Interim Report and Quarterly Management Report by 31 March 2008

The Company
General information	04
Key figures	05
Shareholders' letter	06


Quarterly Management Report
Presentation of the course of business	09
Presentation of the situation	12
Risk and chance report	13
Events after the end of the reporting period	14
Business outlook	14


Financial Statements
Income statement	18
Balance sheet	19
Cash flow statement	20
Statement of changes in equity	21
Notes	22


Other Information
Financial calendar	26
Imprint	27

General information

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

Development of important key figures

in KEUR	2008-01-01 – 2008-03-31 resp. 2008-03-31	2007-01-01 – 2007-03-31 resp. 2007-03-31

Net sales	640	287
Result from operating activities	- 2,320	- 2,158
Period result	- 2,221	- 2,156
Equity	17,472	5,753
Equity ratio	86.6%	71.9%
Balance sheet total	20,172	7,998
Cash flows from operating and investing activities	1,337	- 308
Cash flows from financing activities	0	0
Net change in cash and cash equivalents	1,337	- 308
Cash and cash equivalents1	11,672	2,214
Funds	15,137	3,264
Number of employees (at end of period)	74	60
The 4SC share
Earnings per share (undiluted and diluted) [EUR]	- 0.12	- 0.19
Shares in circulation (average, in thousands)	19,002	11,461
Percentage of freely tradeable shares2	100%	64%
3 month high (Xetra) [EUR]	3.44	3.85
3 month low (Xetra) [EUR]	2.50	3.33
Open at the beginning of period (Xetra) [EUR]	3.42	3.69
Close at the end of period (Xetra) [EUR]	2.95	3.40
Market capitalisation at the end of period [TEUR]	56,055	38,969
Average daily turnover (Xetra, Units)	6,186	2,905

1: This position does not include securities with a original maturity of more than three months, since they are included in cash flows from investing activities (see cash flow statement).

2: According with the regulations of Deutsche Börse (stock exchange) in Frankfurt concerning the determination of the percentage of freely tradeable shares, the free float of 4SC AG is only about 28.7%. Accordingly, all of the 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 shareholders,

The first quarter of the financial year 2008 has gone to plan. The cooperation with the Wuppertal-based company Ai-Curis, which is aimed at a long-term collaboration, has started successfully, which is last but not least reflected in our positive revenue trend. However, as expected, the expenses for research and development have also risen significantly.

This development reflects the substantial progress made in the project pipeline of 4SC AG, the actual value engine of our company. Four preclinical projects are well on the way to readiness for clinical trials and further trials are under preparation for our lead compound SC12267. Thus, our development team has prepared the full-study design for an in-depth phase II study for the treatment of rheumatoid arthritis over the last few months and arranged for the production of the required clinical material. In addition, a phase IIa study for the treatment of inflammatory bowel diseases is in the pipeline for the same substance. The fact that we are pushing ahead with our lead compound independently strengthens our position versus potential licensing partners and ensures that valuable patent life time is used efficiently. We are continuing to hold talks with several interested parties on this subject with regard to a licensing partnership and, in some cases, have also entered into detailed negotiations.

Four pipeline projects on the threshold of clinical development

Research and development activities over the last three months have concentrated on our four preclinical drug candidates. Our aim is to test two of these candidates on humans for the first time before the end of the current financial year. We have been able to make considerable progress with all the projects:

The substance SC68896 for treating haematopoietic and solid tumours has been systematically further optimised, especially with regard to its possible formulation. In addition, we have initiated a new study to test its efficacy for treating colon carcinoma (colon cancer). As regards the drug candidate SC71710 from our 4iP project, we have jointly prepared the design for an initial clinical study for the indication acute myeloid leukaemia with our partner Pro-Qinase and developed a dosing schedule. Parallel to this, we are in the process of establishing a clinical expert network of leading oncologists for both substances – these are also elementary premises for launching successful clinical testing. In the case of the project SC71492 for treating inflammatory diseases, our development team has been able to complete important animal studies that are also the basis for clinical testing. In this case too, we have already defined a corresponding study design and started the process for selecting suitable contract research organisations. Last but not least, we have been able to confirm and more closely define the activity already proven in 2007 for treating avian flu virus infections in the case of the substance SC75741. Its efficacy against other types of viruses could also be repeatedly demonstrated, which makes its application in other indications conceivable, such as e.g. in the context of HCV infections.

Dr Ulrich Dauer Chairman of the Management Board

Which of the four candidates will undergo clinical testing this year mainly depends on which of them is first to successfully complete the formal safety studies and thus meet all the conditions for official approval. It is common knowledge that we are also in regular contact with potential partners from the biotech and pharmaceutical industry with regard to these projects, which all, without exception, originate from our own research and development activities. These contacts are a guarantee that we develop our projects in line with the actual interests of our potential partners and do not ignore the needs of the market. After the successful capital increase last year, we are in a position to push ahead with all the projects in parallel under our own steam and therefore gradually increase the company's value.

Dear shareholders, also on behalf of my colleagues on the Management Board, I would like to thank you for your trust in 4SC AG.

Dr Ulrich Dauer Chairman of the Management Board

QUARTERLY MANAGEMENT REPORT QUARTERLY REPORT BY 31 MARCH 2008

Quarterly Management Report of 4SC AG

During the reporting period the research and development activities of 4SC AG focused on the advancement of the preclinical projects in the direction of clinical development.

1. Presentation of the course of business

1.1 Economic development and development of stock exchange segments

The economic trend in the first quarter of 2008 continued to be shaped completely by the turmoil on the financial markets sparked by the so-called subprime mortage crisis. Whilst international banks in particular are reporting considerable write-down requirements in their financial statements, the capital markets are still signalling widely felt uncertainty and the capital market is suffering from the acute lack of liquidity, at least the European, and especially the German real economy, still seems to be relatively unaffected by these developments at the present time. Even though the growth forecasts by various groups of experts have now been corrected downwards, growth is still expected overall this year. On the other hand, in the USA there are growing signs of a recession, which, according to the experts, even the significant steps taken by the US Federal Reserve Fed to cut interest rates in the first quarter are only likely to be able counteract in the medium term. However, ultimately, there is still a lack of data to be able to conclusively confirm this as a trend.

Another seriously challenge is the clear indication of increasing inflation, which especially also applies to Europe. Historically high energy prices, further rising commodity prices and, for some time now, sharply increasing food prices are heightening the general tension and therefore also fuelling consumer reticence.

The trend of international stock markets was also shaped by the subprime mortage crisis in the USA in the last quarter. This has continued to push down all the indices substantially. Interestingly, the non-American indices are in the main now reacting much more strongly than the American indices themselves. Whilst the DOW Jones Industrial Average Index and the S&P 500 Index have fallen by 7.5% or 9.9% respectively since the start of the year, the Nikkei 225 Stock Average Index, for example, and the Hang Seng have dropped by well over 17%. The DAX also fell by 18.8% by the end of the first quarter compared to the beginning of the year, although the well-known overweighting of financial stocks is likely to have intensified the negative effect.

The representative biotech indices were also hit by a generally negative trend in the first quarter of 2008, although in this case too the trend in the USA was less serious. The American indices reacted virtually in parallel, namely the NASDAQ Biotechnology Index and the AMEX Biotechnology Index have fallen by 6.4% and 6.2% since the start of the year to 780.90 or 737.41 points respectively. The German Daxsector Biotechnology Performance Index suffered considerably from the general market influences.This led to a minus of 12.4% compared to the start of the year; the index therefore closed at 190.02 points.

From a sectoral perspective, all the signs are still pointing to growth. Many companies are currently managing to make progress in key areas, such as clinical development data, patent approvals and industrial cooperations, despite difficult capital markets and minimal reward for positive news.

The private capital market also appears to be gradually gaining momentum, which, for example, is indicated by the "closing"of several international funds. However, the number of significant venture capital-funded rounds of financing still remained manageable in the first quarter of 2008.

The trend of international stock markets was also shaped

by the subprime mortage crisis in the USA in the last quarter.

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

During the reporting period the research and development activities of 4SC AG focused on the advancement of the preclinical projects in the direction of clinical development. In doing so, key prerequisites for clinical trial readiness could be met, especially with regard to the oncological projects SC68896 and SC71710. The development team of 4SC AG completed important preparatory animal studies for a clinical trial with regard to the SC71492 project for treating inflammatory diseases. During the reporting period, 4SC AG has also created other basic prerequisites for the swift further development of the leading clinical project SC12267 for the treatment of rheumatoid arthritis and other autoimmune diseases.

SC12267 (autoimmune diseases)

During the reporting period, the company processed in detail the results of the phase IIa study in rheumatoid arthritis carried out in 2007.

The study report was finalised and the documents on the study were archived according to the guidelines.The development team optimised the tablet composition in preparation for further studies. In addition, other preclinical pharmacological studies in a cell culture model with cells from a joint fluid (synovial cells) demonstrated the positive efficacy of SC12267 and therefore supported the clinical efficacy trends from phase IIa.

4SC AG is working continuously on making sure enough new projects

are in the research pipeline.

SC68896 (cancer)

The new small molecule proteasome inhibitor is currently undergoing preclinical development. A considerable effect with statistical significance could already be proven for SC68896 in 2007 in an animal model for brain tumours (glioblastoma). In addition, an efficacy study in a colon carcinoma (colon cancer) model was initiated during the reporting period, with the aim of developing the potential in another oncological indication.

In the drug supply segment, development activities during the reporting period mainly concentrated on the formulation. In addition, the drug was further optimised. An extensive characterisation showed that a special salt form of SC68896 demonstrated significantly improved properties for use on humans.The production of this salt form has now been commissioned, in order to push ahead with the future development of the substance in this direction.

By establishing a network of experts in the clinical field and evaluating commissioned clinical research institutions, the company is rigorously preparing an initial clinical trial on humans.

SC71492 (inflammatory diseases)

During the reporting period, 4SC AG carried out further studies to clarify the drug mechanism. The results from detailed studies relating to chronic inflammatory bowel diseases showed that the substance had an outstanding effect. An efficacy study aimed at proving the potential for the indication rheumatoid arthritis was commissioned.

As planned, a programme was launched to examine possible toxicity. Initial results showed good levels of tolerance in animal models.

When preparing the planned clinical trials, a manufacturing process was established that allows the production of larger amounts of the substance under industrial conditions.The synthesis for the GMP-certified material required for clinical trials was commissioned by the company.

In addition, extensive testing with regard to stability and the physicochemical properties of the drug lay the foundations for scheduled further development.

During the reporting period 4SC AG defined the study design for the first clinical trial on test persons and started the selection process for suitable contract research institutions.

SC71710 / 4iP Project (cancer)

During the quarter under review, 4SC AG prepared a clinical dosage schedule for the treatment of patients with successful studies for dose titration in cooperation with Freiburg-based ProQinase GmbH. An already initiated tox study programme will be carried out on a commission basis.

In preparation for the clinical trials, the company has embarked on the selection process for clinical contract research institutions and has also prepared the design for the first clinical trial. In addition, the establishment of a clinical expert network of leading oncologists is intended to lay the foundations for the successful execution of an initial clinical trial.

SC75741 (virus infections)

SC75741 is the prototype for a whole category of new study drugs from the 4SC research programme, which is showing pronounced antiviral activity. These molecules act via the so-called NFκB signal pathway. In contrast to other drugs, they do not target the virus itself, but rather the host cell and therefore prevent further multiplication of viruses. As early as 2007, 4SC AG was able to prove activity of the drug candidate on avian flu viruses, such as, in particular, the H5N1 strain, which is highly pathogenic for humans. These results could be confirmed by further studies during the quarter under review and defined more closely. In addition, the compound's efficacy against other types of viruses could also be repeatedly demonstrated, which makes its application in other indications conceivable, such as e.g. in the context of HCV infections.

During the reporting period, activities in this project focused mainly on the identification of other substances that can also be administered orally and therefore extend the application potential against wide-spread influenza viruses.

Kv1.3 (Multiple Sclerosis)

With the aid of computer modelling and electrophysiological measurements, 4SC researchers have developed very active and, above all, selective Kv1.3 blockers, which are now being tested in the further course of lead optimisation with regard to their safety and efficacy. The focus is on treating patients suffering from multiple sclerosis (MS). The target protein Kv1.3, which is highly expressed in immune cells, plays a key role in this autoimmune disease. The research work in this project has been accelerated since the start of the year by using a specially automated system for determining cellular efficacy.

Further projects

4SC AG is working continuously on making sure enough new projects are in the research pipeline. As an example, 4SC AG has found new compound molecules which show particularly strong activity against malaria-causing organisms.These molecules are now to be developed, using subsidies from the European Commission, to the status of a clinical drug candidate, which can subsequently be licensed to a partner. Another project is aimed at the development of cancer treatments for solid tumours. This class of drugs is displaying initial successes in cellular tests, making it an interesting follow-up project to the development projects that are already further advanced.The third project addresses the identification of new compounds for treating autoimmune diseases on the basis of kinases targets.

1.2.2 Research collaborations (Collaborative Business)

In the "Collaborative Business" segment, the emphasis during the reporting period was on collaboration with Wuppertal-based AiCuris GmbH & Co. KG for research of anti-inflammatory drug candidates. AiCuris is a spin-off of Leverkusen-based Bayer HealthCare AG's anti-infective research. In addition to the R&D collaboration in the context of several on-going projects of AiCuris, we are currently evaluating the possible expansion of our collaboration to include new targets of both partners. The cooperation with QuoNova LLC., Melbourne, Florida, USA, is also still developing positively.Through its 10% stake in QuoNova, 4SC AG will also have the possibility, in future, to benefit from any successful developments in QuoNova's product line in addition to sales through the R&D cooperation.

In the "Collaborative Business" segment, the emphasis

during the reporting period was on collaboration

with Wuppertal-based AiCuris GmbH & Co. KG for research

of anti-inflammatory drug candidates.

1.2.3 Personnel

During the quarter under review, technical assistants were recruited for the chemistry and analytics departments as well as a receptionist. In addition, a few positions which had become vacant at short notice could be filled immediately. Consequently, on 31 March 2008 4SC AG had a total workforce of 74 employees (including the Management Board); in the previous year, 60 employees were reported at this point in time.

54 employees were employed in research and development, 18 in administration and distribution and two in the area of information technology.

2. Presentation of the situation

2.1 Earnings position

Net sales in the first quarter of 2008 originated from the "Collaborative Business" segment and amounted to KEUR 640 after KEUR 287 in the same period of the previous year. Whilst the previous year's sales resulted solely from the research and development cooperation with the US-American company QuoNova LLC., 4SC AG was also able to generate revenue within the scope of the new cooperation with Wuppertal-based AiCuris GmbH & Co. KG during the quarter under review.

In order to be able to provide additional capacity for research,

the team in the scientific segments was strengthened at the same time.

A 30.1% increase to KEUR 1,973 was posted for research and development costs in the first quarter of 2008 (corresponding period in the previous year: KEUR 1,517). The main factor was the further development of the project pipeline, combined with increased external services and patent costs. In order to be able to provide additional capacity for research, the team in the scientific segments was strengthened at the same time, which led to an increase in personnel costs.

Administrative costs fell in the first three months of 2008 – despite increased personnel costs – to KEUR 678 after KEUR 698 in the previous year.The background to this were considerable accruals in the previous year, which were connected with the capital increase carried out in the second quarter of 2007.

Thus, the result from operating activities for the first quarter 2008 was KEUR - 2,320 after KEUR - 2,158 in the same quarter last year.

The financial result for the first three months of 2008 could be improved to KEUR 99 (corresponding period in the previous year: KEUR 2). The finance income increased above all thanks to the interest-bearing investment of the liquid funds and the income-statement related valuation of securities from KEUR 64 to KEUR 209. However, finance expenses increased as well from KEUR 25 to KEUR 110. This mainly resulted from exchange losses due to the closing rate of the US dollar. In addition, the pro rata loss arising from the financial assets accounted for by the equity method in connection with the associated company QuoNova LLC. was recorded in the financial result in the previous year (KEUR 0 in 2008 after KEUR - 37 in 2007).

Consequently, the period result for the first quarter of 2008 amounted to KEUR - 2,221 after KEUR - 2,156 in the first three months of 2007. Undiluted and diluted earnings per share amounted to EUR - 0.12 compared to EUR - 0.19 in the corresponding period in the previous year.

2.2 Net assets position

The non-current assets declined compared to 31 December 2007 from KEUR 5,689 to KEUR 5,081. While the intangible assets stayed virtually unchanged and an increase could be posted for the fixed assets, the non-current receivables from associated companies and the other financial assets fell.The current assets also fell to KEUR 15,091 (31 December 2007: KEUR 16,374). The main factor was the reduction of the other financial assets from KEUR 4,886 to KEUR 1,980, however part of it could be compensated for by increasing cash and cash equivalents.

The background to the change in the equity from KEUR 19,616 at the end of the last financial year to KEUR 17,472 as of 31 March 2008 is mainly the negative period result of KEUR - 2,221. Therefore, the equity ratio fell by 2.3 percentage points to 86.6% (88.9% as of 31 December 2007).

The long-term debts rose from KEUR 53 at the end of the previous year to KEUR 85 at the end of the quarter under review, and the short-term debts from KEUR 2,394 to KEUR 2,615. Contrary effects played a role here, namely whilst the accounts payable to associated companies were repaid in full, the trade accounts payable rose as per the cutoff date from KEUR 480 to KEUR 528. At the same time, other liabilities increased by KEUR 261 to KEUR 1,212, mainly due to the external services and patent costs not yet billed.

The balance sheet total fell due to the described effects from KEUR 22,063 on 31 December 2007 to KEUR 20,172 as of 31 March 2008.

2.3 Financial position

In the first quarter of 2008 the cash flows from operating activities amounted to KEUR - 1,795 with a negative pe-riod result of KEUR -2,221 (corresponding period in the previous year: KEUR - 1,190 with a period result of KEUR - 2,156). This was mainly due to the reduction in trade accounts receivables and the increase in other liabilities.

Cash flows from investment activities could be generated both during the reporting period and in the corresponding period in 2007 mainly due to the sale of financial investments.They amounted to KEUR 3,400 in the first quarter of 2008 after KEUR 900 in the same period last year. In the months January to March 2008, KEUR 268 was invested in intangible assets and fixed assets (2007: KEUR 18), so that the cash flows from investment activities amounted to KEUR 3,132 in total (2007: KEUR 882).

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

Hence cash and cash equivalents at the end of the quarter under review amounted to KEUR 11,672. Other monies in the amount of KEUR 1,980 were held in short-term fixed and variable interest-bearing securities and fixed deposits. In addition, KEUR 1,485 are held in financial instruments with a maturity period of more than one year, so that a total cash balance to the amount of EUR 15.137 remains (31 December 2007: KEUR 17,193).

3. Risk and chance report

The risk and opportunity situation of the company has largely remained unchanged compared to the last reporting within the scope of the annual report as at 31 December 2007.

4. Events after the end of the reporting period

Only recently, 4SC AG announced a change in the Supervisory Board with effect as from the end of the annual general meeting taking place on 5 June 2008.The current members of the Supervisory Board Dr Robert B. O'Connell and Dr Brian Morgan intend to resign their seats. The nominations of Dr Thomas Strüngmann and Helmut Jeggle, both representatives of Santo Holding (Deutschland) GmbH, the largest single shareholder of 4SC AG, are proposed.

5. Business outlook

4SC AG has developed largely as planned in the first three months of the financial year 2008 and the objectives set for the year as a whole also endure.

In the main segment "Drug Discovery & Development" the company

is currently concentrating on ongoing negotiations with

several biotech and pharma companies regarding a possible

licensing partnership for the most advanced development

candidate SC12267 for the treatment of rheumatoid arthritis.

In the main segment "Drug Discovery & Development" the company is currently concentrating on ongoing negotiations with several biotech and pharma companies regarding a possible licensing partnership for the most advanced development candidate SC12267 for the treatment of rheumatoid arthritis.To avoid losing any time, 4SC AG is preparing a clinical phase II trial on rheumatoid arthritis and a clinical phase IIa trial for chronic inflammatory bowel diseases for this development candidate parallel to this. The company is also concentrating on further developing the four preclinical projects (see chapter 1.2). These will progress swiftly through the formal preclinical phase, in order to be able to obtain approval for a phase I clinical trial for at least two of them before the end of 2008.

In the "Collaborative Business"segment, the established cooperations with AiCuris GmbH & Co. KG and QuoNova LLC. are to be continued and also intensified where possible. With AiCuris 4SC AG is currently assessing the possibility of extending the cooperation to new targets set by both partners. In addition hereto, new projects and new clients are to be acquired in this segment in the current year.

The establishment of a comprehensive, sustainable pipeline with drug candidates that are attractive for the pharmaceutical industry is and will remain the primary goal of 4SC AG and a major lever for increasing the company value. The company is expecting to conclude one or several substantial licensing agreements in the short and especially mid term, but the scope and actual timing remain difficult to estimate.According to the management, 4SC AG

has sufficient freedom to operate to conduct corresponding negotiations without time pressure and to ensure the swift further development of the drug candidates in the pipeline parallel to this.

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

Planegg-Martinsried, 5 May 2008

Dr Ulrich Dauer, CEO Dr Gerhard Keilhauer, CDO Dr Daniel Vitt, CSO Dipl.-Kfm. Enno Spillner, CFO

FINANCIAL STATEMENTS QUARTERLY REPORT BY 31 MARCH 2008

Financial Statements of 4SC AG (IFRS)

Income statement	18
Balance sheet	19
Cash flow statement	20
Statement of changes in equity	21
Notes	22

4SC AG has developed largely as planned in the first three months of the financial year 2008 and the objectives set for the year as a whole also endure.

Income statement for the period from 1 January to 31 March 2008 (unaudited)

in KEUR	2008-01-01 – 2008-03-31	2007-01-01 – 2007-03-311	Notes

Net sales	640	287
Cost of sales	- 211	- 170
Gross profit	429	117
Distribution costs	- 114	- 81
Research and development costs	- 1,973	- 1,517
Administrative costs	- 678	- 698
Other operating income	16	21
Result from operating activities	- 2,320	- 2,158
Financial result
Result from an associate accounted for by the equity method	0	- 37
Finance income	209	64
Finance expenses	- 110	- 25
Financial result	99	2
Period result	- 2,221	- 2,156
Earnings per share (undiluted and diluted) [EUR]	- 0.12	- 0.19	3.

1: The other operating expenses, reported separately in the previous years' interim report, were assigned to the individual areas of activities.

Balance sheet for the period ended 31 March 2008 (unaudited)

in KEUR	2008-03-31	2007-12-31
ASSETS
Non-current assets
Intangible assets	1,870	1,865
Fixed assets	1,265	1,072
Other financial assets	1,485	1,972
Accounts receivables from associated companies	304	623
Other non-current assets	157	157
Total non-current assets	5,081	5,689
Current assets
Inventories	29	19
Trade accounts receivables	14	131
Accounts receivables from associated companies	656	376
Other financial assets	1,980	4,886
Cash and cash equivalents	11,672	10,335
Other current assets	740	627
Total current assets	15,091	16,374
Total assets	20,172	22,063
EQUITY AND LIABILITIES Equity
Subscribed capital	19,002	19,002
Additional paid-in capital	28,395	28,395
Reserves	707	630
Balance sheet loss	- 30,632	- 28,411
Total equity	17,472	19,616
Non-current liabilities
Other liabilities	85	53
Total non-current liabilities	85	53
Current liabilities
Trade accounts payable	528	480
Accounts payable to associated companies	0	103
Financial liabilities	875	860
Other liabilities	1,212	951
Total current liabilities	2,615	2,394
Total equity and liabilities	20,172	22,063

Cash flow statement for the period from 1 January to 31 March 2008

in KEUR	2008-01-01 – 2008-03-31	2007-01-01 – 2007-03-31
Cash flows from operating activities

Period result before taxes	- 2,221	- 2,156
Corrections for:
Depreciation on fixed assets and intangible assets and impairment of goodwill	70	127
Financial result	- 99	- 2
Non-cash affecting ESOP1	76	54
Non-cash affecting expenses and income	95	- 3
Interest received	22	39
Interest paid	- 9	- 9
Decrease of trade accounts receivables	117	119
Decrease of accounts receivables from associated companies	39	479
Increase of Inventories	- 10	- 3
Increase/Decrease of other current assets	- 113	27
Increase/Decrease of trade accounts payable	48	- 138
Decrease of accounts payable to associated companies	- 103	- 29
Increase of other liabilities	293	305
Cash flows from operating activities	- 1,795	- 1,190
Cash flows from investing activities
Payments for investments in intangible assets	- 11	0
Payments for investments in fixed assets	- 257	- 18
Purchase of financial assets that are no cash equivalents	0	0
Sales of financial assets that are no cash equivalents	3,400	900
Cash flows from investing activities	3,132	882

Cash flows from financing activities	0	0
Net change in cash and cash equivalents	1,337	- 308
+ Cash and cash equivalents at the beginning of the period	10,335	2,522
= Cash and cash equivalents at the end of the period	11,672	2,214

1: ESOP = Employee stock option programme for employees and Management Board

The cash flow statement was prepared in accordance with the provisions of IAS 7.

Statement of changes in equity for the period from 1 January to 31 March 2008

in KEUR	Subscribed	capital Agio	Reserves ESOP1,2		Retained earnings	Revaluation reserve	Balance sheet loss Total
				Reserves
Balance on 2007-01-01	11,461	16,361	246	67	0	- 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 2001/2006/3)			17				17
Overall result 2007-01-01 – 2007-03-31						- 2,156	- 2,156
Period result 2007-01-01 – 2007-03-31						- 2,156	- 2,156
Balance on 2007-03-31	11,461	16,361	301	67	0	- 22,437	5,753

Balance on 2008-01-01	19,002	28,395	583	67	- 20	- 28,411	19,616
Issued options (ESOP 2001/2003)			1				1
Issued options (ESOP 2004/2004)			2				2
Issued options (ESOP 2004/2005)			3				3
Issued options (ESOP 2004/2006/1)			1				1
Issued options (ESOP 2006/2006/2)			36				36
Issued options
(ERSATZ-ESOP 2001/2006/3)			32				32
Issued options (ESOP 2006/2007)			1				1
Overall result 2008-01-01 – 2008-03-31					1	- 2,221	- 2,220
Valuation of financial instruments					1		1
Period result 2008-01-01 – 2008-03-31						- 2,221	- 2,221
Balance on 2008-03-31	19,002	28,395	659	67	-19	- 30,632	17,472

1: ESOP = Employee stock option programme for employees and Management Board

2: Reclassification of the prior year item Additional paid-in capital convertible bonds to reserves ESOP

Notes to the interim report dated 31 March 2008 (unaudited)

1. Summary of significant accounting and valuation policies

1.1 Basis of preparation

This interim report was created entirely in accordance with the accounting principles of the International Financial Reporting Standard (IFRS) 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 and IFRIC adopted by the European Commission have been taken into account, not adopted IFRS and IFRIC have not been taken into account. New standards issued by the IASB are applied without exception starting in the financial year in which their application becomes mandatory.

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 Quo-Nova LLC., Melbourne, Florida, USA.

The interim report was approved for publication by the Management Board on 5 May 2008.

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 2007.

1.3 Use of estimates

In producing this interim report it was necessary for Management to make estimates and assumptions impacting the disclosed value of assets and liabilities, the disclosure of uncertain assets and contingent liabilities as of the balance sheet date as well as expenses and income within the reporting period. Actual values may vary from such estimated values.The discretionary decisions taken correspond to the Financial Statements for the year up to 31 December 2007.

1.4 Seasonality of interim operation

The operating activity of 4SC AG does not vary with the season.

2. Segment report

The following segment reporting has been prepared in accordance with the principles of IAS 14.The primary segment report format is the business segments in which 4SC AG is active. According to IAS 14.26, the secondary report format is geographical segments.

4SC AG operates in the two business segments of "Drug Discovery & Development"and "Collaborative Business."In the "Drug Discovery & Development"segment, 4SC AG is the holder of proprietary and patent rights and takes the decision on the progress of projects. In contrast, the cooperation partner in the "Collaborative Business"segment is the holder of proprietary and patent rights and takes decision on the progress of projects.

in KEUR		Drug Discovery Collaborative & Development Business				Not assigned		Consolidated
	01-01 – 03-31		01-01 – 03-31		01-01 – 03-31			01-01 – 03-31
	2008	2007	2008	2007	2008	2007	2008	2007
Net sales	0	0	640	287	0	0	640	287
Personnel costs	- 504	- 514	- 254	- 104	- 434	- 387	- 1,192	- 1,005
Depreciation	- 32	- 87	- 17	- 23	- 21	- 18	- 70	- 128
Other operating income and expenses	- 1,232	- 854	- 131	- 88	- 335	- 370	- 1,698	- 1,312
Segment result/Result from operating activities	- 1,768	- 1,455	238	72	- 790	- 775	- 2,320	- 2,158
Financial result							99	2
Period result							- 2,221	- 2,156
Other information:
Segment assets	1,706	1,809	445	229	18,021	5,960	20,172	7,998
Segment liabilities	53	17	0	0	2,647	2,228	2,700	2,245
Investments	125	8	76	6	67	4	268	18

Segment report according to business segments:

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	Germany		USA		Consolidated
	01-01 – 03-31		01-01 – 03-31		01-01 – 03-31
	2008	2007	2008	2007	2008	2007
Net sales	326	1	314	286	640	287

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).This is based on a period result amounting to KEUR - 2.221 (Previous year: KEUR - 2.156) and a share count of 19.001.826 (Previous year: 11.461.365)

Because the options issued are not diluted by 4SC AG's loss situation, and because the share price has currently dropped below the exercise price of the options, i.e. the options are currently "out of money", the diluted conforms to the undiluted earnings per share.

in EUR	2008-01-01 – 2008-03-31	2007-01-01 – 2007-03-31
Earnings per share (undiluted and diluted)	- 0.12	- 0.19

4. Share property and directors' dealings

The table below shows the shares and stock options which were held by the Management Board and the Supervisory Board as of 31 March 2008 well as the changes of ownership of the same, compared to the beginning of the year.

Share property of members of the Management Board:

Share quantity in units	Shares 2008-01-01	Shares 2008-03-31
Dr Ulrich Dauer	410,639	410,639
Dr Daniel Vitt	396,803	396,803
Dr Gerhard Keilhauer	13,537	13,537
Dipl.-Kfm. Enno Spillner	9,600	9,600
Share property	830,579	830,579

Options quantity in units	Options 2008-01-01	Options 2008-03-31	Max. number of subscribed shares
Dr Ulrich Dauer	40,600	40,600	35,800
Dr Daniel Vitt	40,600	40,600	35,800
Dr Gerhard Keilhauer	71,500	71,500	66,700
Dipl.-Kfm. Enno Spillner	138,000	138,000	124,800
Options property	290,700	290,700	263,100

Share property of members of the Supervisory Board:

Share quantity in units	Shares 2008-01-01	Shares 2008-03-31
Dr Jörg Neermann	77,000	77,000
Dr Robert O'Connell	10,000	10,000
Dr Manfred Rüdiger	5,000	5,000
Share property	92,000	92,000

There were no transactions with shares or options of 4SC AG by the board members during the first quarter 2008 to be reported as per § 15a of the WpHG (German Security Trading Act).

5. Related party disclosure

In the reporting period there were no material changes in business transactions with related parties.

6. Events after the end of the reporting period

Further explanations regarding events after the end of the reporting period please can be found in paragraph 5 of the management report. They have no direct effect on the net assets, financial and earnings position of the company.

Financial calendar 2008

2008-03-27	Annual Report 2007 ✓
2008-05-08	Three Months' Report 2008 (Q1/2008) ✓
2008-06-05	Annual General Shareholders' Meeting 2008
2008-08-07	Six Months' Report 2008
2008-11-06	Nine Months' Report 2008 (Q3/2008)
2008-11-10 - 2008-11-12	Analyst Meeting: Deutsches Eigenkapitalforum, Congress Center Messe Frankfurt

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Editor 4SC AG _ Am Klopferspitz 19a _ 82152 Planegg-Martinsried _ Germany Investor Relations Bettina von Klitzing _ E-Mail: [email protected] Design Angela Borsche _ Werbeagentur Ursula Borsche GmbH Photography Jan Roeder _ Krailling

4SC AG _ Am Klopferspitz 19a _ 82152 Planegg-Martinsried _ Germany Phone 0049 (0) 89 700 763 - 0 _ Fax 0049 (0) 89 70 07 63 - 29 _ www.4SC.com