Exhibit 10.6

COUGAR BIOTECHNOLOGY, INC.

TRANSACTION INCENTIVE BONUS PLAN

Cougar Biotechnology, Inc., a Delaware corporation (the “Company”), has adopted
this Cougar Biotechnology, Inc. Transaction Incentive Bonus Plan (the “Plan”),
dated as of May 21, 2009, and effective upon the consummation of a Corporate
Transaction (as defined herein), for the benefit of certain of its key
employees, on the terms and conditions hereinafter stated. The Plan, as set
forth herein, is intended to encourage key employees to remain employed by the
Company during the period in which the Company’s Board of Directors (the
“Board”) explores the possibility of accomplishing a Corporate Transaction (as
defined below), and to provide such key employees with additional incentives to
develop the most desirable alternatives for the Company and its shareholders,
and to receive a special bonus for their efforts in accomplishing a Corporate
Transaction.

1. Defined Terms. For purposes of the Plan, the following terms shall have the
meanings indicated below:

1.1 “Award Pool” shall mean an amount equal to $2,000,000.

1.2 “Board” means the Board of Directors of the Company.

1.3 “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

1.4 “Committee” means the Compensation Committee of the Board or such other
committee as may be appointed by the Board to administer the Plan.

1.5 “Company” means Cougar Biotechnology, Inc., a Delaware corporation.

1.6 “Corporate Transaction” means any of the following transactions to which the
Company is a party:

(a) a transaction or series of transactions whereby any “person” or related
“group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of
the Exchange Act) (other than the Company, any of its subsidiaries, an employee
benefit plan maintained by the Company or any of its subsidiaries or a “person”
that, prior to such transaction, directly or indirectly controls, is controlled
by, or is under common control with, the Company) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company possessing more than 50% of the total
combined voting power of the Company’s voting securities outstanding immediately
after such acquisition; or

(b) The consummation by the Company (whether directly involving the Company or
indirectly involving the Company through one or more intermediaries) of (x) a
merger, consolidation, reorganization, or business combination, (y) a sale or
other disposition of all or substantially all of the Company’s assets in any
single transaction or series of related transactions, or (z) the acquisition of
assets or stock of another entity, in each case other than a transaction:

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(i) Which results in the Company’s voting securities outstanding immediately
before the transaction continuing to represent (either by remaining outstanding
or by being converted into voting securities of the Company or the person that,
as a result of the transaction, controls, directly or indirectly, the Company or
owns, directly or indirectly, all or substantially all of the Company’s assets
or otherwise succeeds to the business of the Company) directly or indirectly, at
least a majority of the combined voting power of such successor entity’s
outstanding voting securities immediately after the transaction, and

(ii) After which no person or group beneficially owns voting securities
representing 50% or more of the combined voting power of the successor entity;
provided, that no person or group shall be treated for purposes of this
paragraph (b)(ii) as beneficially owning 50% or more of combined voting power of
the successor entity solely as a result of the voting power held in the Company
prior to the consummation of the transaction.

1.7 “Discretionary Bonus Component” means the amount of bonus payable pursuant
to Section 5.1(b) hereof.

1.8 “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time.

1.9 “Fixed Bonus Component” means the amount of bonus payable pursuant to
Section 5.1(a) hereof.

1.10 “Fixed Amount” shall mean the amount listed opposite the name of such
Participant, as set forth on Schedule A hereto.

1.11 “Participant” means an employee of the Company who has been selected by the
Committee to be eligible to receive a Transaction Bonus pursuant to this Plan,
as set forth on Schedule B hereto.

1.12 “Plan” means this Cougar Biotechnology, Inc. Transaction Incentive Bonus
Plan.

1.13 “Transaction Bonus” means a bonus payable to a Participant pursuant to the
terms of this Plan.

1.14 “Transaction Date” means the date on which a Corporate Transaction is
consummated.

2. Effectiveness of the Plan. This Plan shall become effective upon the
consummation of a Corporate Transaction and shall be of no force or effect prior
to a Corporate Transaction. The Plan shall remain in effect until the earlier of
(i) such times a the Company has discharged all of its obligations under the
Plan, or (ii) the date on which the Plan expires or terminates pursuant to
Section 7 hereof.

 

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3. Administration.

3.1 Authority of the Administrator. Subject to Section 7 hereof, the Plan shall
be interpreted, administered and operated by the Committee, which shall have
complete authority, subject to the express provisions of the Plan, to interpret
the Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, and to make all other determinations necessary or advisable for the
administration of the Plan. The Committee may delegate any of its duties
hereunder to a subcommittee, or to such person or persons from time to time as
it may designate. All decisions, interpretations and other actions of the
Committee shall be final, conclusive and binding on all parties who have an
interest in the Plan.

3.2 Administrator Liability. No member of the Committee will be liable for any
action or determination made by the Committee with respect to the Plan or any
Transaction Bonus paid under the Plan. All expenses and liabilities which
members of the Committee incur in connection with the administration of this
Plan shall be borne by the Company or its successor. No members of the Committee
shall be personally liable for any action, determination or interpretation made
in good faith with respect to this Plan or any Transaction Bonuses paid
hereunder, and all members of the Committee shall be fully indemnified and held
harmless by the Company or its successor in respect of any such action,
determination or interpretation.

4. Eligibility. The Participants shall be the individuals listed on Schedule B
hereto. Each of the Participants shall receive a Transaction Bonus in the manner
provided herein if the terms and conditions set forth below are satisfied.

5. Terms and Conditions of the Transaction Bonus.

5.1 Amount of Transaction Bonus. In the event that a Corporate Transaction
occurs, and (i) a Participant remains employed by the Company through the
Transaction Date, and (ii) the Company’s Chief Executive Officer, in his sole
discretion, determines that such Participant has achieved minimum satisfactory
performance in accomplishing such Corporate Transaction, such Participant shall
be eligible to receive a Transaction Bonus equal to the sum of:

(a) The Fixed Amount, if any, set forth opposite the Participant’s name on
Schedule A hereto (the “Fixed Bonus Component”); provided, that in no event
shall the aggregate Fixed Bonus Component payable to all Participants exceed
$1,650,000, and

(b) An amount, if any, determined by the Company’s Chief Executive Officer, in
his sole discretion, prior to the Transaction Date based on the Participant’s
performance in accomplishing the Corporate Transaction, not to exceed the lesser
of $100,000 or the Participant’s target bonus, as listed opposite the name of
such Participant on Schedule B attached hereto (the “Discretionary Bonus
Component”); provided, that in no event shall the aggregate Discretionary Bonus
Component payable to all Participants exceed $350,000, subject to adjustment for
any forfeiture pursuant to Section 5.3;

 

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further; provided, that in no event shall the aggregate amount of Transaction
Bonuses payable to all Participants under the Plan exceed the Award Pool.

5.2 Payment of Transaction Bonus. Any Transaction Bonus that becomes payable to
a Participant hereunder shall be paid in a single lump-sum as soon as
practicable following the Transaction Date, but in no event later than the last
day of the applicable two and one-half (2  1/2) month “short-term deferral
period” with respect to such Transaction Bonus, within the meaning of Treasury
Regulation Section 1.409A-1(b)(4) (the “Transaction Payment Date”).

5.3 Forfeiture and Reallocation. In the event that a Participant either
(i) ceases to be employed by the Company prior to the consummation of the
Corporate Transaction, or (ii) fails to achieve minimum satisfactory performance
in accomplishing such Corporate Transaction as determined by the Company’s Chief
Executive Officer, in his sole discretion, such Participant shall forfeit all of
the Participant’s right, title and interest in and to any Transaction Bonus
under the Plan, and the Company shall have no obligation with respect thereto.
The amount of any forfeiture of such Participant’s Fixed Bonus Component shall
be reallocated to the remaining Participants by the Company’s Chief Executive
Officer in the form of a Discretionary Bonus Component pursuant to
Section 5.1(b).

6. No Right to Continued Employment. Nothing in this Plan shall confer on any
Participant the right to continued employment with the Company, or affect in any
way the right of the Company to terminate the Participant’s employment at any
time or change the Participant’s responsibilities or, except as expressly
provided herein, affect in any way the rights of a Participant under any other
plan or agreement with the Company, including, without limitation, any
employment or severance agreement between the Company and the Participant.

7. Termination and Amendment. The Company shall not have the right to terminate
the Plan unless such termination is required by law or the Company has obtained
the prior written consent of the Participants. Notwithstanding the foregoing, if
a Corporate Transaction has not occurred by the first anniversary of the date on
which this Plan is adopted, the Plan shall thereupon automatically terminate.
The Company shall have the right to amend this Plan at any time by resolution of
the Board; provided, however, that no amendment to the Plan shall be made which
adversely affects the rights of any Participant under the Plan without such
Participant’s written consent.

8. Successors; Binding Agreement. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume this Plan and all obligations of the Company hereunder in the
same manner and to the same extent that the Company would be so obligated if no
such succession had taken place. This Plan shall inure to the benefit of and
shall be binding upon the Company, its successors and assigns, but without the
prior written consent of the Participants this Plan may not be assigned other
than in connection with the merger or sale of substantially all of the business
and/or assets of the Company or similar transaction in which the successor or
assignee assumes (whether by operation of law or express assumption) all
obligations of the Company hereunder.

 

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9. Withholding. The Company shall have the authority and the right to deduct and
withhold an amount sufficient to satisfy federal, state, local and foreign taxes
required by law to be withheld with respect to any Transaction Bonus payable
under this Plan.

10. Notices. All communications relating to matters arising under this Plan
shall be in writing and shall be deemed to have been duly given when hand
delivered, faxed, emailed or mailed by reputable overnight carrier or United
States certified mail, return receipt requested, addressed, if to a Participant,
to the address on file with the Company and, if to the Company, to the address
set forth below, or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon actual receipt:

To the Company:

Cougar Biotechnology, Inc.

10990 Wilshire Blvd, Suite 1200

Los Angeles, CA 90024

Attention: Compensation Committee

11. Miscellaneous.

11.1 Entire Plan. This Plan contains the entire understanding of the parties
relating to the subject matter hereof.

11.2 Code Section 280G.

(a) A Participant shall bear all expense of, and be solely responsible for, all
federal, state, local or foreign taxes due with respect to any payment received
hereunder, including, without limitation, any excise tax imposed by Section 4999
of the Code; provided, however, that any Transaction Bonus, when taken together
with any other payment or benefit received or to be received by the Participant
in connection with a Corporate Transaction or the termination of the
Participant’s employment (whether payable pursuant to any other plan,
arrangements or agreement with the Company or any affiliate) (all such payments
and benefits, being hereinafter called “Total Payments”) shall be reduced to the
extent necessary so that no portion thereof shall be subject to the excise tax
imposed by Section 4999 of the Code but only if, by reason of such reduction,
the net after-tax benefit received by the Participant shall exceed the net
after-tax benefit received by the Participant if no such reduction was made. For
purposes of this Section 11.2, “net after-tax benefit” shall mean (i) the total
of all payments and the value of all benefits which the Participant receives or
is then entitled to receive from the Company that would constitute “parachute
payments” within the meaning of Section 280G of the Code, less (ii) the amount
of all federal, state and local income taxes payable with respect to the
foregoing calculated at the maximum marginal income tax rate for each year in
which the foregoing shall

 

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be paid to the Participant (based on the rate in effect for such year as set
forth in the Code as in effect at the time of the first payment of the
foregoing) and the amount of applicable employment taxes, less (iii) the amount
of excise taxes imposed with respect to the payments and benefits described in
(i) above by Section 4999 of the Code.

(b) The foregoing determination shall be made by tax counsel appointed by the
Company (the “Tax Counsel”). The Tax Counsel shall submit its determination and
detailed supporting calculations to both the Participant and the Company within
15 days after receipt of a notice from either the Company or the Participant
that the Participant may receive payments which may be “parachute payments.” If
the Tax Counsel determines that such reduction is required by this Section 11.2,
the Transaction Bonus shall be reduced to the extent necessary so that no
portion thereof shall be subject to the excise tax imposed by Section 4999 of
the Code, and the Company shall pay such reduced amount to the Participant. If
the Tax Counsel determines that no reduction is necessary under this
Section 11.2, it will, at the same time as it makes such determination, furnish
the Participant and the Company an opinion that the Participant shall not be
liable for any excise tax under Section 4999 of the Code. The Participant and
the Company shall each provide the Tax Counsel access to and copies of any
books, records, and documents in the possession of the Participant or the
Company, as the case may be, reasonably requested by the Tax Counsel, and
otherwise cooperate with the Tax Counsel in connection with the preparation and
issuance of the determinations and calculations contemplated by this
Section 11.2. The fees and expenses of the Tax Counsel for its services in
connection with the determinations and calculations contemplated by this
Section 11.2 shall be borne by the Company.

11.3 Benefits not Assignable. Except as otherwise provided herein or by law, no
right or interest of any Participant under the Plan shall be assignable or
transferable, in whole or in part, either directly or by operation of law or
otherwise, including without limitation by execution, levy, garnishment,
attachment, pledge or in any manner; no attempted assignment or transfer thereof
shall be effective; and no right or interest of any Participant under the Plan
shall be liable for, or subject to, any obligation or liability of such
Participant. When a payment is due under this Plan to a Participant who is
unable to care for his or her affairs, payment may be made directly to his or
her legal guardian or personal representative.

11.4 Applicable Law. This Plan shall be construed and interpreted in accordance
with the laws of the State of California without reference to the conflict of
laws provisions thereof, to the extent not preempted by federal law, which shall
otherwise control.

11.5 Validity. The invalidity or unenforceability of any provision of this Plan
shall not affect the validity or enforceability of any other provision of this
Plan, which shall remain in full force and effect.

11.6 Captions. The captions contained in this Plan are for convenience only and
shall have no bearing on the meaning, construction or interpretation of the
Plan’s provisions.

 

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11.7 Expenses. The expenses of administering the Plan shall be borne by the
Company.

11.8 Unfunded Plan. The Plan is intended to be an “unfunded” plan for the
payment of any Transaction Bonuses. With respect to any Transaction Bonus
payments not yet made to a Participant, nothing contained in the Plan shall give
the Participant any rights that are greater than those of a general unsecured
creditor of the Company.

11.9 Section 409A of the Code. To the extent applicable, this Plan shall be
interpreted and applied consistent and in accordance with Section 409A of the
Code and Department of Treasury regulations and other interpretive guidance
issued thereunder. Notwithstanding any provision of this Plan to the contrary,
to the extent that the Committee determines that any payments or benefits under
this Plan may not be either compliant with or exempt from Section 409A of the
Code and related Department of Treasury guidance, the Committee may in its sole
discretion adopt such amendments to this Plan or take such other actions that
the Committee determines are necessary or appropriate to (i) exempt the
compensation and benefits payable under this Plan from Section 409A of the Code
and/or preserve the intended tax treatment of such compensation and benefits, or
(ii) comply with the requirements of Section 409A of the Code and related
Department of Treasury guidance; provided, however, that this Section 11.9 shall
not create any obligation on the part of the Committee to adopt any such
amendment or take any other action.

 

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