounts receivables	15	134
Accounts receivables from associated companies	382	518
Cash	895	464
Securities	2,369	4,007
Other current assets	467	550
Prepaid expenses and accrued income	162	106
Total non-current assets	4,310	5,796
TOTAL ASSETS	7,998	9,973

Balance sheet – Equity and liabilities

for the period ended 31 March 2007 (unaudited)

in KEUR	2007-03-31	2006-12-31
EQUITY AND LIABILITIES
Equity
Subscribed capital	11,461	11,461
Additional paid-in capital	16,662	16,607
Retained earnings	67	67
Loss carryforward	- 20,281	- 14,741
Period result	- 2,156	- 5,540
Total equity	5,753	7,854
Non-current liabilities
Long-term loans	818	830
Total non-current liabilities	818	830
Current liabilities
Provisions and deffered liabilities	898	564
Trade accounts payable	361	499
Accounts payable to associated companies	0	29
Down payments received	17	37
Other current liabilities	151	160
Total current liabilities	1,427	1,289
TOTAL EQUITY AND LIABILITIES	7,998	9,973

Cash flow statement

for the period from 01 January to 31 March 2007 (unaudited)

in KEUR	2007-01-01 - 2007-03-31	2006-01-01 - 2006-03-31
Cash flows from operating activities: Period result before taxes	- 2,156	- 1,742
Corrections for:
Depreciation on fixed assets and intangible assets and impairment of goodwill	127	177
Non-cash affecting expenses and income	51	21
Financial result	- 2	5
Interest received	39	17
Interest paid	- 9	- 9
Decrease of trade accounts receivables	119	119
Decrease of accounts receivables from associated companies	479	29
Increase of inventories	- 3	- 1
Decrease of other current assets	83	9
Decrease / Increase of prepaid expenses and accrued income	- 56	54
Decrease of trade accounts payable	- 138	- 22
Decrease of accounts payable to associated companies	- 29	- 29
Increase / Decrease of down payments received	- 20	335
Increase / Decrease of provisions and deffered liabilities	334	- 294
Decrease of other current liabilities	- 9	- 113
Cash flows from operating activities:	- 1,190	- 1,444
Cash flows from investing activities:
Purchase of intangible assets	0	- 2
Purchase of fixed assets	- 18	- 56
Sales / Purchase of securities (maturity > 3 months)	900	- 848
Cash flows from investing activities:	882	- 906
Cash flows from financing activities:	0	0
Net change in cash and cash equivalents	- 308	- 2,350
+ Cash and cash equivalents at the beginning of the period	2,522	6,878
= Cash and cash equivalents at the end of the period	2,214	4,528

Cash flow statement

for the period from 01 January to 31 March 2007 (unaudited)

For the reason of comparability the securities purchased with a maturity of more than three months, which were reported as part of the cash and cash equivalents in the previous year, have been re-classified as cash flows from investing activities. In the previous year, for the period from 1 January 2006 to 31 March 2006 cash flows from investing activities which amounted to KEUR - 58, a net change in cash and cash equivalents amounting to KEUR - 1,502, as well as cash and cash equivalents at the end of the period amounting to KEUR 5,376 were reported.

This reclassification was similarly applied to the following table.

The cash and cash equivalents break down as follows:

in KEUR	2007-03-31	2006-03-31
Cash and cash equivalents	895	398
Securities	2,369	4,978
./. maturity > 3 months	- 1,050	- 848
	2,214	4,528

Statement of changes in equity

for the period from 01 January to 31 March 2007 (unaudited)

in KEUR		Subsribed capital	Additional paid-in capital shares	Additional paid-in capital WSV1	Additional paid-in capital ESOP2	Retained earnings	Loss carryforward / Period result Total
Balance on 2006-01-01	10,530	13,172	11	120	67	- 14,741	9,159
Issued options (ESOP 2001 / 2003)				8			8
Issued options (ESOP 2004 / 2004)				4			4
Issued options (ESOP 2004 / 2005)				3			3
Period result 2006-01-01 - 2006-03-31						- 1,742	- 1,742
Balance on 2006-03-31	10,530	13,172	11	135	67	- 16,483	7,432
Balance on 2007-01-01	11,461	16,361	11	235	67	- 20,281	7,854
Issued options (ESOP 2001 / 2003)				2			2
Issued options (ESOP 2004 / 2004)				4			4
Issued options (ESOP 2004 / 2005)				4			4
Issued options (ESOP 2004 / 2006/1)				1			1
Issued options (ESOP 2006 / 2006/2)				27			27
Issued options (ERSATZ-ESOP 2001)				17			17
Period result 2007-01-01 - 2007-03-31						- 2,156	- 2,156
Balance on 2007-03-31	11,461	16,361	11	290	67	- 22,437	5,753

1: WSV = convertible bonds; 2: ESOP = Employee stock option programme for employees and Management Board

Notes

to the interim report dated 31 March 2007 (unaudited)

1. Basis of valuation and significant accounting and valuation policies

1.1 Basis of valuation

This interim report has been prepared entirely in accordance with the accounting principles of the International Financial Reporting Standard (IFRS) and of IAS 34 (Interim Financial Reporting) in accordance with the requirements of the International Accounting Standards Board (IASB). The recommendations of the Standing Interpretations Committee (SIC) and the International Financial Reporting Interpretations Committee (IFRIC) have been taken into account. All of the IFRS adopted by the European Commission have been taken into account.

In the preparation of the interim report, Management had to make a number of estimations and assumptions exerting an influence on the disclosed value of assets and liabilities on the balance sheet date, and on expenditure and revenue within the reporting period. The actual value may deviate from these estimates. The discretionary decisions taken correspond to the Financial Statements for the year up to 31 December 2006.

This interim report represents the individual Financial Statements of the Germany-based 4SC AG, and in addition to 4SC AG, also takes account of the associated companies, quattro research GmbH, Planegg-Martinsried and QuoNova LLC., Melbourne, Florida, USA.

The interim report was approved for publication by the Management Board on 07 May 2007.

1.2. Significant accounting and valuation policies

The applied accounting and valuation policies correspond to those used for the Financial Statements for the year ending 31 December 2006.

2. Segment report

4SC AG operates in the two business segments of "Drug Discovery & Development" and "Collaborative Business". In the "Drug Discovery & Development" segment, 4SC AG has specialised in research and development of novel therapeutic drugs to combat chronic inflammatory diseases and cancer. The objective of the "Drug Discovery & Development" segment is to realise the commercial potential of the sustainable project pipeline put in place by 4SC AG by means of licensing contracts concluded with the pharmaceutical industry. 4SC AG is the holder of proprietary and patent rights and takes the decisions on the progress of projects. In the "Collaborative Business" segment, within the context of collaborative agreements, 4SC AG makes its technology platform available to partners and customers from the pharmaceutical and biotechnology industry, in the form of a service package. The collaborative partner is the holder of proprietary and patent rights and takes decisions on the progress of projects.

Segment report according to business segments:

in KEUR	Drug Discovery & Development		Collaborative Business			Not assigned	Consolidated
	01-01 - 03-31		01-01 - 03-31			01-01 - 03-31	01-01 - 03-31
	2007	2006	2007	2006	2007	2006	2007	2006
Net sales	0	0	287	503	0	0	287	503
Personnel costs	- 514	- 449	- 104	- 130	- 387	- 334	- 1,005	- 913
Depreciation	- 87	- 96	- 23	- 53	- 18	- 28	- 128	- 177
Other income and expenses	- 854	- 658	- 88	- 162	- 370	- 330	- 1,312	- 1,150
Segment result /
Result from operating activities	- 1,455	- 1,203	72	158	- 775	- 692	- 2,158	- 1,737
Financial result							2	- 5
Period result							- 2,156	- 1,742
Other information:
Segment assets	1,809	927	229	480	5,960	8,007	7,998	9,414
Segment liabilities	17	0	0	336	2,228	1,646	2,245	1,982
Investments	8	16	6	5	4	37	18	58

In particular, administrative costs are not assigned. Net sales are realised and shown both with external customers and with the associated company QuoNova LLC., Melbourne, Florida, USA.

Net sales according to headquarters of the performance recipient:

in KEUR	USA 01-01 - 03-31			Germany 01-01 - 03-31		Japan 01-01 - 03-31	Consolidated 01-01 - 03-31
	2007	2006	2007	2006	2007	2006	2007	2006
Net sales	286	0	1	253	0	250	287	503

Germany is the geographical location of the overall segment assets and the segment investments.

3. Earnings per share

The undiluted earnings per share are calculated in accordance with IAS 33.9 et sqq. by dividing the period result attributable to the shareholders (numerator) by the average weighted number of shares in circulation in the reporting period (denominator). The basis for the first quarter of 2007 is provided by a total number of shares of 11,461,365, and 10,530,077 shares for the same period of the previous year.

Since, as a result of the loss situation at 4SC AG, the options issued will not have a diluting effect, diluted earnings per share correspond to the undiluted earnings.

4. Share property and directors' dealings

Broken down by individual members of the Management and Supervisory Board, the share and options property of 4SC AG on the quarterly reference date of 31 March 2007 are stated as follows:

Share property 2007-03-31					Maximum
Quantity		Options	Options	Options exercised	number of subscribable
	Shares	total	of 2007	in 2007	shares
Management Board
Dr Ulrich Dauer	399,792	40,600	0	0	35,800
Dr Gerhard Keilhauer	9,025	71,500	0	0	66,700
Dipl.-Kfm. Enno Spillner	6,666	138,000	0	0	124,800
Dr Daniel Vitt	393,503	40,600	0	0	35,800
	808,986	290,700	0	0	263,100
Supervisory Board
Dr Jörg Neermann	1,500	0	0	0	0
	1,500	0	0	0	0

The former member of the Management Board, Dr Stefan Busemann, holds 27,600 options from previous years with subscription rights to a maximum of 13,800 shares, as well as 296,691 shares (estimated value according to information obtained in 2005, current value not known).

As a part of the options has a subscription ratio of 2:1, the number of subscribable shares is lower than the total amount of options issued.

There were no transactions with shares or options of 4SC AG by the board members during the first quarter of 2007 to be reported as per § 15a of the WpHG (German Securities Trading Act).

5. Employees' subscription rights

As an instrument aimed at increasing the motivation of 4SC AG employees, since the 2001 financial year, at least once per year, stock options have been granted to all active employees to subscribe to 4SC AG shares.

As at 31 March 2007, the total number of all stock options issued to employees (not including the Management Board) breaks down as follows:

				Exercising price (EUR)	subscription ratio1	outstanding 2007-01-01 (k)	forfeited 20072 (k)	exercised 2007 (k)	outstanding 2007-03-31 (k)	exerciseable 2007-03-31 (k)	subscribeable shares max. number of 2007-03-31 (k)
ESOP	Tranche	Issuance
ESOP 2001	2001/1	01-03-31	9,60	2:1	6	0	0	6	6	3
ESOP 2001	2001/2	01-10-10	9,60	2:1	0	0	0	0	0	0
ESOP 2001	2002	02-06-30	12,00	2:1	12	0	0	12	9	6
ESOP 2001	2003	03-09-30	5,08	2:1	65	0	0	65	32	32
ESOP 2004	2004	04-09-30	4,24	2:1	72	- 4	0	76	0	38
ESOP 2004	2005	05-09-30	4,24	2:1	72	- 4	0	76	0	38
ESOP 2004	2006/1	06-05-30	4,53	2:1	0	0	0	0	0	0
ESOP 2006	2006/2	06-08-25	3,80	1:1	124	0	0	124	0	124
ERSATZ-ESOP 2001	2006/3	06-08-25	3,80	1:1	101	0	0	101	0	101
Total					452	- 8	0	460	47	342

1: For the tranches affected by the capital reduction in December 2004, the subscription ratio is 2:1

2: After finalising the annual accounts options of the "ESOP 2004" were reissued to a former employee, who is still operating as consultant for the 4SC AG.

6. Events after the end of the reporting period

On 4 April 2007, 4SC AG reported, in compliance with § 92 (1) of the AktG (Stock Corporation Act), that the company's equity, according to the accounting principles of the HGB (German Commercial Code), has fallen below half of the nominal capital. This is largely against a background of accumulated losses carried forward from previous years. Furthermore, 4SC AG has reported that the Management Board is preparing appropriate measures which should serve to boost shareholders' equity, and that it will convene a shareholders' meeting immediately as per § 92 (1) of the AktG. The date of the shareholders' meeting, which has been set for 31 May 2007, was published with the convening notice on 17 April 2007.

FINANCIAL CALENDAR / IMPRINT

Financial Calendar 2007

2007-03-29	Annual Report 2006
2007-05-10	Quarterly Financial Report 2007 (Q1/2007)
2007-05-31	Extraordinary Shareholders' Meeting
2007-06-29	Annual General Shareholders' Meeting
2007-08-09	Financial Report (half-year) 2007 (Q2/2007)
2007-11-08	Quarterly Financial Report 2007 (Q3/2007)
2007-11-12 -	Analyst Meeting: Deutsches Eigenkapitalforum,
2007-11-14	Congress Center Messe Frankfurt

Imprint

Editor	4SC AG / Am Klopferspitz 19a / 82152 Planegg-Martinsried
Conception/Text	komm.passion Schumacher's AG
Design	Angela Borsche / Werbeagentur Ursula Borsche GmbH
Investor Relations	Bettina von Klitzing / E-Mail: bettina.von.klitzing@4SC.com