<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q


(Mark One)
[X]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999

                                       OR

[ ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________

Commission File Number: 0-10736
                        --------

                                MGI PHARMA, INC.
                                ----------------
             (Exact name of registrant as specified in its charter)

                Minnesota                              41-1364647
     -------------------------------     --------------------------------------
     (State or other jurisdiction of     (I.R.S. employer identification number)
      incorporation or organization)

         6300 West Old Shakopee Road
                 Suite 110
         Bloomington, Minnesota 55438                 (612) 346-4700
   ---------------------------------------   --------------------------------
   (Address of principal executive offices   (Registrant's telephone number,
              and zip code)                        including area code)

Indicate by check mark, whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_  No ___


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

   Common Stock, $.01 par value                 14,939,240 shares
 --------------------------------    -----------------------------------------
             (Class)                     (Outstanding at November 10, 1999)
<PAGE>

                                MGI PHARMA, INC.

                                 FORM 10-Q INDEX



                                                                           Page
                                                                          Number
                                                                          ------
PART I.  FINANCIAL INFORMATION

     Item 1.  Financial Statements (Unaudited)

                Balance Sheets - September 30, 1999
                and December 31, 1998                                        3

                Statements of Operations - Three Months and
                Nine Months Ended September 30, 1999 and 1998                5

                Statements of Cash Flows - Nine Months
                Ended September 30, 1999 and 1998                            6

                Notes to Financial Statements                                7

     Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of Operations                 12

     Item 3.  Quantitative and Qualitative Disclosure About
              Market Risk                                                   18


PART II.  OTHER INFORMATION


     Item 4.  Submission of Matters to a Vote of Security                   19
              Holders

     Item 5.  Other Information                                             19

     Item 6.  Exhibits and Reports on Form 8-K                              19



SIGNATURES                                                                  20

                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION


Item 1. Financial Statements
----------------------------

                                MGI PHARMA, INC.

                                 BALANCE SHEETS

                                   (unaudited)


                                                  September 30,    December 31,
                                                      1999             1998
                                                   -----------     -----------

ASSETS
------

Current assets:
  Cash and cash equivalents                        $ 5,568,341     $ 6,513,204
  Short-term investments                            13,641,456      10,568,061
  Receivables, less allowances of
    $119,037 and $97,960                             3,036,953       1,410,539
  Inventories                                        1,041,948       1,285,368
  Prepaid expenses                                     213,310         329,953
                                                   -----------     -----------

     Total current assets                           23,502,008      20,107,125

Equipment and furniture, at cost
  less accumulated depreciation of
  $782,134 and $1,062,405                              984,819         540,084

Other assets                                           435,207         474,859
                                                   -----------     -----------

Total assets                                       $24,922,034     $21,122,068
                                                   ===========     ===========



(Continued)

                                       3
<PAGE>

BALANCE SHEETS
(Unaudited)
Page 2

                                                September 30,       December 31,
                                                    1999               1998
                                                ------------       ------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                              $    569,871       $    794,266
  Accrued expenses                                 2,827,670          2,712,884
  Deferred revenue                                      --              495,000
  Other current liabilities                           53,820              9,250
                                                ------------       ------------

     Total current liabilities                     3,451,361          4,011,400
                                                ------------       ------------

Stockholders' equity:
  Common stock, $.01 par value,
    30,000,000 authorized shares,
    14,900,180 and 14,542,472
    Issued shares                                    149,002            145,425
  Additional paid-in capital                      92,903,194         90,850,590
  Notes receivable from officers                        --              (56,999)
  Accumulated deficit                            (71,581,523)       (73,828,348)
                                                ------------       ------------

     Total stockholders' equity                   21,470,673         17,110,668
                                                ------------       ------------

Total liabilities and
  stockholders' equity                          $ 24,922,034       $ 21,122,068
                                                ============       ============

-------------------------------------

See accompanying notes to financial statements.

                                       4
<PAGE>

                                MGI PHARMA, INC.

                            STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                               Three Months Ended          Nine Months Ended
                                                  September 30,              September 30,
                                           -------------------------   -------------------------
                                               1999         1998           1999          1998
                                           -----------   -----------   -----------   -----------
<S>                                        <C>           <C>           <C>           <C>
Revenues:
  Sales                                    $ 4,271,847   $ 3,274,112   $13,528,969   $ 9,163,357
  Promotion                                    250,000       125,000       625,000       625,000
  Licensing                                  1,290,046     1,071,319     3,198,829     2,386,089
  Interest and other                           270,403       209,314       675,692       596,457
                                           -----------   -----------   -----------   -----------
                                             6,082,296     4,679,745    18,028,490    12,770,903
                                           -----------   -----------   -----------   -----------

Costs and Expenses:
  Cost of sales                                258,882       216,026       821,441       716,531
  Selling, general and administrative        2,923,887     2,712,366     9,667,086     7,776,171
  Research and development                   1,871,292     1,316,839     5,078,917     3,911,609
                                           -----------   -----------   -----------   -----------
                                             5,054,061     4,245,231    15,567,444    12,404,311
                                           -----------   -----------   -----------   -----------

Income before taxes                          1,028,235       434,514     2,461,046       366,592
                                           -----------   -----------   -----------   -----------

Provision for income taxes                      75,565        50,000       214,221       150,000
                                           -----------   -----------   -----------   -----------

Net income                                 $   952,670   $   384,514     2,246,825       216,592
                                           ===========   ===========   ===========   ===========


Net income per common share:
           Basic                           $      0.06   $      0.03   $      0.15   $      0.02

           Assuming dilution               $      0.06   $      0.03   $      0.14   $      0.01


Weighted average number of
   common shares outstanding:
           Basic                            14,818,854    14,452,288    14,681,292    14,330,574

           Assuming dilution                15,732,835    15,019,806    15,586,710    14,847,538
</TABLE>

------------------------------------------------------------------------------

See accompanying notes to financial statements.

                                       5
<PAGE>

                                MGI PHARMA, INC.

                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)

                                               Nine Months Ended September 30,
                                               ------------------------------
                                                    1999            1998
                                                ------------    ------------

OPERATING ACTIVITIES:
  Net income                                    $  2,246,825    $    216,592
  Adjustments for non-cash items:
    Depreciation                                     197,853         188,893
    Benefit plan contribution                        117,261         100,292
    Stock option acceleration                        162,953            --
    Other                                            110,951            --
  Change in operating assets and liabilities:
    Receivables                                   (1,626,414)     (1,105,409)
    Inventories                                      243,420        (138,564)
    Prepaid expenses                                 116,643          90,940
    Accounts payable and accrued expenses           (110,116)         71,427
    Deferred revenue                                (495,000)       (450,000)
    Other current liabilities                         44,570          39,567
                                                ------------    ------------

Net cash provided by (used in) operating
  activities                                       1,008,946        (986,262)
                                                ------------    ------------

INVESTING ACTIVITIES:
  Purchase of investments                        (15,464,561)    (12,690,850)
  Maturity of investments                         12,391,166      11,223,183
  Purchase of equipment and furniture               (672,519)       (166,446)
  Payments on notes receivable                        56,999          45,576
  Other                                              (41,368)         47,980
                                                ------------    ------------

Net cash used in investing activities             (3,730,283)     (1,540,557)
                                                ------------    ------------

FINANCING ACTIVITIES:
  Issuance of shares under stock
    plans                                          1,776,474         999,624
                                                ------------    ------------
Net cash provided by financing
  activities                                       1,776,474         999,624
                                                ------------    ------------
Decrease in cash and cash equivalents               (944,863)     (1,527,195)

Cash and cash equivalents at
  beginning of period                              6,513,204       7,057,091
                                                ------------    ------------

Cash and cash equivalents at
  end of period                                 $  5,568,341    $  5,529,896
                                                ============    ============

----------------------------------
See accompanying notes to financial statements.

                                       6
<PAGE>

                                MGI PHARMA, INC.

                          NOTES TO FINANCIAL STATEMENTS

                                   (Unaudited)



(1)      Basis of Presentation

MGI PHARMA, INC. (MGI or the company) is a pharmaceutical company that acquires,
develops and markets differentiated specialty pharmaceutical products. MGI's
current product portfolio is comprised of products that address special needs in
the fields of oncology and rheumatology, however, the company may expand its
scope as its business grows. The company promotes products directly to
physicians throughout the United States using its own specialty sales force. As
is common in the pharmaceutical industry, domestic sales are made to
pharmaceutical wholesalers for further distribution through pharmacies to the
ultimate consumers of the company's products. U.S. sales of Salagen(R) Tablets
(pilocarpine hydrochloride) account for substantially all of the company's
sales. The company intends to commercialize all of its products outside the
United States through various alliances, as it has for Salagen Tablets. The
company has agreements with several international pharmaceutical companies to
commercialize Salagen Tablets outside the U.S., including the major markets of
Europe, Japan and Canada. Current product development efforts include clinical
and preclinical studies for MGI 114, the lead drug in a family of potential
anti-cancer analogs known as the acylfulvenes, and continued clinical support of
Salagen Tablets. Exclusive rights in Japan to MGI 114 and the other acylfulvene
analogs were granted to Dainippon Pharmaceutical Co., Ltd. under a cooperative
development and commercialization agreement in 1995.

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal, recurring adjustments)
considered necessary for fair presentation have been included. Interim results
may not be indicative of annual results. Certain prior year amounts have been
reclassified to conform with current year presentation. For further information,
refer to the financial statements and footnotes included in the company's report
on Form 10-K for the year ended December 31, 1998.

                                       7
<PAGE>

(2)      Income Per Common Share

Income per share for the three month and nine month periods ended September 30,
1999 and 1998 are summarized in the following table:

<TABLE>
<CAPTION>

Three Months Ended                       1999                             1998
                           --------------------------------  -------------------------------
September 30                                          Per                              Per
                              Net                    Share      Net                   Share
                             Income       Shares     Amount    Income       Shares    Amount
                             ------       ------     ------    ------       ------    ------
<S>                        <C>          <C>          <C>     <C>          <C>          <C>
Basic                      $  952,670   14,818,854   $0.06   $  384,514   14,452,288   $0.03
Effect of
  dilutive stock options         --        913,981    --           --        567,518    --
                           -----------------------------------------------------------------

Assuming dilution          $  952,670   15,732,835   $0.06   $  384,514   15,019,806   $0.03


<CAPTION>

Nine Months Ended                        1999                             1998
                           --------------------------------  -------------------------------
September 30                                          Per                              Per
                              Net                    Share      Net                   Share
                             Income       Shares     Amount    Income       Shares    Amount
                             ------       ------     ------    ------       ------    ------

Basic                      $2,246,825   14,681,292   $0.15    $  216,592   14,330,574   $0.02
Effect of
  dilutive stock options         --        905,418   ($0.01)        --        516,964   ($0.01)
                           -----------------------------------------------------------------

Assuming dilution          $2,246,825   15,586,710   $0.14    $  216,592   14,847,538   $0.01

</TABLE>

(3)      Short-Term Investments

Because the company has the intent and ability to hold its investments to
maturity, they are considered held-to-maturity investments. As such, they are
stated at amortized cost, which approximates estimated fair value.
Held-to-maturity investments at September 30, 1999 and December 31, 1998 are
summarized in the following table:

Short-Term Investments

                                       1999                 1998
                                -----------------   ----------------
Commercial paper                       $6,682,542         $6,434,638
Corporate notes                         4,891,836          4,133,423
Certificates of deposit                 2,067,078                 --
                                -----------------   ----------------
                                      $13,641,456        $10,568,061
                                =================   ================

                                       8
<PAGE>

(4)      Inventories

Inventories at September 30, 1999 and December 31, 1998 are summarized as
follows:

                                        1999               1998
                                  ---------------    ---------------
Raw materials and supplies               $11,898            $83,016
Work in process                          315,419            531,952
Finished products                        714,631            670,400
                                  ---------------    ---------------
                                      $1,041,948         $1,285,368
                                  ===============    ===============



Inventories are stated at the lower of cost or market. Cost is determined on a
first-in, first-out basis.


(5)      Accrued Expenses

Accrued expenses at September 30, 1999, and December 31, 1998, are summarized in
the following table:

                                                1999           1998
                                           ------------   ------------
Product development commitments                $804,978       $446,429
Product return accrual                          474,861        467,547
Bonuses                                         466,348        536,683
Retirement and separation agreement             232,500             --
Retirement plan contribution                    152,758        204,619
Third party manufacturing                            --        422,334
Other accrued expenses                          696,225        635,272
                                           ------------   ------------
                                             $2,827,670     $2,712,884
                                           ============   ============

(6)      Promotion Revenue

In March 1999, the company and Schein Pharmaceutical, Inc. concluded their
agreement for the promotion of INFeD(R) (iron dextran injection). The company
recognized a final quarterly promotion fee of $125,000 in the first quarter of
1999.

In April 1999, the company entered into promotion agreements with Connetics
Corporation for the promotion of Ridaura(R) (auranofin) and Luxiq(TM)
(betamethasone valerate) Foam, 0.12%. Under the terms of the agreements, the
company will promote Ridaura and Luxiq to the rheumatology market in the United
States. For Ridaura, the company will receive $250,000 per quarter for making a
specified number of sales calls, plus a split of gross margin produced from
annual sales greater than $7.5 million. For Luxiq, the company will receive a
split of product contribution from sales of Luxiq in the rheumatology market.
Minimum terms for the Ridaura and Luxiq agreements are 18 months and 30 months
respectively.

                                       9
<PAGE>

In July 1999, the company entered into an agreement with Pharmacia & Upjohn for
the co-promotion of Azulfidine EN-tabs(R) (sulfasalazine delayed release
tablets, USP) Enteric-coated. Under the terms of the agreement, MGI began
promoting Azulfidine EN-tabs to the rheumatology market in the United States in
September 1999. MGI will earn promotion revenue based on its ability to increase
sales of Azulfidine EN-tabs(R). The Azulfidine EN-tabs(R) co-promotion agreement
has an initial term of three and one-half years from the co-promotion marketing
launch.

(7)      Stock Incentive Plans

Under stock incentive plans, designated persons (including officers, directors
and employees) are granted rights to acquire company common stock. These rights
include stock options and other equity rights. At September 30, 1999, 3,140,554
shares of common stock remain reserved for issuance, of which 939,533 remain
available for grant. Options to purchase 2,201,021 shares of common stock were
outstanding, of which 1,226,830 were exercisable. Options outstanding had a
weighted average exercise price of $7.63 per share.

(8)      Stockholders' Equity

Changes in selected stockholders' equity accounts for the nine months ended
September 30, 1999, were as follows:

<TABLE>
<CAPTION>
                                      Common stock           Additional  Note receivable
                                -------------------------     paid-in        from
                                   Shares      Par value      capital       officer
                                -----------   -----------   -----------   -----------
<S>                              <C>            <C>         <C>           <C>
Balance at December 31, 1998     14,542,472     $ 145,425   $90,850,590   ($   56,999)
Exercise of stock options           336,999         3,370     1,686,203          --
Employee retirement savings
  plan contribution                  10,557           106       116,648          --
Employee stock purchase plan         10,152           101        86,800          --
Note payment                           --            --            --          56,999
Stock option acceleration              --            --         162,953          --
                                -----------     ---------   -----------   -----------
Balance at September 30, 1999    14,900,180     $ 149,002   $92,903,194   $         0
                                ===========     =========   ===========   ===========
</TABLE>

                                       10
<PAGE>

(9)      Commitments

On April 19, 1999, the company entered into a lease agreement for replacement
office space, located near its then current facility. The company moved to the
new location in the third quarter of 1999. The lease has a six-year term, with
an option to extend the lease for an additional four years. Under the terms of
the lease, the company is required to pay rent, real estate taxes, and operating
costs. Future minimum lease payments for this lease agreement are as follows:

Remainder of 1999                          $89,000
2000                                       363,000
2001                                       441,000
2002                                       448,000
2003                                       455,000
Thereafter                                 720,000
                                       -----------
                                        $2,516,000
                                       ===========

                                       11
<PAGE>

Item 2.
-------

Management's Discussion and Analysis of Financial Condition and Results of
Operations

Overview

MGI PHARMA, INC. (MGI or the company) is a pharmaceutical company that acquires,
develops and markets differentiated, specialty pharmaceutical products. MGI's
current product portfolio is comprised of products that address special needs in
the fields of cancer and rheumatology, however, the company may expand its scope
as its business grows.

The company promotes products directly to physicians in the United States using
its own specialty sales force. These products include company-owned Salagen(R)
Tablets (pilocarpine hydrochloride) and Didronel(R) I.V. Infusion (etidronate
disodium), and three copromoted products, Ridaura(R) (auranofin), Luxiq(TM)
(betamethasone valerate) Foam, 0.12%, and Azulfidine EN-tabs(R) (sulfasalazine
delayed release tablets, USP). Salagen Tablets are approved in the United States
for two indications: symptoms of radiation-induced dry mouth in head and neck
cancer patients, and the symptoms of dry mouth associated with Sjogren's
syndrome, an autoimmune disease that damages the salivary glands. Sales of
Salagen Tablets in the United States account for more than 95 percent of company
product sales. Didronel I.V. Infusion is used to treat hypercalcemia (elevated
blood calcium) in cancer patients. Copromoted products continue to be owned and
distributed by the copromotion partners, so MGI recognizes promotion fee
revenue, rather than product sales revenue for these products. Outside the
United States, MGI commercializes its products through various alliances, and
has agreements with several international pharmaceutical companies to
commercialize Salagen Tablets in Europe, Japan and Canada.

The company's current product development efforts include clinical and
preclinical studies for MGI 114, the lead drug in a family of potential
anti-cancer analogs known as acylfulvenes. Exclusive rights in Japan to MGI 114
and the other acylfulvene analogs were granted to Dainippon under a development
and commercialization agreement in 1995. The company also provides ongoing
clinical support of Salagen Tablets.

Results of Operations

Revenues
--------

Sales

Sales revenues increased 30 percent from $3,274,112 in the 1998 third quarter to
$4,271,847 in the 1999 third quarter, and increased 48 percent from $9,163,357
in the nine month period ended September 30, 1998, to $13,528,969 in the
corresponding 1999 period. The increases reflect increasing sales of Salagen
Tablets from broader demand for the

                                       12
<PAGE>

product, following FDA approval of Salagen Tablets as a treatment of Sjogren's
syndrome symptoms in February 1998.

Sales of Salagen Tablets in the United States provided 97 percent of
company-wide product sales in both the 1999 third quarter, and in the nine month
period ended September 30, 1999. As is common in the pharmaceutical industry,
the company's domestic sales are made to pharmaceutical wholesalers for further
distribution through pharmacies to the ultimate consumers of the company's
products. Although U.S. sales of Salagen Tablets decreased 10 percent from the
second quarter of 1999 to the third quarter of 1999, this decrease follows a 6
percent increase from the first quarter of 1999 to the second quarter of 1999,
and an 18 percent increase from the fourth quarter of 1998 to the first quarter
of 1999. The company believes that the current quarter-to-quarter decrease is a
result of wholesale pipeline inventory adjustments, and moderating demand for
the product. Additional months of trend information is needed to assess how much
the prior long-term annual growth rate of around 40 percent has moderated.

Additionally, sales of Salagen Tablets may be negatively affected by the
approval of alternative treatments for conditions currently treated by Salagen
Tablets. A competing product, Ethyol(R) (amifostine), was approved in June 1999
by the FDA for treatment of radiation-induced dry mouth only in post-operative
head and neck cancer patients. Salagen Tablets are approved for the treatment of
dry mouth symptoms resulting from radiation used to treat head and neck cancer
patients, and for dry mouth symptoms associated with Sjogren's syndrome. Due to
the more restricted patient population for Ethyol, as well as other factors such
as price and invasive administration, the company currently believes that Ethyol
will not have a major impact on sales of Salagen Tablets. Other potential
competitive compounds are in various stages of development, including a compound
to treat the symptoms of Sjogren's syndrome, which was submitted to the FDA for
approval in the second half of 1998. At this time, the company is unable to
estimate what effect, if any, these development compounds will have on the
future demand for Salagen Tablets.

Promotion

Promotion revenue increased 100 percent from $125,000 in the 1998 third quarter
to $250,000 in the 1999 third quarter, but remained constant at $625,000 in the
nine month period ended September 30 for both 1998 and 1999. These comparisons
reflect promotion revenue from differing product relationships between 1998 and
1999. In 1998, the company was promoting INFeD(R) under an agreement with Schein
Pharmaceutical. In 1999, the company concluded its promotional activities with
Schein, and entered into promotion agreements with Connetics Corporation for the
promotion of Ridaura(R) and Luxiq(TM).

Under the Schein agreement, the company earned a minimum promotion fee of
$125,000 per quarter, plus an additional fee of $250,000 in the first quarter of
1998 resulting from an amendment to the contract. The company concluded its
promotional activity with Schein at the end of the first quarter of 1999. Under
the Connectics agreement, the company is

                                       13
<PAGE>

recognizing a minimum of $250,000 per quarter for the promotion of Ridaura.
After September 1999, the company will begin recognizing promotion revenue from
the co-promotion of Azulfidine EN-tabs(R), under an agreement with Pharmacia &
Upjohn.

Licensing

Licensing revenue increased 20 percent from $1,071,319 in the 1998 third quarter
to $1,290,046 in the 1999 third quarter, and increased 34 percent from
$2,386,089 in the nine month period ended September 30, 1998, to $3,198,829 in
the corresponding 1999 period. The increases are due to an increase in royalties
on technology from the company's former agricultural business, an increase in
revenue from international Salagen Tablets relationships, and a scheduled
increase in quarterly licensing payments from Dainippon for continuing
acylfulvene rights in Japan. However, the increases from international partners
for Salagen Tablets were not reflective of underlying product demand and may not
be recurring. The company is committed to improving the promotion of Salagen
Tablets in Europe. Until this is achieved, only modest year-to-year increases in
Salagen Tablets related licensing income are expected. In addition, future
licensing revenues will likely fluctuate between years and from one quarter to
another depending on the achievement of milestones by the company or its
partners, the level of recurring royalty generating activities, and the timing
of initiating additional licensing relationships. Quarterly licensing payments
from Dainippon are scheduled to conclude with a $100,000 payment in the second
quarter of 2000.

Interest and other

Interest and other income increased 29 percent from $209,314 in the 1998 third
quarter to $270,403 in the 1999 third quarter, and increased 13 percent from
$596,457 in the nine month period ended September 30, 1998, to $675,692 in the
corresponding 1999 period. An increase in the average amount of funds available
for investment caused the increases in interest income for both the quarter and
nine month period comparisons. The increase for the nine month period was
reduced by a decrease in the investment yield in 1999.

Costs and Expenses
------------------

Cost of Sales

Cost of sales increased 20 percent from $216,026 in the 1998 third quarter to
$258,882 in the 1999 third quarter, and increased 15 percent from $716,531 in
the nine month period ended September 30, 1998, to $821,441 in the corresponding
1999 period. Both changes reflect increased unit sales. Management believes that
cost of sales as a percent of product sales should continue near its recent
annual range of 5 to 9 percent for its current products. Quarterly changes in
product mix may cause this measure to fluctuate.

                                       14
<PAGE>

Selling, general and administrative

Selling, general and administrative expenses increased 8 percent from $2,712,366
in the 1998 third quarter to $2,923,887 in the 1999 third quarter, and increased
24 percent from $7,776,171 in the nine month period ended September 30, 1998 to
$9,667,086 in the corresponding 1999 period. The increases result from increased
selling and promotion costs to support Salagen Tablets as a treatment for
symptoms of dry mouth from Sjogren's syndrome, $525,000 in expenses associated
with non-recurring retirement and separation agreements, relocation and
recruiting expenses for the Executive Vice President, and costs related to
moving the company to a new office location. As such, selling, general and
administrative expenses in 1999 are expected to be greater than 1998.

Research and development

Research and development expense increased 42 percent from $1,316,839 in the
1998 third quarter to $1,871,292 in the 1999 third quarter, and increased 30
percent from $3,911,609 in the nine month period ended September 30, 1998, to
$5,078,917 in the corresponding 1999 period. The increases reflect increasing
costs for the development of MGI 114, the lead anti-cancer drug in MGI's
acylfulvene family of potential anti-cancer analogs. During 1998, development of
MGI 114 transitioned from Phase I to Phase II clinical studies. Enrollment in
three MGI sponsored Phase II studies began in 1998, and has increased throughout
1999. These studies will evaluate the efficacy of MGI 114 for the treatment of
patients with prostate, pancreatic or ovarian tumors. In addition, MGI continued
to provide clinical supplies of MGI 114 to the National Cancer Institute for
NCI's clinical studies of MGI 114. Research and development spending is expected
to increase as the development effort for MGI 114 continues to expand.

Net income

Net income of $384,514 in the third quarter of 1998 compares to net income of
$952,670 in the third quarter of 1999. Net income of $216,592 in the nine month
period ended September 30, 1998, compares to net income of $2,246,825 in the
corresponding 1999 period. The increases are due to increases in total revenues
of 30 percent and 41 percent for the third quarter and nine month period,
respectively, compared to 1998. Costs and expenses increased 19 percent and 26
percent for the third quarter and nine month period, respectively, compared to
1998.

Liquidity and Capital Resources

At September 30, 1999, the company had cash and investments of $19,209,797 and
working capital of $20,050,647 compared with $17,081,265 and $16,095,725,
respectively, at December 31, 1998. For the nine month period ended September
30, 1999, the company received $1,776,474 in cash from issuance of shares under
stock award plans, and generated $1,008,946 of cash from its operating
activities.

                                       15
<PAGE>

Cash in excess of current operating needs is invested in money market
instruments in accordance with the company's investment policy. This policy
emphasizes principal preservation, so it requires strong issuer credit ratings
and limits the amount of credit exposure from any one issuer or industry.

Substantial amounts of capital are required for pharmaceutical development and
commercialization efforts. For continued development and commercialization of
MGI 114, Salagen Tablets and products acquired through the company's product
acquisition strategy, the company plans to utilize cash provided from growth in
product sales, collaborative arrangements and existing liquid assets. The
company may also seek other sources of funding, including additional equity or
debt issuances, or may manage the pace of developing its product candidates. The
company anticipates that current cash and investments are sufficient to fund
existing operations for at least two years.

Year 2000

Worldwide, many currently installed computer systems and software are coded to
accept only two-digit entries in the date code fields. These date code fields
will need to accept four-digit entries to distinguish 21st century dates from
20th century dates. Unless it is resolved, this problem could result in system
failures or miscalculations causing disruptions of business operations
(including, among other things, a temporary inability to process transactions,
send invoices or engage in other similar business activities). As a result, many
companies' computer systems and software need to be upgraded or replaced in
order to comply with Year 2000 requirements. The extent of potential global
impact of the Year 2000 problem is uncertain. However, if not corrected in a
timely manner, it could affect national economies generally, and MGI
specifically.

The company formed a project team (consisting of representatives from its
various departments) to address internal and external Year 2000 issues. The
company's internal computer systems were being reviewed to assess and remediate
Year 2000 problems. The company's assessment of internal systems included its
information technology (IT), as well as non-IT systems (those systems containing
embedded technology in the form of microprocessors or other similar circuitry).
The company's Year 2000 compliance program included the following phases:
identifying systems that need to be modified or replaced; carrying out
remediation work to modify existing systems or convert to new systems; and
conducting validation testing of systems and applications to ensure compliance.
The company has completed its compliance program.

The amount of remediation work required to address Year 2000 problems was not
extensive. The company has replaced most of its financial and operational
systems in the last several years, and management believes that the new
equipment and software substantially address Year 2000 issues. Additionally, the
company modified some of its existing hardware and software in order for its
computer systems to function properly in the Year 2000 and thereafter.

                                       16
<PAGE>

In addition, the company has requested assurances from its major suppliers that
they are addressing the Year 2000 issue and that products purchased by the
company from such suppliers will function properly in the Year 2000. Contacts
have also been made with the company's major customers. These actions are
intended to help mitigate the possible external impact of the Year 2000 problem.
However, it is impossible to fully assess the potential consequences in the
event service interruptions from suppliers occur or in the event that there are
infrastructure disruptions in areas such as utilities, communications,
transportation, banking and government.

The company has spent approximately $738,000 through September 30, 1999, to
upgrade its information technology systems. In part, these upgrades were to
resolve Year 2000 issues. This total cost includes the cost of replacing
non-compliant systems in cases where the company has accelerated plans to
replace such systems. As of September 30, 1999, the company believes that all of
the its systems are Year 2000 compliant. The company does not expect to incur
any additional material costs related to Year 2000 issues.

Based on its assessments to date, the company believes it will not experience
material disruption as a result of Year 2000 problems in internal processes,
information processing or interface with major customers, or with processing
orders and billing. However, if certain critical third-party providers, such as
those providing product distribution, banking, contract manufacturing,
electricity, water or telephone service, experience difficulties resulting in
disruption of service to the company, a shutdown of the company's operations at
its Minnesota headquarters could occur for the duration of the disruption. The
company has developed a contingency plan to provide for continuity of operation
in the event of certain problem scenarios. Assuming no major disruption in
service from utility companies or other critical third-party providers, the
company believes that it will be able to manage its total Year 2000 transition
without any further material effect on the company's results of operations or
financial condition.

Cautionary Statement

This Form 10-Q contains forward-looking statements within the meaning of federal
securities laws. These statements include statements regarding intent, belief,
or current expectations of the company and its management. These forward-looking
statements are not guarantees of future performance and involve a number of
risks and uncertainties that may cause the company's actual results to differ
materially from the results discussed in these statements. Factors that might
cause such differences include, but are not limited to, dependence on sales of
Salagen Tablets, the ability to develop MGI 114 into an approved and
successfully marketed chemotherapy agent, dependence on a license acquisition
strategy, uncertainty of strategic alliances, and other risks and uncertainties
detailed from time to time in the company's filings with the Securities and
Exchange Commission, including Exhibit 99 to this Form 10-Q.

                                       17
<PAGE>

Item 3.
-------

Quantitative and Qualitative Disclosures About Market Risk

The company does not have operations subject to risks of material foreign
currency fluctuations, nor does it use derivative financial instruments in its
operations or investment portfolio. The company places its investments in
instruments that meet high credit quality standards, as specified in the
company's investment policy guidelines. The company does not expect any material
loss with respect to its investment portfolio or exposure to market risks
associated with interest rates.

                                       18
<PAGE>

                                MGI PHARMA, INC.

                           PART II - OTHER INFORMATION


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

None


Item 5.  Other Information
--------------------------

In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the company is hereby filing cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in forward looking statements of the
company made by, or on behalf of the company. See Exhibit 99 to this report.


Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

(a)      LISTING OF EXHIBITS:

         27   Financial Data Schedule
         99   Cautionary Statements

(b)      REPORTS ON FORM 8-K

         There were no reports on Form 8-K filed during the three months ended
         September 30, 1999.

                                       19
<PAGE>

                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                        MGI PHARMA, INC.


Date: November 10, 1999                 By: /s/ William C. Brown
                                            ------------------------------------
                                            William C. Brown,
                                            Chief Financial Officer

                                       20
<PAGE>

                                MGI PHARMA, INC.

                          Quarterly Report on Form 10-Q
                                     for the
                        Quarter Ended September 30, 1999

                                  EXHIBIT INDEX
                                  -------------

     Exhibit
      Number                      Description
      ------                      -----------


       27                     Financial Data Schedule

       99                     Cautionary Statements
[{"type": "10-Q", "sequence": "1", "description": "FORM 10-Q", "secsgml_size_bytes": 46657}]
{"company-data": {"conformed-name": "MGI PHARMA INC", "cik": "0000702131", "assigned-sic": "2834", "irs-number": "411364647", "state-of-incorporation": "MN", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-10736", "film-number": "99748853"}, "business-address": {"street1": "9900 BREN RD EAST STE 300E", "street2": "C/O OPUS CENTER MINNETONKA MINNESOTA", "city": "MINNEAPOLIS", "state": "MN", "zip": "55343", "phone": "6129357335"}, "mail-address": {"street1": "OPUS CENTER", "street2": "9900 BREN ROAD EAST  SUITE 300E", "city": "MINNEAPOLIS", "state": "MN", "zip": "55343"}, "former-company": {"former-conformed-name": "MOLECULAR GENETICS INC", "date-changed": "19900812"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

(Mark One)
[X]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999

                                       OR

[ ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________

Commission File Number: 0-10736
                        --------

                                MGI PHARMA, INC.
                                ----------------
             (Exact name of registrant as specified in its charter)

                Minnesota                              41-1364647
     -------------------------------     --------------------------------------
     (State or other jurisdiction of     (I.R.S. employer identification number)
      incorporation or organization)

         6300 West Old Shakopee Road
                 Suite 110
         Bloomington, Minnesota 55438                 (612) 346-4700
   ---------------------------------------   --------------------------------
   (Address of principal executive offices   (Registrant's telephone number,
              and zip code)                        including area code)

Indicate by check mark, whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_  No ___

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

   Common Stock, $.01 par value                 14,939,240 shares
 --------------------------------    -----------------------------------------
             (Class)                     (Outstanding at November 10, 1999)
MGI PHARMA, INC.

                                 FORM 10-Q INDEX

                                                                           Page
                                                                          Number
                                                                          ------
PART I.  FINANCIAL INFORMATION

     Item 1.  Financial Statements (Unaudited)

                Balance Sheets - September 30, 1999
                and December 31, 1998                                        3

                Statements of Operations - Three Months and
                Nine Months Ended September 30, 1999 and 1998                5

                Statements of Cash Flows - Nine Months
                Ended September 30, 1999 and 1998                            6

                Notes to Financial Statements                                7

     Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of Operations                 12

     Item 3.  Quantitative and Qualitative Disclosure About
              Market Risk                                                   18

PART II.  OTHER INFORMATION

     Item 4.  Submission of Matters to a Vote of Security                   19
              Holders

     Item 5.  Other Information                                             19

     Item 6.  Exhibits and Reports on Form 8-K                              19

SIGNATURES                                                                  20

                                       2
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
----------------------------

                                MGI PHARMA, INC.

                                 BALANCE SHEETS

                                   (unaudited)

                                                  September 30,    December 31,
                                                      1999             1998
                                                   -----------     -----------

ASSETS
------

Current assets:
  Cash and cash equivalents                        $ 5,568,341     $ 6,513,204
  Short-term investments                            13,641,456      10,568,061
  Receivables, less allowances of
    $119,037 and $97,960                             3,036,953       1,410,539
  Inventories                                        1,041,948       1,285,368
  Prepaid expenses                                     213,310         329,953
                                                   -----------     -----------

     Total current assets                           23,502,008      20,107,125

Equipment and furniture, at cost
  less accumulated depreciation of
  $782,134 and $1,062,405                              984,819         540,084

Other assets                                           435,207         474,859
                                                   -----------     -----------

Total assets                                       $24,922,034     $21,122,068
                                                   ===========     ===========

(Continued)

                                       3
BALANCE SHEETS
(Unaudited)
Page 2

                                                September 30,       December 31,
                                                    1999               1998
                                                ------------       ------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                              $    569,871       $    794,266
  Accrued expenses                                 2,827,670          2,712,884
  Deferred revenue                                      --              495,000
  Other current liabilities                           53,820              9,250
                                                ------------       ------------

     Total current liabilities                     3,451,361          4,011,400
                                                ------------       ------------

Stockholders' equity:
  Common stock, $.01 par value,
    30,000,000 authorized shares,
    14,900,180 and 14,542,472
    Issued shares                                    149,002            145,425
  Additional paid-in capital                      92,903,194         90,850,590
  Notes receivable from officers                        --              (56,999)
  Accumulated deficit                            (71,581,523)       (73,828,348)
                                                ------------       ------------

     Total stockholders' equity                   21,470,673         17,110,668
                                                ------------       ------------

Total liabilities and
  stockholders' equity                          $ 24,922,034       $ 21,122,068
                                                ============       ============

-------------------------------------

See accompanying notes to financial statements.

                                       4
MGI PHARMA, INC.

                            STATEMENTS OF OPERATIONS

                                   (Unaudited)
Three Months Ended          Nine Months Ended
                                                  September 30,              September 30,
                                           -------------------------   -------------------------
                                               1999         1998           1999          1998
                                           -----------   -----------   -----------   -----------
Revenues:
  Sales                                    $ 4,271,847   $ 3,274,112   $13,528,969   $ 9,163,357
  Promotion                                    250,000       125,000       625,000       625,000
  Licensing                                  1,290,046     1,071,319     3,198,829     2,386,089
  Interest and other                           270,403       209,314       675,692       596,457
                                           -----------   -----------   -----------   -----------
                                             6,082,296     4,679,745    18,028,490    12,770,903
                                           -----------   -----------   -----------   -----------

Costs and Expenses:
  Cost of sales                                258,882       216,026       821,441       716,531
  Selling, general and administrative        2,923,887     2,712,366     9,667,086     7,776,171
  Research and development                   1,871,292     1,316,839     5,078,917     3,911,609
                                           -----------   -----------   -----------   -----------
                                             5,054,061     4,245,231    15,567,444    12,404,311
                                           -----------   -----------   -----------   -----------

Income before taxes                          1,028,235       434,514     2,461,046       366,592
                                           -----------   -----------   -----------   -----------

Provision for income taxes                      75,565        50,000       214,221       150,000
                                           -----------   -----------   -----------   -----------

Net income                                 $   952,670   $   384,514     2,246,825       216,592
                                           ===========   ===========   ===========   ===========

Net income per common share:
           Basic                           $      0.06   $      0.03   $      0.15   $      0.02

           Assuming dilution               $      0.06   $      0.03   $      0.14   $      0.01

Weighted average number of
   common shares outstanding:
           Basic                            14,818,854    14,452,288    14,681,292    14,330,574

           Assuming dilution                15,732,835    15,019,806    15,586,710    14,847,538
------------------------------------------------------------------------------

See accompanying notes to financial statements.

                                       5
MGI PHARMA, INC.

                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)

                                               Nine Months Ended September 30,
                                               ------------------------------
                                                    1999            1998
                                                ------------    ------------

OPERATING ACTIVITIES:
  Net income                                    $  2,246,825    $    216,592
  Adjustments for non-cash items:
    Depreciation                                     197,853         188,893
    Benefit plan contribution                        117,261         100,292
    Stock option acceleration                        162,953            --
    Other                                            110,951            --
  Change in operating assets and liabilities:
    Receivables                                   (1,626,414)     (1,105,409)
    Inventories                                      243,420        (138,564)
    Prepaid expenses                                 116,643          90,940
    Accounts payable and accrued expenses           (110,116)         71,427
    Deferred revenue                                (495,000)       (450,000)
    Other current liabilities                         44,570          39,567
                                                ------------    ------------

Net cash provided by (used in) operating
  activities                                       1,008,946        (986,262)
                                                ------------    ------------

INVESTING ACTIVITIES:
  Purchase of investments                        (15,464,561)    (12,690,850)
  Maturity of investments                         12,391,166      11,223,183
  Purchase of equipment and furniture               (672,519)       (166,446)
  Payments on notes receivable                        56,999          45,576
  Other                                              (41,368)         47,980
                                                ------------    ------------

Net cash used in investing activities             (3,730,283)     (1,540,557)
                                                ------------    ------------

FINANCING ACTIVITIES:
  Issuance of shares under stock
    plans                                          1,776,474         999,624
                                                ------------    ------------
Net cash provided by financing
  activities                                       1,776,474         999,624
                                                ------------    ------------
Decrease in cash and cash equivalents               (944,863)     (1,527,195)

Cash and cash equivalents at
  beginning of period                              6,513,204       7,057,091
                                                ------------    ------------

Cash and cash equivalents at
  end of period                                 $  5,568,341    $  5,529,896
                                                ============    ============

----------------------------------
See accompanying notes to financial statements.

                                       6
MGI PHARMA, INC.

                          NOTES TO FINANCIAL STATEMENTS

                                   (Unaudited)

(1)      Basis of Presentation

MGI PHARMA, INC. (MGI or the company) is a pharmaceutical company that acquires,
develops and markets differentiated specialty pharmaceutical products. MGI's
current product portfolio is comprised of products that address special needs in
the fields of oncology and rheumatology, however, the company may expand its
scope as its business grows. The company promotes products directly to
physicians throughout the United States using its own specialty sales force. As
is common in the pharmaceutical industry, domestic sales are made to
pharmaceutical wholesalers for further distribution through pharmacies to the
ultimate consumers of the company's products. U.S. sales of Salagen(R) Tablets
(pilocarpine hydrochloride) account for substantially all of the company's
sales. The company intends to commercialize all of its products outside the
United States through various alliances, as it has for Salagen Tablets. The
company has agreements with several international pharmaceutical companies to
commercialize Salagen Tablets outside the U.S., including the major markets of
Europe, Japan and Canada. Current product development efforts include clinical
and preclinical studies for MGI 114, the lead drug in a family of potential
anti-cancer analogs known as the acylfulvenes, and continued clinical support of
Salagen Tablets. Exclusive rights in Japan to MGI 114 and the other acylfulvene
analogs were granted to Dainippon Pharmaceutical Co., Ltd. under a cooperative
development and commercialization agreement in 1995.

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal, recurring adjustments)
considered necessary for fair presentation have been included. Interim results
may not be indicative of annual results. Certain prior year amounts have been
reclassified to conform with current year presentation. For further information,
refer to the financial statements and footnotes included in the company's report
on Form 10-K for the year ended December 31, 1998.

                                       7
(2)      Income Per Common Share

Income per share for the three month and nine month periods ended September 30,
1999 and 1998 are summarized in the following table:
Three Months Ended                       1999                             1998
                           --------------------------------  -------------------------------
September 30                                          Per                              Per
                              Net                    Share      Net                   Share
                             Income       Shares     Amount    Income       Shares    Amount
                             ------       ------     ------    ------       ------    ------
Basic                      $  952,670   14,818,854   $0.06   $  384,514   14,452,288   $0.03
Effect of
  dilutive stock options         --        913,981    --           --        567,518    --
                           -----------------------------------------------------------------

Assuming dilution          $  952,670   15,732,835   $0.06   $  384,514   15,019,806   $0.03
Nine Months Ended                        1999                             1998
                           --------------------------------  -------------------------------
September 30                                          Per                              Per
                              Net                    Share      Net                   Share
                             Income       Shares     Amount    Income       Shares    Amount
                             ------       ------     ------    ------       ------    ------

Basic                      $2,246,825   14,681,292   $0.15    $  216,592   14,330,574   $0.02
Effect of
  dilutive stock options         --        905,418   ($0.01)        --        516,964   ($0.01)
                           -----------------------------------------------------------------

Assuming dilution          $2,246,825   15,586,710   $0.14    $  216,592   14,847,538   $0.01
(3)      Short-Term Investments

Because the company has the intent and ability to hold its investments to
maturity, they are considered held-to-maturity investments. As such, they are
stated at amortized cost, which approximates estimated fair value.
Held-to-maturity investments at September 30, 1999 and December 31, 1998 are
summarized in the following table:

Short-Term Investments

                                       1999                 1998
                                -----------------   ----------------
Commercial paper                       $6,682,542         $6,434,638
Corporate notes                         4,891,836          4,133,423
Certificates of deposit                 2,067,078                 --
                                -----------------   ----------------
                                      $13,641,456        $10,568,061
                                =================   ================

                                       8
(4)      Inventories

Inventories at September 30, 1999 and December 31, 1998 are summarized as
follows:

                                        1999               1998
                                  ---------------    ---------------
Raw materials and supplies               $11,898            $83,016
Work in process                          315,419            531,952
Finished products                        714,631            670,400
                                  ---------------    ---------------
                                      $1,041,948         $1,285,368
                                  ===============    ===============

Inventories are stated at the lower of cost or market. Cost is determined on a
first-in, first-out basis.

(5)      Accrued Expenses

Accrued expenses at September 30, 1999, and December 31, 1998, are summarized in
the following table:

                                                1999           1998
                                           ------------   ------------
Product development commitments                $804,978       $446,429
Product return accrual                          474,861        467,547
Bonuses                                         466,348        536,683
Retirement and separation agreement             232,500             --
Retirement plan contribution                    152,758        204,619
Third party manufacturing                            --        422,334
Other accrued expenses                          696,225        635,272
                                           ------------   ------------
                                             $2,827,670     $2,712,884
                                           ============   ============

(6)      Promotion Revenue

In March 1999, the company and Schein Pharmaceutical, Inc. concluded their
agreement for the promotion of INFeD(R) (iron dextran injection). The company
recognized a final quarterly promotion fee of $125,000 in the first quarter of
1999.

In April 1999, the company entered into promotion agreements with Connetics
Corporation for the promotion of Ridaura(R) (auranofin) and Luxiq(TM)
(betamethasone valerate) Foam, 0.12%. Under the terms of the agreements, the
company will promote Ridaura and Luxiq to the rheumatology market in the United
States. For Ridaura, the company will receive $250,000 per quarter for making a
specified number of sales calls, plus a split of gross margin produced from
annual sales greater than $7.5 million. For Luxiq, the company will receive a
split of product contribution from sales of Luxiq in the rheumatology market.
Minimum terms for the Ridaura and Luxiq agreements are 18 months and 30 months
respectively.

                                       9
In July 1999, the company entered into an agreement with Pharmacia & Upjohn for
the co-promotion of Azulfidine EN-tabs(R) (sulfasalazine delayed release
tablets, USP) Enteric-coated. Under the terms of the agreement, MGI began
promoting Azulfidine EN-tabs to the rheumatology market in the United States in
September 1999. MGI will earn promotion revenue based on its ability to increase
sales of Azulfidine EN-tabs(R). The Azulfidine EN-tabs(R) co-promotion agreement
has an initial term of three and one-half years from the co-promotion marketing
launch.

(7)      Stock Incentive Plans

Under stock incentive plans, designated persons (including officers, directors
and employees) are granted rights to acquire company common stock. These rights
include stock options and other equity rights. At September 30, 1999, 3,140,554
shares of common stock remain reserved for issuance, of which 939,533 remain
available for grant. Options to purchase 2,201,021 shares of common stock were
outstanding, of which 1,226,830 were exercisable. Options outstanding had a
weighted average exercise price of $7.63 per share.

(8)      Stockholders' Equity

Changes in selected stockholders' equity accounts for the nine months ended
September 30, 1999, were as follows:
Common stock           Additional  Note receivable
                                -------------------------     paid-in        from
                                   Shares      Par value      capital       officer
                                -----------   -----------   -----------   -----------
Balance at December 31, 1998     14,542,472     $ 145,425   $90,850,590   ($   56,999)
Exercise of stock options           336,999         3,370     1,686,203          --
Employee retirement savings
  plan contribution                  10,557           106       116,648          --
Employee stock purchase plan         10,152           101        86,800          --
Note payment                           --            --            --          56,999
Stock option acceleration              --            --         162,953          --
                                -----------     ---------   -----------   -----------
Balance at September 30, 1999    14,900,180     $ 149,002   $92,903,194   $         0
                                ===========     =========   ===========   ===========
10
(9)      Commitments

On April 19, 1999, the company entered into a lease agreement for replacement
office space, located near its then current facility. The company moved to the
new location in the third quarter of 1999. The lease has a six-year term, with
an option to extend the lease for an additional four years. Under the terms of
the lease, the company is required to pay rent, real estate taxes, and operating
costs. Future minimum lease payments for this lease agreement are as follows:

Remainder of 1999                          $89,000
2000                                       363,000
2001                                       441,000
2002                                       448,000
2003                                       455,000
Thereafter                                 720,000
                                       -----------
                                        $2,516,000
                                       ===========

                                       11
Item 2.
-------

Management's Discussion and Analysis of Financial Condition and Results of
Operations

Overview

MGI PHARMA, INC. (MGI or the company) is a pharmaceutical company that acquires,
develops and markets differentiated, specialty pharmaceutical products. MGI's
current product portfolio is comprised of products that address special needs in
the fields of cancer and rheumatology, however, the company may expand its scope
as its business grows.

The company promotes products directly to physicians in the United States using
its own specialty sales force. These products include company-owned Salagen(R)
Tablets (pilocarpine hydrochloride) and Didronel(R) I.V. Infusion (etidronate
disodium), and three copromoted products, Ridaura(R) (auranofin), Luxiq(TM)
(betamethasone valerate) Foam, 0.12%, and Azulfidine EN-tabs(R) (sulfasalazine
delayed release tablets, USP). Salagen Tablets are approved in the United States
for two indications: symptoms of radiation-induced dry mouth in head and neck
cancer patients, and the symptoms of dry mouth associated with Sjogren's
syndrome, an autoimmune disease that damages the salivary glands. Sales of
Salagen Tablets in the United States account for more than 95 percent of company
product sales. Didronel I.V. Infusion is used to treat hypercalcemia (elevated
blood calcium) in cancer patients. Copromoted products continue to be owned and
distributed by the copromotion partners, so MGI recognizes promotion fee
revenue, rather than product sales revenue for these products. Outside the
United States, MGI commercializes its products through various alliances, and
has agreements with several international pharmaceutical companies to
commercialize Salagen Tablets in Europe, Japan and Canada.

The company's current product development efforts include clinical and
preclinical studies for MGI 114, the lead drug in a family of potential
anti-cancer analogs known as acylfulvenes. Exclusive rights in Japan to MGI 114
and the other acylfulvene analogs were granted to Dainippon under a development
and commercialization agreement in 1995. The company also provides ongoing
clinical support of Salagen Tablets.

Results of Operations

Revenues
--------

Sales

Sales revenues increased 30 percent from $3,274,112 in the 1998 third quarter to
$4,271,847 in the 1999 third quarter, and increased 48 percent from $9,163,357
in the nine month period ended September 30, 1998, to $13,528,969 in the
corresponding 1999 period. The increases reflect increasing sales of Salagen
Tablets from broader demand for the

                                       12
product, following FDA approval of Salagen Tablets as a treatment of Sjogren's
syndrome symptoms in February 1998.

Sales of Salagen Tablets in the United States provided 97 percent of
company-wide product sales in both the 1999 third quarter, and in the nine month
period ended September 30, 1999. As is common in the pharmaceutical industry,
the company's domestic sales are made to pharmaceutical wholesalers for further
distribution through pharmacies to the ultimate consumers of the company's
products. Although U.S. sales of Salagen Tablets decreased 10 percent from the
second quarter of 1999 to the third quarter of 1999, this decrease follows a 6
percent increase from the first quarter of 1999 to the second quarter of 1999,
and an 18 percent increase from the fourth quarter of 1998 to the first quarter
of 1999. The company believes that the current quarter-to-quarter decrease is a
result of wholesale pipeline inventory adjustments, and moderating demand for
the product. Additional months of trend information is needed to assess how much
the prior long-term annual growth rate of around 40 percent has moderated.

Additionally, sales of Salagen Tablets may be negatively affected by the
approval of alternative treatments for conditions currently treated by Salagen
Tablets. A competing product, Ethyol(R) (amifostine), was approved in June 1999
by the FDA for treatment of radiation-induced dry mouth only in post-operative
head and neck cancer patients. Salagen Tablets are approved for the treatment of
dry mouth symptoms resulting from radiation used to treat head and neck cancer
patients, and for dry mouth symptoms associated with Sjogren's syndrome. Due to
the more restricted patient population for Ethyol, as well as other factors such
as price and invasive administration, the company currently believes that Ethyol
will not have a major impact on sales of Salagen Tablets. Other potential
competitive compounds are in various stages of development, including a compound
to treat the symptoms of Sjogren's syndrome, which was submitted to the FDA for
approval in the second half of 1998. At this time, the company is unable to
estimate what effect, if any, these development compounds will have on the
future demand for Salagen Tablets.

Promotion

Promotion revenue increased 100 percent from $125,000 in the 1998 third quarter
to $250,000 in the 1999 third quarter, but remained constant at $625,000 in the
nine month period ended September 30 for both 1998 and 1999. These comparisons
reflect promotion revenue from differing product relationships between 1998 and
1999. In 1998, the company was promoting INFeD(R) under an agreement with Schein
Pharmaceutical. In 1999, the company concluded its promotional activities with
Schein, and entered into promotion agreements with Connetics Corporation for the
promotion of Ridaura(R) and Luxiq(TM).

Under the Schein agreement, the company earned a minimum promotion fee of
$125,000 per quarter, plus an additional fee of $250,000 in the first quarter of
1998 resulting from an amendment to the contract. The company concluded its
promotional activity with Schein at the end of the first quarter of 1999. Under
the Connectics agreement, the company is

                                       13
recognizing a minimum of $250,000 per quarter for the promotion of Ridaura.
After September 1999, the company will begin recognizing promotion revenue from
the co-promotion of Azulfidine EN-tabs(R), under an agreement with Pharmacia &
Upjohn.

Licensing

Licensing revenue increased 20 percent from $1,071,319 in the 1998 third quarter
to $1,290,046 in the 1999 third quarter, and increased 34 percent from
$2,386,089 in the nine month period ended September 30, 1998, to $3,198,829 in
the corresponding 1999 period. The increases are due to an increase in royalties
on technology from the company's former agricultural business, an increase in
revenue from international Salagen Tablets relationships, and a scheduled
increase in quarterly licensing payments from Dainippon for continuing
acylfulvene rights in Japan. However, the increases from international partners
for Salagen Tablets were not reflective of underlying product demand and may not
be recurring. The company is committed to improving the promotion of Salagen
Tablets in Europe. Until this is achieved, only modest year-to-year increases in
Salagen Tablets related licensing income are expected. In addition, future
licensing revenues will likely fluctuate between years and from one quarter to
another depending on the achievement of milestones by the company or its
partners, the level of recurring royalty generating activities, and the timing
of initiating additional licensing relationships. Quarterly licensing payments
from Dainippon are scheduled to conclude with a $100,000 payment in the second
quarter of 2000.

Interest and other

Interest and other income increased 29 percent from $209,314 in the 1998 third
quarter to $270,403 in the 1999 third quarter, and increased 13 percent from
$596,457 in the nine month period ended September 30, 1998, to $675,692 in the
corresponding 1999 period. An increase in the average amount of funds available
for investment caused the increases in interest income for both the quarter and
nine month period comparisons. The increase for the nine month period was
reduced by a decrease in the investment yield in 1999.

Costs and Expenses
------------------

Cost of Sales

Cost of sales increased 20 percent from $216,026 in the 1998 third quarter to
$258,882 in the 1999 third quarter, and increased 15 percent from $716,531 in
the nine month period ended September 30, 1998, to $821,441 in the corresponding
1999 period. Both changes reflect increased unit sales. Management believes that
cost of sales as a percent of product sales should continue near its recent
annual range of 5 to 9 percent for its current products. Quarterly changes in
product mix may cause this measure to fluctuate.

                                       14
Selling, general and administrative

Selling, general and administrative expenses increased 8 percent from $2,712,366
in the 1998 third quarter to $2,923,887 in the 1999 third quarter, and increased
24 percent from $7,776,171 in the nine month period ended September 30, 1998 to
$9,667,086 in the corresponding 1999 period. The increases result from increased
selling and promotion costs to support Salagen Tablets as a treatment for
symptoms of dry mouth from Sjogren's syndrome, $525,000 in expenses associated
with non-recurring retirement and separation agreements, relocation and
recruiting expenses for the Executive Vice President, and costs related to
moving the company to a new office location. As such, selling, general and
administrative expenses in 1999 are expected to be greater than 1998.

Research and development

Research and development expense increased 42 percent from $1,316,839 in the
1998 third quarter to $1,871,292 in the 1999 third quarter, and increased 30
percent from $3,911,609 in the nine month period ended September 30, 1998, to
$5,078,917 in the corresponding 1999 period. The increases reflect increasing
costs for the development of MGI 114, the lead anti-cancer drug in MGI's
acylfulvene family of potential anti-cancer analogs. During 1998, development of
MGI 114 transitioned from Phase I to Phase II clinical studies. Enrollment in
three MGI sponsored Phase II studies began in 1998, and has increased throughout
1999. These studies will evaluate the efficacy of MGI 114 for the treatment of
patients with prostate, pancreatic or ovarian tumors. In addition, MGI continued
to provide clinical supplies of MGI 114 to the National Cancer Institute for
NCI's clinical studies of MGI 114. Research and development spending is expected
to increase as the development effort for MGI 114 continues to expand.

Net income

Net income of $384,514 in the third quarter of 1998 compares to net income of
$952,670 in the third quarter of 1999. Net income of $216,592 in the nine month
period ended September 30, 1998, compares to net income of $2,246,825 in the
corresponding 1999 period. The increases are due to increases in total revenues
of 30 percent and 41 percent for the third quarter and nine month period,
respectively, compared to 1998. Costs and expenses increased 19 percent and 26
percent for the third quarter and nine month period, respectively, compared to
1998.

Liquidity and Capital Resources

At September 30, 1999, the company had cash and investments of $19,209,797 and
working capital of $20,050,647 compared with $17,081,265 and $16,095,725,
respectively, at December 31, 1998. For the nine month period ended September
30, 1999, the company received $1,776,474 in cash from issuance of shares under
stock award plans, and generated $1,008,946 of cash from its operating
activities.

                                       15
Cash in excess of current operating needs is invested in money market
instruments in accordance with the company's investment policy. This policy
emphasizes principal preservation, so it requires strong issuer credit ratings
and limits the amount of credit exposure from any one issuer or industry.

Substantial amounts of capital are required for pharmaceutical development and
commercialization efforts. For continued development and commercialization of
MGI 114, Salagen Tablets and products acquired through the company's product
acquisition strategy, the company plans to utilize cash provided from growth in
product sales, collaborative arrangements and existing liquid assets. The
company may also seek other sources of funding, including additional equity or
debt issuances, or may manage the pace of developing its product candidates. The
company anticipates that current cash and investments are sufficient to fund
existing operations for at least two years.

Year 2000

Worldwide, many currently installed computer systems and software are coded to
accept only two-digit entries in the date code fields. These date code fields
will need to accept four-digit entries to distinguish 21st century dates from
20th century dates. Unless it is resolved, this problem could result in system
failures or miscalculations causing disruptions of business operations
(including, among other things, a temporary inability to process transactions,
send invoices or engage in other similar business activities). As a result, many
companies' computer systems and software need to be upgraded or replaced in
order to comply with Year 2000 requirements. The extent of potential global
impact of the Year 2000 problem is uncertain. However, if not corrected in a
timely manner, it could affect national economies generally, and MGI
specifically.

The company formed a project team (consisting of representatives from its
various departments) to address internal and external Year 2000 issues. The
company's internal computer systems were being reviewed to assess and remediate
Year 2000 problems. The company's assessment of internal systems included its
information technology (IT), as well as non-IT systems (those systems containing
embedded technology in the form of microprocessors or other similar circuitry).
The company's Year 2000 compliance program included the following phases:
identifying systems that need to be modified or replaced; carrying out
remediation work to modify existing systems or convert to new systems; and
conducting validation testing of systems and applications to ensure compliance.
The company has completed its compliance program.

The amount of remediation work required to address Year 2000 problems was not
extensive. The company has replaced most of its financial and operational
systems in the last several years, and management believes that the new
equipment and software substantially address Year 2000 issues. Additionally, the
company modified some of its existing hardware and software in order for its
computer systems to function properly in the Year 2000 and thereafter.

                                       16
In addition, the company has requested assurances from its major suppliers that
they are addressing the Year 2000 issue and that products purchased by the
company from such suppliers will function properly in the Year 2000. Contacts
have also been made with the company's major customers. These actions are
intended to help mitigate the possible external impact of the Year 2000 problem.
However, it is impossible to fully assess the potential consequences in the
event service interruptions from suppliers occur or in the event that there are
infrastructure disruptions in areas such as utilities, communications,
transportation, banking and government.

The company has spent approximately $738,000 through September 30, 1999, to
upgrade its information technology systems. In part, these upgrades were to
resolve Year 2000 issues. This total cost includes the cost of replacing
non-compliant systems in cases where the company has accelerated plans to
replace such systems. As of September 30, 1999, the company believes that all of
the its systems are Year 2000 compliant. The company does not expect to incur
any additional material costs related to Year 2000 issues.

Based on its assessments to date, the company believes it will not experience
material disruption as a result of Year 2000 problems in internal processes,
information processing or interface with major customers, or with processing
orders and billing. However, if certain critical third-party providers, such as
those providing product distribution, banking, contract manufacturing,
electricity, water or telephone service, experience difficulties resulting in
disruption of service to the company, a shutdown of the company's operations at
its Minnesota headquarters could occur for the duration of the disruption. The
company has developed a contingency plan to provide for continuity of operation
in the event of certain problem scenarios. Assuming no major disruption in
service from utility companies or other critical third-party providers, the
company believes that it will be able to manage its total Year 2000 transition
without any further material effect on the company's results of operations or
financial condition.

Cautionary Statement

This Form 10-Q contains forward-looking statements within the meaning of federal
securities laws. These statements include statements regarding intent, belief,
or current expectations of the company and its management. These forward-looking
statements are not guarantees of future performance and involve a number of
risks and uncertainties that may cause the company's actual results to differ
materially from the results discussed in these statements. Factors that might
cause such differences include, but are not limited to, dependence on sales of
Salagen Tablets, the ability to develop MGI 114 into an approved and
successfully marketed chemotherapy agent, dependence on a license acquisition
strategy, uncertainty of strategic alliances, and other risks and uncertainties
detailed from time to time in the company's filings with the Securities and
Exchange Commission, including Exhibit 99 to this Form 10-Q.

                                       17
Item 3.
-------

Quantitative and Qualitative Disclosures About Market Risk

The company does not have operations subject to risks of material foreign
currency fluctuations, nor does it use derivative financial instruments in its
operations or investment portfolio. The company places its investments in
instruments that meet high credit quality standards, as specified in the
company's investment policy guidelines. The company does not expect any material
loss with respect to its investment portfolio or exposure to market risks
associated with interest rates.

                                       18
MGI PHARMA, INC.

                           PART II - OTHER INFORMATION

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

None

Item 5.  Other Information
--------------------------

In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the company is hereby filing cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in forward looking statements of the
company made by, or on behalf of the company. See Exhibit 99 to this report.

Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

(a)      LISTING OF EXHIBITS:

         27   Financial Data Schedule
         99   Cautionary Statements

(b)      REPORTS ON FORM 8-K

         There were no reports on Form 8-K filed during the three months ended
         September 30, 1999.

                                       19
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        MGI PHARMA, INC.

Date: November 10, 1999                 By: /s/ William C. Brown
                                            ------------------------------------
                                            William C. Brown,
                                            Chief Financial Officer

                                       20
MGI PHARMA, INC.

                          Quarterly Report on Form 10-Q
                                     for the
                        Quarter Ended September 30, 1999

                                  EXHIBIT INDEX
                                  -------------

     Exhibit
      Number                      Description
      ------                      -----------

       27                     Financial Data Schedule

       99                     Cautionary Statements