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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 March 31, 2011

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: 001-32836





MEDIVATION, INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 13-3863260                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer identification No.)

201 Spear Street, 3rd floor

San Francisco, California 94105

(Address of principal executive offices) (Zip Code)

(415) 543-3470

(Registrants telephone number, 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 by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  | x
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ̈    No  x

As
of May 3, 2011, 34,895,502 shares of the registrants Common Stock, $0.01 par value per share, were issued and outstanding.









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|                               |  |                                                                                        |    |  |    | 
|------------------------------ |  | -------------------------------------------------------------------------------------- | -- |  | -- | 
|PART I  FINANCIAL INFORMATION |  |                                                                                        | 2  | 
|                               |  |                                                                                       
|ITEM 1.                        |  | FINANCIAL STATEMENTS (UNAUDITED).                                                      |    |  | 2  | 
|                               |  |                                                                                       
|                               |  | CONDENSED CONSOLIDATED BALANCE SHEETS                                                  |    |  | 2  | 
|                               |  |                                                                                       
|                               |  | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                        |    |  | 3  | 
|                               |  |                                                                                       
|                               |  | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                        |    |  | 4  | 
|                               |  |                                                                                       
|                               |  | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                   |    |  | 5  | 
|                               |  |                                                                                       
|ITEM 2.                        |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS. |    |  | 13 | 
|                               |  |                                                                                       
|ITEM 3.                        |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                            |    |  | 21 | 
|                               |  |                                                                                       
|ITEM 4.                        |  | CONTROLS AND PROCEDURES.                                                               |    |  | 22 | 
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                        | 22 | 
|                               |  |                                                                                       
|ITEM 1.                        |  | LEGAL PROCEEDINGS.                                                                     |    |  | 22 | 
|                               |  |                                                                                       
|ITEM 1A.                       |  | RISK FACTORS.                                                                          |    |  | 22 | 
|                               |  |                                                                                       
|ITEM 2.                        |  | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.                           |    |  | 35 | 
|                               |  |                                                                                       
|ITEM 3.                        |  | DEFAULTS UPON SENIOR SECURITIES.                                                       |    |  | 35 | 
|                               |  |                                                                                       
|ITEM 4.                        |  | (REMOVED AND RESERVED).                                                                |    |  | 35 | 
|                               |  |                                                                                       
|ITEM 5.                        |  | OTHER INFORMATION.                                                                     |    |  | 35 | 
|                               |  |                                                                                       
|ITEM 6.                        |  | EXHIBITS.                                                                              |    |  | 36 | 



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

MEDIVATION, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)



|                                                                                                                                    |  |               |          |   |                  |   |          |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | -------- | - | ---------------- | - | -------- | -
|                                                                                                                                    |  | March 31,2011 |          |   | December 31,2010 |  
|ASSETS                                                                                                                              |  |               |          |   |                  |   |          |  
|Current assets:                                                                                                                     |  |               |          |   |                  |   |          |  
|Cash and cash equivalents                                                                                                           |  | $             | 94,885   |   |                  | $ | 107,717  |  
|Short-term investments                                                                                                              |  |               | 100,074  |   |                  |   | 100,039  |  
|Receivable from collaboration partners (Note 2)                                                                                     |  |               | 14,747   |   |                  |   | 21,188   |  
|Prepaid expenses and other current assets                                                                                           |  |               | 7,979    |   |                  |   | 8,067    |  
|                                                                                                                                    |  |               |          |   |                  |   |          |  
|Total current assets                                                                                                                |  |               | 217,685  |   |                  |   | 237,011  |  
|Property and equipment, net                                                                                                         |  |               | 754      |   |                  |   | 862      |  
|Restricted cash                                                                                                                     |  |               | 843      |   |                  |   | 843      |  
|Other non-current assets                                                                                                            |  |               | 1,785    |   |                  |   | 887      |  
|                                                                                                                                    |  |               |          |   |                  |   |          |  
|Total assets                                                                                                                        |  | $             | 221,067  |   |                  | $ | 239,603  |  
|                                                                                                                                    |  |               |          |   |                  |   |          |  
|                                                                                                                                    |  |              
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                |  |               |          |   |                  |   |          |  
|Current liabilities:                                                                                                                |  |               |          |   |                  |   |          |  
|Accounts payable                                                                                                                    |  | $             | 4,879    |   |                  | $ | 3,229    |  
|Accrued expenses                                                                                                                    |  |               | 21,704   |   |                  |   | 21,399   |  
|Deferred revenue                                                                                                                    |  |               | 59,216   |   |                  |   | 59,153   |  
|Other current liabilities                                                                                                           |  |               | 453      |   |                  |   | 5,193    |  
|                                                                                                                                    |  |               |          |   |                  |   |          |  
|Total current liabilities                                                                                                           |  |               | 86,252   |   |                  |   | 88,974   |  
|Deferred revenue, net of current                                                                                                    |  |               | 126,735  |   |                  |   | 141,507  |  
|Other non-current liabilities                                                                                                       |  |               | 1,412    |   |                  |   | 1,438    |  
|                                                                                                                                    |  |               |          |   |                  |   |          |  
|Total liabilities                                                                                                                   |  |               | 214,399  |   |                  |   | 231,919  |  
|                                                                                                                                    |  |               |          |   |                  |   |          |  
|                                                                                                                                    |  |              
|Commitments and contingencies (Note 11)                                                                                             |  |               |          |   |                  |   |          |  
|                                                                                                                                    |  |              
|Stockholders equity:                                                                                                               |  |               |          |   |                  |   |          |  
|Preferred stock, $0.01 par value per share; 1,000,000 shares authorized; no shares issued and outstanding                           |  |               |         |   |                  |   |         |  
|Common stock, $0.01 par value per share;                                                                                            |  |               |          |   |                  |   |          |  
|50,000,000 shares authorized; issued and outstanding 34,777,729 shares at March 31, 2011 and 34,573,829 shares at December 31,
2010 |  |               | 348      |   |                  |   | 346      |  
|Additional paid-in capital                                                                                                          |  |               | 226,220  |   |                  |   | 218,786  |  
|Accumulated other comprehensive gain                                                                                                |  |               | 2        |   |                  |   | 2        |  
|Accumulated deficit                                                                                                                 |  |               | (219,902 | ) |                  |   | (211,450 | )
|                                                                                                                                    |  |               |          |   |                  |   |          |  
|Total stockholders equity                                                                                                          |  |               | 6,668    |   |                  |   | 7,684    |  
|                                                                                                                                    |  |               |          |   |                  |   |          |  
|Total liabilities and stockholders equity                                                                                          |  | $             | 221,067  |   |                  | $ | 239,603  |  
|                                                                                                                                    |  |               |          |   |                  |   |          |  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.



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MEDIVATION, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)



|                                                                                               |  |                    |        |   |      |   |         |  
|---------------------------------------------------------------------------------------------- |  | ------------------ | ------ | - | ---- | - | ------- | -
|                                                                                               |  | Three months ended |       
|                                                                                               |  | March 31,          |       
|                                                                                               |  | 2011               |        |   | 2010 |  
|Collaboration revenue                                                                          |  | $                  | 14,709 |   |      | $ | 15,734  |  
|                                                                                               |  |                    |        |   |      |   |         |  
|Operating expenses:                                                                            |  |                    |        |   |      |   |         |  
|Research and development                                                                       |  |                    | 17,618 |   |      |   | 25,582  |  
|Selling, general and administrative                                                            |  |                    | 6,156  |   |      |   | 7,839   |  
|                                                                                               |  |                    |        |   |      |   |         |  
|Total operating expenses                                                                       |  |                    | 23,774 |   |      |   | 33,421  |  
|                                                                                               |  |                    |        |   |      |   |         |  
|Loss from operations                                                                           |  |                    | (9,065 | ) |      |   | (17,687 | )
|Other income (expense):                                                                        |  |                    |        |   |      |   |         |  
|Interest income                                                                                |  |                    | 41     |   |      |   | 113     |  
|Other income (expense), net                                                                    |  |                    | (333   | ) |      |   | 109     |  
|                                                                                               |  |                    |        |   |      |   |         |  
|Total other income                                                                             |  |                    | (292   | ) |      |   | 222     |  
|                                                                                               |  |                    |        |   |      |   |         |  
|Net loss before income tax                                                                     |  |                    | (9,357 | ) |      |   | (17,465 | )
|Income tax expense (benefit)                                                                   |  |                    | (905   | ) |      |   |        |  
|                                                                                               |  |                    |        |   |      |   |         |  
|Net loss                                                                                       |  | $                  | (8,452 | ) |      | $ | (17,465 | )
|                                                                                               |  |                    |        |   |      |   |         |  
|Basic and diluted net loss per common share                                                    |  | $                  | (0.24  | ) |      | $ | (0.51   | )
|                                                                                               |  |                    |        |   |      |   |         |  
|Weighted average common shares used in the calculation of basic and diluted net loss per share |  |                    | 34,663 |   |      |   | 33,953  |  
|                                                                                               |  |                    |        |   |      |   |         |  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.



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MEDIVATION, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



|                                                                               |  |                             |         |   |      |   |         |  
|------------------------------------------------------------------------------ |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                               |  | Three months endedMarch 31, |        
|                                                                               |  | 2011                        |         |   | 2010 |  
|Cash flows from operating activities:                                          |  |                             |         |   |      |   |         |  
|Net loss                                                                       |  | $                           | (8,452  | ) |      | $ | (17,465 | )
|Adjustments to reconcile net loss to net cash flows from operating activities: |  |                             |         |   |      |   |         |  
|Depreciation and amortization                                                  |  |                             | 109     |   |      |   | 107     |  
|Accretion of discount on securities                                            |  |                             | (35     | ) |      |   | (104    | )
|Stock-based compensation                                                       |  |                             | 3,614   |   |      |   | 3,503   |  
|Changes in operating assets and liabilities:                                   |  |                             |         |   |      |   |         |  
|Receivable from collaboration partners                                         |  |                             | 6,441   |   |      |   | (4,458  | )
|Prepaid expenses and other current assets                                      |  |                             | 88      |   |      |   | 602     |  
|Other non-current assets                                                       |  |                             | (899    | ) |      |   | (447    | )
|Accounts payable                                                               |  |                             | 1,650   |   |      |   | 2,539   |  
|Accrued expenses                                                               |  |                             | 305     |   |      |   | 4,705   |  
|Other current liabilities                                                      |  |                             | (4,740  | ) |      |   | (654    | )
|Deferred revenue                                                               |  |                             | (14,709 | ) |      |   | (15,734 | )
|Other non-current liabilities                                                  |  |                             | (26     | ) |      |   | (59     | )
|                                                                               |  |                             |         |   |      |   |         |  
|Net cash provided by (used in) operating activities                            |  |                             | (16,654 | ) |      |   | (27,465 | )
|                                                                               |  |                             |         |   |      |   |         |  
|Cash flows from investing activities:                                          |  |                             |         |   |      |   |         |  
|Maturities of short-term investments                                           |  |                             |        |   |      |   | 86,000  |  
|Purchase of property and equipment                                             |  |                             |        |   |      |   | (88     | )
|                                                                               |  |                             |         |   |      |   |         |  
|Net cash provided by investing activities                                      |  |                             |        |   |      |   | 85,912  |  
|                                                                               |  |                             |         |   |      |   |         |  
|Cash flows from financing activities:                                          |  |                             |         |   |      |   |         |  
|Stock option and warrant exercises                                             |  |                             | 863     |   |      |   | 3,056   |  
|Net proceeds from shareholder securities law settlement                        |  |                             | 2,959   |   |      |   |        |  
|                                                                               |  |                             |         |   |      |   |         |  
|Net cash provided by financing activities                                      |  |                             | 3,822   |   |      |   | 3,056   |  
|                                                                               |  |                             |         |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                           |  |                             | (12,832 | ) |      |   | 61,503  |  
|Cash and cash equivalents at beginning of period                               |  |                             | 107,717 |   |      |   | 57,463  |  
|                                                                               |  |                             |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                     |  | $                           | 94,885  |   |      | $ | 118,966 |  
|                                                                               |  |                             |         |   |      |   |         |  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.



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MEDIVATION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

(unaudited)

NOTE 1  THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Medivation, Inc. is a biopharmaceutical company focused
on the rapid development of novel small molecule drugs to treat serious diseases for which there are limited treatment options. The Companys product candidates in clinical development are MDV3100, which is in Phase 3 development for the
treatment of advanced prostate cancer, and dimebon (latrepirdine), which is in Phase 3 development for the treatment of mild-to-moderate Alzheimers disease. The Companys MDV3100 program is partnered with Astellas Pharma Inc., or
Astellas, and its dimebon program is partnered with Pfizer Inc., or Pfizer.

In October 2009, Medivation entered into a
collaboration agreement with Astellas. Under the terms of the agreement, the Company and Astellas agreed to develop and commercialize MDV3100 for the treatment of prostate cancer. The Company and Astellas share equally the costs and expenses of
developing and commercializing MDV3100 for the United States market, except that development costs for studies useful in both the United States market and either Europe or Japan are shared two-thirds by Astellas and one-third by the Company.
Medivation and Astellas will share equally profits (or losses) resulting from commercialization of MDV3100 in the United States. Outside the United States, Astellas will bear all development and commercialization costs and will pay the Company
tiered double-digit royalties on aggregate net sales of MDV3100.

In September 2008, the Company announced a collaboration
agreement with Pfizer, which became effective in October 2008. Under the terms of the agreement, the Company and Pfizer agreed to develop and commercialize dimebon for the treatment of Alzheimers disease and Huntington disease. The Company and
Pfizer share the costs and expenses of developing and commercializing dimebon for the United States market on a 60% Pfizer/40% Medivation basis, and will share profits (or losses) resulting from commercialization of dimebon in the United States in
the same proportions. Outside the United States, Pfizer will bear all development and commercialization costs and will pay the Company tiered royalties on aggregate net sales of dimebon.

The first two Phase 3 clinical studies of dimebon that the Company has completed under its collaboration agreement with Pfizer were
both negative. In March 2010 the Company reported negative top-line results from its 598-patient Phase 3 CONNECTION trial of dimebon in patients with mild-to-moderate Alzheimers disease, and in April 2011 the Company reported
negative top-line results from its 403-patient Phase 3 HORIZON trial of dimebon in patients with Huntington disease. Dimebon failed to show a statistically significant benefit over placebo on any of the primary or secondary endpoints in both
the CONNECTION and HORIZON trials, and thus did not meet any of either studys efficacy endpoints. Due to the negative results in the CONNECTION trial, Pfizer has the right to terminate the collaboration agreement with the Company at any time.
Due to the negative results in the HORIZON trial, the Company and Pfizer discontinued development of dimebon for Huntington disease in April 2011.

The Company has funded its operations primarily through private and public offerings of its common stock, and from the up-front, development milestone and cost-sharing payments from its collaboration
agreements with Astellas and Pfizer. As of March 31, 2011, the Company had an accumulated deficit of $219.9 million and it expects to incur substantial additional losses for the foreseeable future as it continues to finance clinical and
preclinical studies of its existing and potential future product candidates and its corporate overhead costs.

Basis of
Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the U.S. for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by
accounting principles generally accepted in the U.S. for complete financial statements. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements. In the opinion of
management, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of results for the periods presented, have been included. The results of operations of any interim period are not necessarily indicative of the
results of operations for the full year or any other interim period.



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The preparation of unaudited condensed consolidated financial statements requires management
to make estimates and assumptions that affect the recorded amounts reported therein. A change in facts or circumstances surrounding the estimate could result in a change to estimates and impact future operating results.

The balance sheet at December 31, 2010 has been derived from the audited financial statements at that date.

The unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of
the interim unaudited condensed consolidated financial statements have read or have access to the audited consolidated financial statements for the preceding fiscal year. Accordingly, these unaudited condensed consolidated financial statements
should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2010 included in the Companys Annual Report on Form 10-K filed with the Securities and Exchange
Commission, or the Commission, on March 16, 2011.

The unaudited condensed consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, Medivation Neurology, Inc., Medivation Prostate Therapeutics, Inc. and Medivation Technologies, Inc. and reflect the elimination of intercompany accounts and transactions.

Reference is made to Summary of Significant Accounting Policies included in the Companys Annual Report on Form 10-K for
the year ended December 31, 2010. As of the date of the filing of this Quarterly Report, the Company did not identify any significant changes to the critical accounting policies discussed in its Annual Report for the year ended
December 31, 2010.

Recently Issued Accounting Pronouncements

In March 2010, the Financial Accounting Standards Board (FASB) ratified Emerging Issues Task Force (EITF) Issue No. 08-9,
Milestone Method of Revenue Recognition (Issue 08-9). The Accounting Standards Update resulting from Issue 08-9 amends Accounting Standards Codification (ASC) 605-28. The Task Force concluded that the milestone method is a valid
application of the proportional performance model when applied to research or development arrangements. Accordingly, the consensus states that an entity can make an accounting policy election to recognize a payment that is contingent upon the
achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. A milestone is defined in the consensus as an event: (1) that can only be achieved based in whole or in part on either (a) the
entitys performance or (b) on the occurrence of a specific outcome resulting from the entitys performance; (2) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be
achieved; and (3) that would result in additional payments being due to the entity. Issue 08-9 is effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2010, and may be applied either
prospectively to milestones achieved after the adoption date, or; retrospectively for all periods presented. The Company adopted Issue 08-9 prospectively on January 1, 2011, which did not have any impact on its consolidated financial
statements.

In October 2009, the FASB issued Accounting Standards Update (ASU) No. 2009-13, Multiple-Deliverable
Revenue Arrangements (ASU 2009-13). This update removes the criterion that entities must use objective and reliable evidence of fair value in separately accounting for deliverables and provides entities with a hierarchy of evidence that must
be considered when allocating arrangement consideration. The new guidance also requires entities to allocate arrangement consideration to the separate units of accounting based on the deliverables relative selling price. The provisions will be
effective for revenue arrangements entered into or materially modified in the Companys fiscal year 2011. The Company adopted this statement prospectively on January 1, 2011, which did not have any impact on its consolidated financial
statements.

NOTE 2  COLLABORATION AGREEMENTS

(a) The Astellas Collaboration Agreement

In October 2009, the
Company announced a collaboration agreement with Astellas. Under the Astellas Collaboration Agreement, the Company and Astellas agreed to collaborate on the development of MDV3100 for prostate cancer for the United States market, including
associated regulatory filings with the U.S. Food and Drug Administration, or the FDA. In addition, if approved by the FDA, following such approval and the launch of MDV3100 in the United States, the Company, at its option, and Astellas will
co-promote MDV3100 in the United States. Astellas is responsible for development of, seeking regulatory approval for and commercialization of MDV3100 outside the United States. Astellas will be responsible for commercial manufacture of MDV3100 on a
global basis. Both Medivation and Astellas have agreed not to commercialize certain other products having a similar mechanism of action as MDV3100 for the treatment of specified indications for a specified time period, subject to certain exceptions.

The agreement establishes several joint committees consisting of an equal number of representatives from both parties that
operate by consensus to oversee the collaboration. In the event that a joint committee is unable to reach consensus on a particular issue, then, depending on the issue, a dispute may be decided at the joint committee level by the party with the
final decision on the issue or escalated to senior management of the parties. If a dispute is escalated to senior management and no consensus is reached,



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then the dispute may be decided by the party to whom the contract grants final decision on such issue. Other issues can only be decided by consensus of the parties, and unless and until the
parties representatives reach agreement on such issue, no decision on such issue will be made, and the status quo will be maintained.

Under the Astellas Collaboration Agreement, Astellas paid the Company a non-refundable, up-front cash payment of $110.0 million in the fourth quarter of 2009. The Company is also eligible to receive up to
$335.0 million in development milestone payments, plus up to an additional $320.0 million in commercial milestone payments. The Company received a $10.0 million development milestone payment in the fourth quarter of 2010. The Company is required to
share 10% of the up-front and development milestone payments received under the Astellas Collaboration Agreement with The Regents of the University of California, or UCLA, pursuant to the terms of its MDV3100 license agreement. The Company paid 10%
of the up-front and development milestone payments, or $11.0 million and $1.0 million, respectively, to UCLA in the fourth quarter of 2009 and the first quarter of 2011, respectively. The Company and Astellas will share equally the costs and
expenses of developing and commercializing MDV3100 for the United States market, except that development costs for studies useful in both the United States market and either Europe or Japan are shared two-thirds by Astellas and one-third by the
Company. The Company and Astellas will share profits (or losses) resulting from the commercialization of MDV3100 in the United States equally. Outside the United States, Astellas will bear all development and commercialization costs and will pay the
Company tiered, double-digit royalties on the aggregate net sales of MDV3100.

The Company and Astellas each are permitted to
terminate the Astellas Collaboration Agreement for an uncured material breach by, or the insolvency of, the other party. Astellas has a right to terminate the Astellas Collaboration Agreement unilaterally by advance written notice to the Company,
but except in certain specific circumstances, generally cannot exercise that termination right until the first anniversary of MDV3100s first commercial sale. Following any termination of the Astellas Collaboration Agreement in its entirety,
all rights to develop and commercialize MDV3100 will revert to the Company, and Astellas will grant a license to the Company to enable the Company to continue such development and commercialization. In addition, except in the case of a termination
by Astellas for an uncured material breach, Astellas will supply MDV3100 to the Company during a specified transition period.

(b) The Pfizer Collaboration Agreement

In September 2008, the Company announced a collaboration agreement with Pfizer. Under this agreement, the Company and Pfizer agreed to collaborate on the development of dimebon for Alzheimers
disease and Huntington disease for the United States market, including associated regulatory filings with the FDA. The Company and Pfizer discontinued development of dimebon for Huntington disease in April 2011 following the negative results in
the HORIZON trial. In addition, if approved by the FDA, following such approval and the launch of dimebon in the United States, the Company, at its option, and Pfizer will co-promote dimebon to specialty physicians in the United States, and Pfizer
will promote dimebon to primary care physicians in the United States. Pfizer will be responsible for development and seeking regulatory approval for, and commercialization of, dimebon outside the United States. Pfizer is responsible for all
manufacture of product for both clinical and commercial purposes. Both the Company and Pfizer have agreed not to commercialize for the treatment of specified indications any other products directed to the same primary molecular target as dimebon for
a specified time period, subject to certain exceptions.

The agreement establishes several joint committees consisting of an
equal number of representatives from both parties that operate by consensus to oversee the collaboration. In the event that a joint committee is unable to reach consensus on a particular issue, then, depending on the issue, a dispute may be decided
at the joint committee level by the party with the final decision on the issue or escalated to senior management of the parties. If a dispute is escalated to senior management and no consensus is reached, then the dispute may be decided by the party
to whom the contract grants final decision on such issue. Other issues can only be decided by consensus of the parties, and unless and until the parties representatives reach agreement on such issue, no decision on such issue will be made, and
the status quo will be maintained.

Under the Pfizer Collaboration Agreement, Pfizer paid the Company an up-front cash payment
of $225.0 million in the fourth quarter of 2008. The Company is also eligible to receive payments of up to $500.0 million upon the attainment of development and regulatory milestones plus additional milestone payments upon the achievement of certain
net sales levels for the product. The Company and Pfizer will share the costs and expenses of developing and commercializing dimebon for the United States market on a 60%/40% basis, with Pfizer assuming the larger share, and the Company and Pfizer
will share profits (or losses) resulting from the commercialization of dimebon in the United States in such proportions. Outside the United States, Pfizer will bear all development and commercialization costs and will pay the Company tiered
royalties on the aggregate net sales of dimebon.

The Company is permitted to terminate the Pfizer Collaboration Agreement for
an uncured material breach by Pfizer. Pfizer has the right to terminate the Pfizer Collaboration Agreement unilaterally at any time. In the event of an uncured material breach of the Pfizer Collaboration Agreement by the Company, Pfizer may elect
either to terminate the Pfizer Collaboration Agreement or to keep the Pfizer Collaboration Agreement in place, but terminate the Companys right to participate in development, commercialization



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(other than co-promoting dimebon) and other activities for dimebon, including the joint committees and decision making for dimebon. However, such termination would not affect the Companys
financial return or, unless the Company commits an uncured material breach of its co-promotion obligations, the Companys co-promotion rights. Following any termination of the Pfizer Collaboration Agreement, all rights to develop and
commercialize dimebon will revert to the Company, and Pfizer will grant a license to the Company to enable the Company to continue such development and commercialization, remain responsible for its ongoing financial and other obligations under the
Collaboration Agreement for a transition period of six months following termination, and is obligated to supply product to the Company for a reasonable period of time, not to exceed eighteen months following termination, on terms to be negotiated
between the parties in good faith.

(c) Revenue Recognition

The Company records up-front payments under its collaboration agreements as deferred revenue and amortizes them on a straight-line basis
over the expected performance period of its deliverables under the applicable collaboration agreement. The Company presently estimates that its performance periods under the Astellas Collaboration Agreement and the Pfizer Collaboration Agreement
will end in the fourth quarter of 2014 and the fourth quarter of 2013, respectively. Milestone payments earned by the Company under its collaboration agreements are recognized as revenue in their entirety in the period in which the underlying
milestone event is achieved, except that any milestone payments triggered by events that occur during the performance period and not qualifying as substantive milestones are recorded as deferred revenue and amortized on a straight-line basis over
the performance period. Any profit sharing and royalty payments earned by the Company under its collaboration agreements will be recognized as revenue in the period in which the underlying product sales occur.

To date the Company has recorded $120.0 million and $225.0 million of deferred revenue with respect to the Astellas Collaboration
Agreement and the Pfizer Collaboration Agreement, respectively, consisting of up-front and development milestone payments under those agreements. At March 31, 2011, deferred revenue balances with respect to the Astellas Collaboration Agreement
and the Pfizer Collaboration Agreement were $86.9 million and $99.0 million, respectively.

Revenue recognized with respect to
the Astellas Collaboration Agreement and the Pfizer Collaboration Agreement for the three months ended March 31, 2011 and 2010 is as follows:



|                                                  |  |                    |        |  |      |   |        | 
|------------------------------------------------- |  | ------------------ | ------ |  | ---- | - | ------ | 
|                                                  |  | Three months ended |       
|                                                  |  | March 31,          |       
|                                                  |  | 2011               |        |  | 2010 |  
|                                                  |  | (in thousands)     |       
|Collaboration revenue from Astellas collaboration |  | $                  | 5,705  |  |      | $ | 5,230  | 
|Collaboration revenue from Pfizer collaboration   |  |                    | 9,004  |  |      |   | 10,504 | 
|                                                  |  |                    |        |  |      |   |        | 
|Total collaboration revenue                       |  | $                  | 14,709 |  |      | $ | 15,734 | 
|                                                  |  |                    |        |  |      |   |        | 

(d) Cost-Sharing Payments

Under both the Astellas Collaboration Agreement and the Pfizer Collaboration Agreement, the parties make quarterly cost-sharing payments
to one another in amounts necessary to ensure that each party bears its contractual share of the overall development costs and commercialization costs incurred. The Company presents these cost-sharing payments, whether to or from the Company, in the
applicable expense line in the statement of operations. Cost-sharing payments by the Company to its collaborative partners are thus presented as increases in expense in the Companys statement of operations, while cost-sharing payments by its
collaborative partners to the Company are presented as reductions in expense.



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For the three months ended March 31, 2011 and 2010, the Company recorded development
cost-sharing payments from its corporate partners, and corresponding reductions in research and development expense, as follows:



|                                                |  |                    |        |  |      |   |        | 
|----------------------------------------------- |  | ------------------ | ------ |  | ---- | - | ------ | 
|                                                |  | Three months ended |       
|                                                |  | March 31,          |       
|                                                |  | 2011               |        |  | 2010 |  
|                                                |  | (in thousands)     |       
|Development cost-sharing payments from Astellas |  | $                  | 9,887  |  |      | $ | 6,027  | 
|Development cost-sharing payments from Pfizer   |  |                    | 4,915  |  |      |   | 5,038  | 
|                                                |  |                    |        |  |      |   |        | 
|Total                                           |  | $                  | 14,802 |  |      | $ | 11,065 | 
|                                                |  |                    |        |  |      |   |        | 

For the three months ended March 31, 2011 and 2010, the Company recorded commercialization cost-sharing
payments from (to) its corporate partners, and corresponding reductions (increases) in selling, general and administrative expense, as follows:



|                                                           |  |                             |     |   |      |   |      |  
|---------------------------------------------------------- |  | --------------------------- | --- | - | ---- | - | ---- | -
|                                                           |  | Three months endedMarch 31, |    
|                                                           |  | 2011                        |     |   | 2010 |  
|                                                           |  | (in thousands)              |    
|Commercialization cost-sharing payments from (to) Astellas |  | $                           | (68 | ) |      | $ | 135  |  
|Commercialization cost-sharing payments from (to) Pfizer   |  |                             | 13  |   |      |   | (252 | )
|                                                           |  |                             |     |   |      |   |      |  
|Total                                                      |  | $                           | (55 | ) |      | $ | (117 | )
|                                                           |  |                             |     |   |      |   |      |  

NOTE 3  BASIC AND DILUTED NET LOSS PER SHARE

Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the
period. Diluted net loss per share is computed similarly to basic net loss per share, except that the denominator is increased to include all dilutive potential common shares, including outstanding options and warrants. Potentially dilutive common
shares have been excluded from the diluted loss per common share computations in all periods presented because such securities have an anti-dilutive effect on loss per common share due to the Companys net loss. There are no reconciling items
used to calculate the weighted average number of total common shares outstanding for basic and diluted net loss per share data. At March 31, 2011 and 2010 these potentially dilutive securities were as follows:



|                                   |  |                |       |  |      |  |       | 
|---------------------------------- |  | -------------- | ----- |  | ---- |  | ----- | 
|                                   |  | March 31,      |      
|                                   |  | 2011           |       |  | 2010 | 
|                                   |  | (in thousands) |      
|Outstanding options                |  |                | 4,886 |  |      |  | 5,087 | 
|Outstanding warrants               |  |                | 23    |  |      |  | 100   | 
|Outstanding restricted stock units |  |                | 171   |  |      |  | 8     | 
|                                   |  |                |       |  |      |  |       | 
|Total                              |  |                | 5,080 |  |      |  | 5,195 | 
|                                   |  |                |       |  |      |  |       | 

NOTE 4  COMPREHENSIVE LOSS

Comprehensive loss is comprised of net loss adjusted for changes in market values of available-for-sale securities. Below is a reconciliation of net loss to comprehensive loss for the periods presented.



|                                                        |  |                             |        |   |      |   |         |  
|------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------- | -
|                                                        |  | Three months endedMarch 31, |       
|                                                        |  | 2011                        |        |   | 2010 |  
|                                                        |  | (in thousands)              |       
|Net loss                                                |  | $                           | (8,452 | ) |      | $ | (17,465 | )
|Change in market value of available-for-sale securities |  |                             |       |   |      |   | 25      |  
|                                                        |  |                             |        |   |      |   |         |  
|Total comprehensive loss                                |  | $                           | (8,452 | ) |      | $ | (17,440 | )
|                                                        |  |                             |        |   |      |   |         |  



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NOTE 5  STOCK-BASED COMPENSATION

The Companys Amended and Restated 2004 Equity Incentive Award Plan, or the Plan, which is stockholder-approved, provides for the
issuance of options and other stock-based awards, including restricted stock units, covering up to 7,500,000 shares of the Companys common stock. Shares issued upon exercise of stock-based awards are new shares that have been reserved for
issuance under the Plan. The amendment and restatement of the Plan was approved by the Board and by the stockholders in March and May 2007, respectively.

The Plan is administered by the Board, or a committee appointed by the Board, which determines recipients and types of awards to be granted, including the number of shares subject to the awards, the
exercise price and the vesting schedule. The term of stock options granted under the Plan cannot exceed ten years. Options generally have an exercise price equal to the fair market value of the common stock on the grant date and generally vest over
a period of four years. Restricted stock units granted under the Plan represent the right to receive one share of the Companys common stock upon vesting of each unit, and generally vest over a period of three years. In addition, all
outstanding awards under the Plan will accelerate and become immediately exercisable upon a change of control of the Company, as defined in the Plan.

The following table summarizes stock option activity for the three months ended March 31, 2011:



|                                     |  |                  |           |  |                               |   |       |                                                    |  |  |                                       |  |  |   |      | 
|------------------------------------ |  | ---------------- | --------- |  | ----------------------------- | - | ----- | -------------------------------------------------- |  |  | ------------------------------------- |  |  | - | ---- | 
|                                     |  | Number ofOptions |           |  | WeightedAverageExercise Price |   |       | WeightedAverageRemainingContractual Term(in years) |  |  | Aggregate IntrinsicValue(in
millions) | 
|Outstanding at December 31, 2010     |  |                  | 5,041,303 |  |                               | $ | 17.39 |                                                    |  |  |                                       |  |  |   |      | 
|Granted                              |  |                  | 81,024    |  |                               | $ | 15.81 |                                                    |  |  |                                       |  |  |   |      | 
|Exercised                            |  |                  | 203,066   |  |                               | $ | 4.25  |                                                    |  |  |                                       |  |  |   |      | 
|Forfeited                            |  |                  | 33,012    |  |                               | $ | 20.76 |                                                    |  |  |                                       |  |  |   |      | 
|                                     |  |                  |           |  |                               |   |       |                                                    |  |  |                                       |  |  |   |      | 
|Outstanding at March 31, 2011        |  |                  | 4,886,249 |  |                               | $ | 17.89 |                                                    |  |  | 7.19                                  |  |  | $ | 18.0 | 
|                                     |  |                  |           |  |                               |   |       |                                                    |  |  |                                       |  |  |   |      | 
|Exercisable/vested at March 31, 2011 |  |                  | 2,995,323 |  |                               | $ | 15.81 |                                                    |  |  | 6.29                                  |  |  | $ | 14.1 | 
|                                     |  |                  |           |  |                               |   |       |                                                    |  |  |                                       |  |  |   |      | 

The following table summarizes restricted stock unit activity for the three months ended
March 31, 2011:



|                                 |  |                                |         |  |                                              |   |       |                                                    |  |  |                                       |  |  |   |     | 
|-------------------------------- |  | ------------------------------ | ------- |  | -------------------------------------------- | - | ----- | -------------------------------------------------- |  |  | ------------------------------------- |  |  | - | --- | 
|                                 |  | Number ofRestrictedStock Units |         |  | WeightedAverageGrant DateFair Value PerShare |   |       | WeightedAverageRemainingContractual Term(in years) |  |  | Aggregate IntrinsicValue(in
millions) | 
|Outstanding at December 31, 2010 |  |                                | 173,119 |  |                                              | $ | 14.23 |                                                    |  |  |                                       |  |  |   |     | 
|Granted                          |  |                                |        |  |                                              | $ |      |                                                    |  |  |                                       |  |  |   |     | 
|Vested                           |  |                                | 834     |  |                                              | $ | 15.71 |                                                    |  |  |                                       |  |  |   |     | 
|Forfeited                        |  |                                | 1,170   |  |                                              | $ | 15.50 |                                                    |  |  |                                       |  |  |   |     | 
|                                 |  |                                |         |  |                                              |   |       |                                                    |  |  |                                       |  |  |   |     | 
|Outstanding at March 31, 2011    |  |                                | 171,115 |  |                                              | $ | 14.21 |                                                    |  |  | 2.7                                   |  |  | $ | 3.2 | 
|                                 |  |                                |         |  |                                              |   |       |                                                    |  |  |                                       |  |  |   |     | 

The Company estimates the fair value of stock options and warrants using the Black-Scholes option
valuation model. Estimated volatility is based on the historical stock price volatility of the Companys common stock and the implied volatility of the Companys common stock inherent in the market prices of publicly traded options in its
common stock. Estimated dividend yield is 0%. The risk-free rate is estimated to equal U.S. Treasury security rates for the applicable terms. The estimated term for options granted to employees and directors is based on the Companys actual
exercise experience and an assumption that unexercised options will remain outstanding for a period equal to the midpoint between the date the option vests in full and the contractual option termination date. For the first quarter of 2011, this
methodology produced an estimated term of 5.99 years. For consultant options, at each valuation date the Company uses an estimated option term equal to the period then required for the option to vest in full. Consultant options generally vest over a
period of four years from the option grant date. Different estimates of volatility, dividend yield, risk-free rate and expected term could materially change the value of an option and the resulting expense.



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Stock-based awards granted to employees and directors are valued at their respective grant
dates and expensed over the remaining vesting period of the award. Stock-based awards granted to consultants are valued at their respective measurement dates and recognized as expense based on the portion of the total consulting services provided
during the applicable period. As further consulting services are provided in future periods, the Company will revalue the associated awards and recognize additional expense based on their then-current fair values.

Total stock-based compensation expense recognized by the Company in the three months ended March 31, 2011 and March 31, 2010 was as
follows (in thousands):



|                                                |  |                              |       |  |      |   |       | 
|----------------------------------------------- |  | ---------------------------- | ----- |  | ---- | - | ----- | 
|                                                |  | Three months endedMarch 
31, |      
|                                                |  | 2011                         |       |  | 2010 |  
|Stock-based compensation expense recognized as: |  |                              |       |  |      |   |       | 
|Research and development expense                |  | $                            | 2,070 |  |      | $ | 1,853 | 
|General and administrative expense              |  |                              | 1,544 |  |      |   | 1,650 | 
|                                                |  |                              |       |  |      |   |       | 
|Total stock-based compensation expense          |  | $                            | 3,614 |  |      | $ | 3,503 | 
|                                                |  |                              |       |  |      |   |       | 

Unearned stock-based compensation expense attributable to employee and director awards totaled $26.1 million
at March 31, 2011 and will be recognized as expense over a weighted-average period of 2.63 years.

NOTE 6  SHORT-TERM
INVESTMENTS

As of March 31, 2011, short-term investments consisted of United States treasury notes maturing in April
2011. The amortized cost, gross unrealized gain and estimated fair value of short-term investments at March 31, 2011 was $100.0 million, $0.0 million and $100.0 million, respectively. As of December 31, 2010, short-term investments
consisted of United States treasury notes maturing in April 2011. The amortized cost, gross unrealized gain and estimated fair value of short-term investments at December 31, 2010 were $100.0 million, $0.0 million and $100.0 million,
respectively.

NOTE 7  FAIR VALUE DISCLOSURES

The Company determines fair value for marketable securities with Level 1 inputs through quoted market prices in active markets for identical assets. The following table presents the Companys assets
that are measured at fair value on a recurring basis as of March 31, 2011 (in thousands):



|                    |  |                          |         |  |                               |         |         |  |         |   |   |  |  |   |   | 
|------------------- |  | ------------------------ | ------- |  | ----------------------------- | ------- | ------- |  | ------- | - | - |  |  | - | - | 
|                    |  | Fair
ValueMarch 31, 2011 |         |  | Fair value measurements using |        
|                    |  |                          | Level 1 |  |                               | Level 2 |         |  | Level 3 |  
|Money market funds  |  | $                        | 53,657  |  |                               | $       | 53,657  |  |         | $ |  |  |  | $ |  | 
|U.S. Treasury notes |  | $                        | 100,000 |  |                               | $       | 100,000 |  |         | $ |  |  |  | $ |  | 

NOTE 8  ACCRUED EXPENSES

At March 31, 2011 and December 31, 2010, accrued expenses consisted of the following (in thousands):



|                                |  |               |        |  |                  |   |        | 
|------------------------------- |  | ------------- | ------ |  | ---------------- | - | ------ | 
|                                |  | March 31,2011 |        |  | December 31,2010 |  
|Payroll and payroll related     |  | $             | 1,956  |  |                  | $ | 617    | 
|Preclinical and clinical trials |  |               | 18,763 |  |                  |   | 19,190 | 
|Other                           |  |               | 985    |  |                  |   | 1,592  | 
|                                |  |               |        |  |                  |   |        | 
|Total accrued expenses          |  | $             | 21,704 |  |                  | $ | 21,399 | 
|                                |  |               |        |  |                  |   |        | 



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NOTE 9  DEFERRED REVENUE

Deferred revenue at March 31, 2011 and December 31, 2010 consisted of the following (in thousands):



|                                             |  |           |         |  |              |   |         | 
|-------------------------------------------- |  | --------- | ------- |  | ------------ | - | ------- | 
|                                             |  | March 31, |         |  | December 31, |  
|                                             |  | 2011      |         |  | 2010         |  
|Current portion:                             |  |           |         |  |              |   |         | 
|Deferred revenue from Astellas (see Note 2a) |  | $         | 23,201  |  |              | $ | 23,138  | 
|Deferred revenue from Pfizer (see Note 2b)   |  |           | 36,015  |  |              |   | 36,015  | 
|                                             |  |           |         |  |              |   |         | 
|Total                                        |  | $         | 59,216  |  |              | $ | 59,153  | 
|                                             |  |           |         |  |              |   |         | 
|Long-term portion:                           |  |           |         |  |              |   |         | 
|Deferred revenue from Astellas (see Note 2a) |  | $         | 63,709  |  |              | $ | 69,477  | 
|Deferred revenue from Pfizer (see Note 2b)   |  |           | 63,026  |  |              |   | 72,030  | 
|                                             |  |           |         |  |              |   |         | 
|Total                                        |  | $         | 126,735 |  |              | $ | 141,507 | 
|                                             |  |           |         |  |              |   |         | 

NOTE 10  INCOME TAXES

The Company calculates its quarterly tax provision consistent with the guidance provided by ASC 740-270, whereby the Company forecasts its estimated annual effective tax rate and then applies that rate to
its year-to-date pre-tax book income (loss). The Company has recorded tax benefit of $0.9 million for the three months ended March 31, 2011, as it expects to carry-back anticipated 2011 losses to obtain a partial refund of federal income taxes
paid for 2010. The Company has established and continues to maintain a full valuation allowance against its deferred tax assets as the Company does not currently believe that realization of those assets is more likely than not.

The Company currently has a federal income tax examination in progress. Since the audit is at its preliminary stage, the Company has not
recorded any potential audit adjustments. There are no on-going tax audits with state tax jurisdictions. As a result of the Companys net operating loss carryforwards, all of its tax years are subject to federal and state tax examination.

NOTE 11  CONTINGENCIES

In March 2010, the first of three purported securities class action lawsuits was commenced against the Company based on the negative CONNECTION data reported in March 2010. The lawsuits, which have
now been consolidated into a single action, are largely identical and allege violations of the Securities Exchange Act of 1934 in connection with allegedly false and misleading statements made by the Company related to dimebon. The plaintiffs
allege, among other things, that the defendants disseminated false and misleading statements about the effectiveness of dimebon for the treatment of Alzheimers disease, making it impossible for stockholders to gain a realistic understanding of
the drugs progress toward FDA approval. The plaintiffs purport to seek damages, an award of their costs and injunctive relief on behalf of a class of stockholders who purchased or otherwise acquired the Companys common stock between
July 17, 2008 and March 2, 2010. The lawsuit is subject to inherent uncertainties, and the actual cost will depend upon many unknown factors. The outcome of the litigation is necessarily uncertain, the Company could be forced to expend
significant resources in the defense of the suit and it may not prevail. The Company has not established any reserve for any potential liability relating to this lawsuit. The Companys management believes that the Company has meritorious
defenses and intends to defend this lawsuit vigorously. The Company believes it is entitled to coverage under its relevant insurance policies, subject to a $350,000 retention, but coverage could be denied or prove to be insufficient.

NOTE 12  PROCEEDS FROM STOCKHOLDER SECURITIES LAW SETTLEMENT.

In the quarter ended March 31, 2011, the Company received net proceeds of $3.0 million from a securities law settlement involving trades in the Companys stock by an unaffiliated
stockholder. The Company recognized this amount in its financial statements through a credit to additional paid in capital, with no impact to the Companys statement of operations.



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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|------- | --------------------------------------------------------------------------------------

The following discussion should be read in conjunction with our audited consolidated financial statements and notes thereto for the
fiscal year ended December 31, 2010, included in our Annual Report on Form 10-K for the year ended December 31, 2010. The following Managements Discussion and Analysis of Financial Condition and Results of Operations contains
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We intend that these
forward-looking statements be subject to the safe harbors created by those provisions. Forward-looking statements are generally written in the future tense and/or are preceded by words such as may, should,
forecast, could, expect, suggest, believe, anticipate, intend, plan, or other similar words. The forward-looking statements contained in this Quarterly
Report on Form 10-Q involve a number of risks and uncertainties, many of which are outside of our control. Factors that could cause actual results to differ materially from projected results include, but are not limited to, those discussed in
Risk Factors in Item 1A of Part II below. Readers are expressly advised to review and consider those Risk Factors, which include risks associated with (1) the negative results we reported from our CONNECTION and HORIZON trials
in March 2010 and April 2011, respectively, and the potential impact of those results and/or any future dimebon clinical trial results on continued clinical development of dimebon, including risks associated with Pfizers potential termination
of our dimebon collaboration agreement, which Pfizer has the right to do at any time, (2) our ability to successfully conduct clinical and preclinical trials for our product candidates, (3) our ability to obtain required regulatory
approvals to develop and market our product candidates, (4) our ability to raise additional capital on favorable terms, (5) our ability to execute our development plan on time and on budget, (6) our ability to obtain commercial
partners and maintain our relationships with our current and/or potential partners, (7) our ability, whether alone or with commercial partners, to successfully commercialize any of our product candidates that may be approved for sale, and
(8) our ability to identify and obtain additional product candidates. Although we believe that the assumptions underlying the forward-looking statements contained in this Quarterly Report on Form 10-Q are reasonable, any of the assumptions
could be inaccurate, and therefore there can be no assurance that such statements will be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be
regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. Furthermore, past performance in operations and share price is not necessarily
indicative of future performance. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The Company

We are a
biopharmaceutical company focused on the rapid development of novel small molecule drugs to treat serious diseases for which there are limited treatment options. Our product candidates in clinical development are MDV3100, which is in Phase 3
development for the treatment of advanced prostate cancer, and dimebon (latrepirdine), which is in Phase 3 development for the treatment of mild-to-moderate Alzheimers disease. Our MDV3100 program is partnered with Astellas Pharma Inc., or
Astellas, and our dimebon program is partnered with Pfizer Inc., or Pfizer.

In October 2009, we entered into a collaboration
agreement with Astellas. Under the terms of the agreement, we and Astellas agreed to develop and commercialize MDV3100 for the treatment of prostate cancer. We and Astellas share equally the costs and expenses of developing and commercializing
MDV3100 for the United States market, except that development costs for studies useful in both the United States market and either Europe or Japan are shared two-thirds by Astellas and one-third by us. We and Astellas will share equally profits (or
losses) resulting from commercialization of MDV3100 in the United States. Outside the United States, Astellas will bear all development and commercialization costs and will pay us tiered double-digit royalties on aggregate net sales of MDV3100.

In September 2008, we announced a collaboration agreement with Pfizer, which became effective in October 2008. Under the
terms of the agreement, we and Pfizer agreed to develop and commercialize dimebon for the treatment of Alzheimers disease and Huntington disease. We and Pfizer share the costs and expenses of developing and commercializing dimebon for the
United States market on a 60% Pfizer/40% Medivation basis, and will share profits (or losses) resulting from commercialization of dimebon in the United States in the same proportions. Outside the United States, Pfizer will bear all development and
commercialization costs and will pay us tiered royalties on aggregate net sales of dimebon.

The first two Phase 3
clinical studies of dimebon that we have completed under our collaboration agreement with Pfizer were both negative. In March 2010 we reported negative top-line results from our 598-patient Phase 3 CONNECTION trial of dimebon in patients
with mild-to-moderate Alzheimers disease, and in April 2011 we reported negative top-line results from our 403-patient Phase 3 HORIZON trial of dimebon in patients with Huntington disease. Dimebon failed to show a statistically
significant benefit over placebo on any of the primary or secondary endpoints in both the CONNECTION and HORIZON trials, and thus did not



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meet any of either studys efficacy endpoints. Due to the negative results in the CONNECTION trial, Pfizer has the right to terminate our collaboration agreement at any time. Due to the
negative results in the HORIZON trial, we and Pfizer discontinued development of dimebon for Huntington disease in April 2011.

We have funded our operations primarily through private and public offerings of our common stock, and from the up-front, development milestone and cost-sharing payments from our collaboration agreements
with Astellas and Pfizer. As of March 31, 2011, we had an accumulated deficit of $219.9 million and we expect to incur substantial additional losses for the foreseeable future as we continue to finance clinical and preclinical studies of our
existing and potential future product candidates and our corporate overhead costs.

Our Pipeline

MDV3100

With Astellas, we are currently conducting two Phase 3 trials and one Phase 2 trial of MDV3100 in patients with various stages of advanced prostate cancer, and expect to initiate a second Phase
2 trial in the second quarter of 2011. These ongoing and upcoming clinical trials span the full spectrum of advanced prostate cancer patients, from the latest stage (patients who have already failed docetaxel-based chemotherapy) to the earliest
stage (patients who have not yet been treated with any hormonal therapy). These trials, all of which are studying MDV3100 at a dose of 160 mg/day, are as follows:



| |  |  | AFFIRM is a randomized, double-blind, placebo-controlled Phase 3 trial evaluating MDV3100 versus placebo in 1,199 patients with advanced prostate
cancer who have previously failed docetaxel-based chemotherapy. The primary endpoint is overall survival. We completed enrollment of the AFFIRM trial in November 2010, and intend to conduct an interim analysis in this trial. Depending on the
survival rates of patients in the AFFIRM trial, data from the interim analysis could potentially be available in 2011.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | PREVAIL is a randomized, double-blind, placebo-controlled Phase 3 trial evaluating MDV3100 versus placebo in approximately 1,700 patients with
advanced prostate cancer who have not previously been treated with chemotherapy. The co-primary endpoints are progression-free survival and overall survival. We began enrollment in the PREVAIL trial in September 2010.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | TERRAIN is a randomized, double-blind Phase 2 trial evaluating MDV3100 versus bicalutamide, the leading marketed anti-androgen drug, in
approximately 370 advanced prostate cancer patients who have progressed following medical castration with an LHRH-analog drug or surgical castration. The primary endpoint is progression-free survival. We began enrollment in the TERRAIN trial in
March 2011.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In the second quarter of 2011 we expect to initiate a Phase 2 trial evaluating MDV3100 in patients who have not had any previous hormonal treatment for
their prostate cancer. This will be the first trial to examine the effects of MDV3100 in the earlier-stage population of patients who have not yet undergone medical or surgical castration.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In February 2011, we presented long-term follow-up data from our ongoing Phase 1-2 clinical trial of MDV3100 at the American Society of
Clinical Oncologys Genitourinary Cancers Symposium. A total of 140 advanced prostate cancer patients, including both men who had failed prior chemotherapy and men who were chemotherapy-naïve, were enrolled in this trial between
July 2007 and December 2008. Of those men, 18 remained on study as of the cutoff date of the analysis (December 22, 2010). In this trial MDV3100 consistently demonstrated anti-tumor activity across endpoints, as evaluated by
reductions in PSA levels, radiographic findings, circulating tumor cell counts, and median times to PSA and radiographic progression. Earlier results from this trial were published in 2010 in The Lancet.

Dimebon (latrepirdine)

With Pfizer, we are currently conducting the randomized, double-blind, placebo-controlled Phase 3 CONCERT trial, which is studying dimebon plus donepezil, the leading marketed Alzheimers
disease therapy, versus donepezil alone in 1,003 patients with mild-to-moderate Alzheimers disease over a twelve-month treatment period. We completed enrollment in the CONCERT trial in November 2010, and expect to report top-line results
in the first half of 2012. Should the CONCERT trial fail, we expect that development of dimebon would be discontinued and that Pfizer would elect to terminate our collaboration agreement.



14



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##### Table of Contents

In March 2010 and April 2011, respectively, we reported negative top-line results from
our CONNECTION trial, a randomized, double-blind, six-month, placebo-controlled Phase 3 trial in 598 patients with mild-to-moderate Alzheimers disease, and from our HORIZON trial, a randomized, double-blind, placebo-controlled Phase 3
trial in 403 patients with Huntington disease. In March 2010 we also reported top-line results from a 742-patient safety study of dimebon in patients with mild-to-moderate Alzheimers disease, approximately 85% of whom were also taking one
or more approved Alzheimers disease medicines.

In both the CONNECTION and HORIZON trials, dimebon failed to show a
statistically significant improvement over placebo on any of the primary or secondary efficacy endpoints, and thus did not meet any of the study endpoints in either trial. We designed the CONNECTION trial to confirm the results of our first clinical
trial of dimebon in 183 patients with mild-to-moderate Alzheimers disease in Russia, or the Russian Study, which was published in 2008 in The Lancet. In the Russian Study, dimebon showed a statistically significant improvement over
placebo on all of the same primary and secondary efficacy endpoints used in the CONNECTION trial. Thus, the CONNECTION trial failed to replicate the efficacy results seen in the Russian Study. We designed the HORIZON trial to confirm the results of
our previously completed 90-patient Phase 2 study, published in March 2010 in Archives of Neurology, showing that dimebon significantly improved cognitive function in Huntington disease patients as measured by the Mini-Mental State
Examination. The HORIZON trial failed to replicate these efficacy results. Based on the HORIZON results, we and Pfizer discontinued development of dimebon for Huntington disease in April 2011.

Dimebon has been well tolerated in all studies completed to date, including the CONNECTION and HORIZON trials and the 742-patient safety
study.

Critical Accounting Policies and the Use of Estimates

Reference is made to Critical Accounting Policies and Use of Estimates included in our Annual Report on Form 10-K for the year ended December 31, 2010. As of the date of the filing
of this Quarterly Report, we did not identify any significant changes to the critical accounting policies discussed in our Annual Report for the year ended December 31, 2010.

Recent Accounting Pronouncements

Reference is made to Note 1 to our
condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.

Results of Operations

Three Months Ended March 31, 2011 and
2010

Collaboration Revenue



|                                    |  |                              |        |    |      |   |        | 
|----------------------------------- |  | ---------------------------- | ------ | -- | ---- | - | ------ | 
|                                    |  | Three months endedMarch 
31, |       
|                                    |  | 2011                         |        |    | 2010 |  
|                                    |  | (in thousands)               |       
|Collaboration revenue from Astellas |  | $                            | 5,705  |    |      | $ | 5,230  | 
|Collaboration revenue from Pfizer   |  |                              | 9,004  |    |      |   | 10,504 | 
|                                    |  |                              |        |    |      |   |        | 
|Total collaboration revenue         |  | $                            | 14,709 |    |      | $ | 15,734 | 
|                                    |  |                              |        |    |      |   |        | 
|Percentage decrease                 |  |                              | (7     | )% |      |   |        | 

During the three-month periods ended March 31, 2011 and March 31, 2010, we recorded $14.7 and
$15.7 million, respectively, of amortized collaboration revenue under our collaboration agreements with Astellas and Pfizer. The decrease in revenue in the three-month period ended March 31, 2011 was due to changed estimates of the performance
period under the Pfizer Collaboration Agreement, partially offset by an increase in collaboration revenues from our Astellas collaboration from amortization of a $10.0 million development milestone payment received in the fourth quarter of 2010.

To date we have recorded $120.0 million and $225.0 million of deferred revenue with respect to the Astellas Collaboration
Agreement and the Pfizer Collaboration Agreement, respectively, consisting of up-front and development milestone payments under those agreements. At March 31, 2011, deferred revenue balances with respect to the Astellas Collaboration Agreement
and the Pfizer Collaboration Agreement were $86.9 million and $99.0 million, respectively. We amortize this deferred revenue on a straight-line basis over the expected performance period of our deliverables under the applicable collaboration
agreement.

We presently estimate that our performance periods under the Astellas Collaboration Agreement and the Pfizer
Collaboration Agreement will end in the fourth quarters of 2014 and 2013, respectively. Given the negative results in the CONNECTION trial we reported in March 2010, we revised our estimates of our performance period under the Pfizer
Collaboration Agreement in the first and



15



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##### Table of Contents

third quarters of 2010. The cumulative effect of these changes, which we applied on a prospective basis, was to extend the performance period by seven quarters and correspondingly reduce
amortized revenue related to the Pfizer Collaboration Agreement by $7.3 million per quarter. Subsequent changes in our estimate of the performance periods under our collaboration agreements could significantly alter the amount of revenue recognized
in future periods.

Research and Development Expense



|                                 |  |                             |        |    |      |   |        | 
|-------------------------------- |  | --------------------------- | ------ | -- | ---- | - | ------ | 
|                                 |  | Three months endedMarch
31, |       
|                                 |  | 2011                        |        |    | 2010 |  
|                                 |  | (in thousands)              |       
|Research and development expense |  | $                           | 17,618 |    |      | $ | 25,582 | 
|Percentage decrease              |  |                             | (31    | )% |      |   |        | 

Research and development expenses were $17.6 million for the three months ended
March 31, 2011 compared to $25.6 million for the same period in 2010. The change was primarily due to a $4.2 million decrease in clinical and preclinical study expense and a $3.8 million decrease in payroll and other related expense resulting
from the reduction in workforce we implemented in the first quarter of 2010 following the negative CONNECTION data. Research and development headcount at March 31, 2011 was 68 compared to 58 at March 31, 2010. We expect our research and
development headcount to increase to approximately 80 over the next two quarters as we expand to staff anticipated 2011 increases in workload.

Research and development expenses represented 74% and 77% of total operating expenses in the three-month periods ended March 31, 2011 and March 31, 2010, respectively.

Under both our Astellas and Pfizer Collaboration Agreements, specified development costs incurred by our partners and us with respect to
the U.S. market are subject to cost-sharing. The parties make quarterly true-up payments to ensure that each has borne its applicable percentage of the shared development costs incurred by both companies. We account for development cost true-up
payments as additions to research and development expense when such payments are payable by us, and as reductions to research and development expense when such payments are receivable by us. Thus, our research and development expense is presented
net of these true-up payments, which were as follows for the three months ended March 31, 2011 and March 31, 2010:



|                                                |  |                             |        |  |      |   |        | 
|----------------------------------------------- |  | --------------------------- | ------ |  | ---- | - | ------ | 
|                                                |  | Three months endedMarch 31, |       
|                                                |  | 2011                        |        |  | 2010 |  
|                                                |  | (in thousands)              |       
|Development cost-sharing payments from Astellas |  | $                           | 9,887  |  |      | $ | 6,027  | 
|Development cost-sharing payments from Pfizer   |  |                             | 4,915  |  |      |   | 5,038  | 
|                                                |  |                             |        |  |      |   |        | 
|Total development cost-sharing payments         |  | $                           | 14,802 |  |      | $ | 11,065 | 
|                                                |  |                             |        |  |      |   |        | 

To date, we have been engaged in two major research and development programs: the development of MDV3100 for
the treatment of prostate cancer and the development of dimebon for the treatment of Alzheimers disease and Huntington disease. We and our partner Pfizer discontinued development of dimebon for Huntington disease in April 2011. Other
research and development programs consist of preclinical stage programs. Research and development costs are identified as either directly allocable to one of our research and development programs or as an indirect cost, with only direct costs being
tracked by specific program. Direct costs consist primarily of clinical and preclinical study costs, cost of supplying drug substance and drug product for use in clinical and preclinical studies, contract research organization fees, and other
contracted services pertaining to specific clinical and preclinical studies. Indirect costs consist of personnel costs (including both cash costs and non-cash stock-based compensation costs), corporate overhead costs, and other administrative and
support costs. The following table summarizes the direct costs attributable to each program and the total indirect costs for each period.



|                                        |  |                             |        |  |      |   |        | 
|--------------------------------------- |  | --------------------------- | ------ |  | ---- | - | ------ | 
|                                        |  | Three months endedMarch 31, |       
|                                        |  | 2011                        |        |  | 2010 |  
|                                        |  | (in thousands)              |       
|Direct costs:                           |  |                             |        |  |      |   |        | 
|MDV3100                                 |  | $                           | 4,812  |  |      | $ | 3,064  | 
|Dimebon (latrepirdine)                  |  |                             | 3,854  |  |      |   | 14,770 | 
|Other                                   |  |                             | 2,298  |  |      |   | 2,603  | 
|                                        |  |                             |        |  |      |   |        | 
|Total direct costs                      |  | $                           | 10,964 |  |      |   | 20,437 | 
|Indirect costs                          |  |                             | 6,654  |  |      |   | 5,145  | 
|                                        |  |                             |        |  |      |   |        | 
|Total research and development expenses |  | $                           | 17,618 |  |      | $ | 25,582 | 
|                                        |  |                             |        |  |      |   |        | 



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##### Table of Contents

Our projects or intended projects may be subject to change from time to time as we evaluate
our research and development priorities and available resources.

The research and development of each of MDV3100 and dimebon
will be completed upon the earlier to occur of the following two events: (1) receipt of regulatory approvals to market the applicable product candidate for all indications for which we and our corporate partners seek such approvals or
(2) our decision to abandon development of the applicable product candidate.

In order to obtain the necessary regulatory
approvals, we will need to establish to the satisfaction of the applicable regulatory authorities in the United States, Europe and other relevant countries that the applicable product candidate is both safe and effective for each of its intended
indications. The process of conducting the preclinical and clinical testing required to establish safety and efficacy and obtain regulatory approvals is expensive, uncertain and takes many years. We are not able to reasonably estimate the time or
cost required to obtain such regulatory approvals, and failure to receive the necessary regulatory approvals would prevent us from commercializing the product candidates affected. The length of time required for clinical development of a particular
product candidate and our development costs for that product candidate may be impacted by the scope and timing of enrollment in clinical trials for the product candidate, unanticipated additional clinical trials that may be required, future
decisions to develop a product candidate for subsequent indications, and whether in the future we decide to pursue development of the product candidate with a corporate partner or independently. For example, MDV3100 may have the potential to be
approved for multiple indications, and we do not yet know how many of those indications we and our partner Astellas will pursue. The decision to pursue regulatory approval for subsequent indications will depend on several variables outside of our
control, including the strength of the data generated in our prior and ongoing clinical studies and the willingness of our corporate partners to jointly fund such additional work. Furthermore, the scope and number of clinical studies required to
obtain regulatory approval for each pursued indication is subject to the input of the applicable regulatory authorities, we have not yet sought such input for all potential indications that we and our corporate partners may elect to pursue, and even
after having given such input applicable regulatory authorities may subsequently require additional clinical studies prior to granting regulatory approval based on new data generated by us or other companies, or for other reasons outside of our
control. Moreover, we or our current or potential future corporate partners may decide to discontinue development of any development project at any time for regulatory, commercial, scientific or other reasons. To date, we have not commercialized any
of our product candidates and in fact may never do so.

Selling, General and Administrative Expense



|                                            |  |                             |       |    |      |   |       | 
|------------------------------------------- |  | --------------------------- | ----- | -- | ---- | - | ----- | 
|                                            |  | Three months endedMarch 31, |      
|                                            |  | 2011                        |       |    | 2010 |  
|                                            |  | (in thousands)              |      
|Selling, general and administrative expense |  | $                           | 6,156 |    |      | $ | 7,839 | 
|Percentage decrease                         |  |                             | (21   | )% |      |   |       | 

Selling, general and administrative expenses were $6.2 million for the three months ended
March 31, 2011 compared to $7.8 million for the same period in 2010. The change was primarily due to decreases in facilities and payroll expenses resulting from the reduction in workforce we implemented in the first quarter of 2010 following
the negative CONNECTION data. Selling, general and administrative headcount at March 31, 2011 was 32 compared to 28 at March 31, 2010. We expect our selling, general and administrative headcount to increase to approximately 35 over the
next two quarters as we expand to staff anticipated 2011 increases in workload.

Selling, general and administrative expenses
represented 26% and 23% of total operating expenses in the three-month periods ended March 31, 2011 and March 31, 2010, respectively.



17



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Under both our Astellas and Pfizer Collaboration Agreements, specified commercialization
costs incurred by our partners and us with respect to the U.S. market are subject to cost-sharing. The parties make quarterly true-up payments to ensure that each has borne its applicable percentage of the shared commercialization costs incurred by
both companies. We account for commercialization cost true-up payments as additions to selling, general and administrative expense when such payments are payable by us, and as reductions to selling, general and administrative expense when such
payments are receivable by us. Thus, our selling, general and administrative expense is presented net of these true-up payments, which were as follows for the three months ended March 31, 2011 and March 31, 2010:



|                                                           |  |                             |     |   |      |   |      |  
|---------------------------------------------------------- |  | --------------------------- | --- | - | ---- | - | ---- | -
|                                                           |  | Three months endedMarch 31, |    
|                                                           |  | 2011                        |     |   | 2010 |  
|                                                           |  | (in thousands)              |    
|Commercialization cost-sharing payments from (to) Astellas |  | $                           | (68 | ) |      | $ | 135  |  
|Commercialization cost-sharing payments from (to) Pfizer   |  |                             | 13  |   |      |   | (252 | )
|                                                           |  |                             |     |   |      |   |      |  
|Total commercialization cost-sharing payments              |  | $                           | (55 | ) |      | $ | (117 | )
|                                                           |  |                             |     |   |      |   |      |  

Interest Income



|                    |  |                             |     |    |      |   |     | 
|------------------- |  | --------------------------- | --- | -- | ---- | - | --- | 
|                    |  | Three months endedMarch 31, |    
|                    |  | 2011                        |     |    | 2010 |  
|                    |  | (in thousands)              |    
|Interest income     |  | $                           | 41  |    |      | $ | 113 | 
|Percentage decrease |  |                             | (64 | )% |      |   |     | 

The decrease in interest income of 64%, or $0.1 million, in the quarter ended March 31, 2011
as compared to the prior year period was primarily due to lower yields and investment balances.

Other Income (Expense), net



|                            |  |                             |      |    |      |   |     | 
|--------------------------- |  | --------------------------- | ---- | -- | ---- | - | --- | 
|                            |  | Three months endedMarch 31, |     
|                            |  | 2011                        |      |    | 2010 |  
|                            |  | (in thousands)              |     
|Other income (expense), net |  | $                           | (333 | )  |      | $ | 109 | 
|Percentage decrease         |  |                             | (406 | )% |      |   |     | 

The decrease in other income (expense), net of 406%, or $0.4 million, in the quarter ended
March 31, 2011 as compared to the prior year period was due to higher realized and unrealized losses on foreign exchange payables.

Income Tax Expense (Benefit)

The following table summarizes our effective tax rates and income tax expense (benefit) for the three-month periods ended March 31, 2011 and March 31, 2010:



|                             |  |                             |      |   |      |   |      |  
|---------------------------- |  | --------------------------- | ---- | - | ---- | - | ---- | -
|                             |  | Three months endedMarch 31, |     
|                             |  | 2011                        |      |   | 2010 |  
|                             |  | (in thousands)              |     
|Income tax expense (benefit) |  | $                           | (905 | ) |      | $ |     |  
|Effective tax rate           |  |                             | 9.46 | % |      |   | 0.00 | %

The tax benefit for the
three-month period ended March 31, 2011 of $0.9 million was the result of our ability to carry back our anticipated 2011 federal income tax loss to the prior two tax years. Based upon the weight of available evidence, which includes our
historical operating performance, reported cumulative net losses since inception and expected continuing net losses, we maintain a full valuation allowance on our net deferred tax assets until sufficient positive evidence exists to support reversal
of the valuation allowance.



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Liquidity and Capital Resources

Sources of Liquidity

We have incurred cumulative net losses of $219.9 million through March 31, 2011, and we expect to incur substantial additional losses in the future as we continue research and development activities
designed to support potential approval of our present and potential future product candidates. We have not generated any revenue from product sales to date, and we do not expect to generate product revenue for several years, if ever. All of our
operations to date have been funded through the sale of our debt and equity securities, and from up-front, development milestone and cost-sharing true-up payments from Astellas and Pfizer. As of March 31, 2011 we had cash, cash equivalents and
short-term investments of $195.0 million available to fund operations. Based upon our current expectations, we believe our capital resources at March 31, 2011 will be sufficient to fund our currently planned operations beyond the end of 2012,
regardless of whether Pfizer elects to terminate our collaboration agreement. This estimate is based on a number of assumptions that may prove to be wrong and we could exhaust our available cash reserves earlier than presently anticipated. Our
future capital requirements will depend on many factors, many of which are wholly or partially outside of our control. Such factors include the results of our ongoing clinical trials and whether such results are adequate to obtain marketing approval
for any of our product candidates, whether we and our corporate partners elect or are required to conduct any additional clinical trials not presently contemplated, the nature and scope of our development activities involving product candidates
other than MDV3100 and dimebon, whether we elect to exercise our co-promotion rights on either MDV3100 or dimebon should either product candidate receive marketing approvals in the United States, and the continued effectiveness of our collaboration
agreements with Astellas and Pfizer.

Astellas Collaboration Agreement

Our global development and commercialization agreement with Astellas became effective in October 2009. Under the Astellas Collaboration
Agreement, we and Astellas agreed to collaborate on the development of MDV3100 for prostate cancer for the United States market, including associated regulatory filings with the FDA. In addition, if approved by the FDA, following such approval and
the launch of MDV3100 in the United States, we, at our option, and Astellas have the right to co-promote MDV3100 in the United States. Astellas is responsible for development of, and seeking regulatory approval for, and commercialization of MDV3100
outside the United States. Astellas will be responsible for commercial manufacture of MDV3100 on a global basis. Both we and Astellas have agreed not to commercialize certain other products having a similar mechanism of action as MDV3100 for the
treatment of specified indications for a specified time period, subject to certain exceptions.

We and Astellas share the
costs of developing and commercializing MDV3100 for the United States market on a 50%/50% basis, and we and Astellas will share profits (or losses) resulting from the commercialization of MDV3100 in the United States in such proportions. Costs of
clinical trials supporting development in both the United States and in either Europe or Japan, including all four of our ongoing Phase 3 and Phase 2 clinical trials, are borne two-thirds by Astellas and one-third by us. Outside the United
States, Astellas will bear all development and commercialization costs and will pay to us tiered, double-digit royalties on the aggregate net sales of MDV3100.

The agreement establishes several joint committees consisting of an equal number of representatives from both parties that operate by consensus to oversee the collaboration. In the event that a joint
committee is unable to reach consensus on a particular issue, then, depending on the issue, a dispute may be decided at the joint committee level by the party with the final decision on the issue or escalated to senior management of the parties. If
a dispute is escalated to senior management and no consensus is reached, then the dispute may be decided by the party to whom the contract grants final decision on such issue. Other issues can only be decided by consensus of the parties, and unless
and until the parties representatives reach agreement on such issue, no decision on such issue will be made, and the status quo will be maintained.

Under the Astellas Collaboration Agreement, Astellas paid us a non-refundable, up-front cash payment of $110.0 million in the fourth quarter of 2009. We are also eligible to receive up to $335.0 million
in development milestone payments, plus up to an additional $320.0 million in commercial milestone payments. We received a $10.0 million development milestone payment in the fourth quarter of 2010. We are required to share 10% of the up-front and
development milestone payments received under the Astellas Collaboration Agreement with The Regents of the University of California, or UCLA, pursuant to the terms of our MDV3100 license agreement. We paid 10% of the up-front and development
milestone payments, or $11.0 million and $1.0 million, respectively, to UCLA in the fourth quarter of 2009 and the first quarter of 2011, respectively.

Each of Medivation and Astellas is permitted to terminate the Astellas Collaboration Agreement for an uncured material breach by the other party or for the insolvency of the other party. Astellas has a
right to terminate the Astellas Collaboration Agreement unilaterally by advance written notice to us, but, except in certain specific circumstances, generally cannot exercise that termination right until the first anniversary of MDV3100s first
commercial sale. Following any termination of the Astellas Collaboration



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Agreement in its entirety, all rights to develop and commercialize MDV3100 will revert to us, and Astellas will grant a license to us to enable us to continue such development and
commercialization. In addition, except in the case of a termination by Astellas for our uncured material breach, Astellas will supply MDV3100 to us during a specified transition period.

Pfizer Collaboration Agreement

In September 2008, we announced a collaboration agreement with Pfizer. Due to the negative results in the CONNECTION study, Pfizer has the unilateral right to terminate our collaboration agreement at any
time. Under the Pfizer Collaboration Agreement, we and Pfizer will collaborate on development of dimebon for Alzheimers disease for the United States market, including associated regulatory filings with the FDA. We and Pfizer discontinued
development of dimebon for Huntington disease in April 2011 following the negative results in the HORIZON trial. In addition, if approved by the FDA, following such approval and the launch of dimebon in the United States, we, at our option, and
Pfizer have the right to co-promote dimebon to specialty physicians in the United States, and Pfizer has the sole right to promote dimebon to primary care physicians in the United States. Pfizer will be responsible for development and seeking
regulatory approval for, and commercialization of, dimebon outside the United States. Following a period of transition from our contract manufacturers to Pfizer, Pfizer has assumed responsibility for all manufacture of product for both clinical and
commercial purposes. Both we and Pfizer have agreed not to commercialize for the treatment of specified indications any other products directed to the same primary molecular target as dimebon for a specified time period, subject to certain
exceptions.

The agreement establishes several joint committees consisting of an equal number of representatives from both
parties that operate by consensus to oversee the collaboration. In the event that a joint committee is unable to reach consensus on a particular issue, then, depending on the issue, a dispute may be decided at the joint committee level by the party
with the final decision on the issue or escalated to senior management of the parties. If a dispute is escalated to senior management and no consensus is reached, then the dispute may be decided by the party to whom the contract grants final
decision on such issue. Other issues can only be decided by consensus of the parties, and unless and until the parties representatives reach agreement on such issue, no decision on such issue will be made, and the status quo will be
maintained.

Under the Pfizer Collaboration Agreement, Pfizer paid us a non-refundable up-front cash payment of $225.0 million
in the fourth quarter of 2008. We are also eligible to receive payments of up to $500.0 million upon the attainment of development and regulatory milestones plus additional milestone payments upon the achievement of certain net sales levels for the
product. We and Pfizer will share the costs and expenses of developing and commercializing dimebon for the United States market on a 60%/40% basis, with Pfizer assuming the larger share, and we and Pfizer will share profits (or losses) resulting
from the commercialization of dimebon in the United States in such proportions. Outside the United States, Pfizer will bear all development and commercialization costs and will pay us tiered royalties on the aggregate net sales of dimebon.

If one of the parties merges with, or acquires or is acquired by, a third party and as a result such party must divest its
interest in the dimebon collaboration due to a governmental requirement, then the other party has the first right to purchase the divesting partys interest in the collaboration, on terms to be negotiated by the parties. In the event that the
parties are unable to agree on the terms of this purchase after following the negotiation procedure outlined in the collaboration agreement, the divesting party will have a time-limited right to sell its interest in the collaboration to a third
party. However, the terms of this sale must be more favorable than any terms offered by the non-divesting party and the third party will remain bound by the terms of the collaboration agreement. In the event the non-divesting party declines to
purchase the divesting partys interest, the divesting party may sell its interest in the collaboration to a third party on any terms but such third party will remain bound by the terms of the collaboration agreement.

We are permitted to terminate the collaboration agreement for an uncured material breach by Pfizer. Pfizer has a right to terminate the
collaboration agreement unilaterally at any time. In the event of our uncured material breach of the collaboration agreement, Pfizer may elect either to terminate the collaboration agreement or to keep the collaboration agreement in place, but
terminate our right to participate in development, commercialization (other than co-promoting dimebon) and other activities for dimebon, including the joint committees and decision making for dimebon. However, such termination would not affect our
financial return or, unless we commit an uncured material breach of our co-promotion obligations, our co-promotion rights. Following any termination of the collaboration agreement, all rights to develop and commercialize dimebon will revert to us,
and Pfizer will grant a license to us to enable us to continue such development and commercialization, remain responsible for its ongoing financial and other obligations under the collaboration agreement for a transition period of six months
following termination, and is obligated to supply product to us for a reasonable period, not to exceed eighteen months following termination, on terms to be negotiated between the parties in good faith.



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Cash Flow



|                                        |  |                             |         |   |      |   |         |  
|--------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                        |  | Three months endedMarch
31, |        
|                                        |  | 2011                        |         |   | 2010 |  
|                                        |  | (in thousands)              |        
|Net cash provided by (used in):         |  |                             |         |   |      |   |         |  
|Operating activities                    |  | $                           | (16,654 | ) |      | $ | (27,465 | )
|Investing activities                    |  |                             |        |   |      |   | 85,912  |  
|Financing activities                    |  |                             | 3,822   |   |      |   | 3,056   |  
|                                        |  |                             |         |   |      |   |         |  
|Net change in cash and cash equivalents |  | $                           | (12,832 | ) |      | $ | 61,503  |  
|                                        |  |                             |         |   |      |   |         |  

Operating Activities

Net cash used in operating activities totaled $16.7 million in the three months ended March 31, 2011, and was primarily driven by our net loss of $8.5 million, decreased deferred revenue of $14.7
million and decreased other current liabilities of $4.7 million arising from income tax payments for 2010, partially offset by decreased receivables from our corporate partners of $6.4 million, non-cash stock-based compensation expense of
$3.6 million, and a net increase in accounts payable and accrued expenses of $2.0 million arising in the ordinary course of business.

Net cash used in operating activities totaled $27.5 million in the three months ended March 31, 2010, and was primarily driven by our net loss of $17.5 million, decreased deferred revenue of $15.7
million, and increased receivables from our corporate partners of $4.5 million, partially offset by an increase in accounts payable and accrued expenses of $7.2 million arising in the ordinary course of business, and $3.5 million in non-cash
stock-based compensation expense.

Investing Activities

There were no cash flows from investing activities in the three months ended March 31, 2011.

Net cash provided by investing activities totaled $85.9 million in the three months ended March 31, 2010, representing net
maturities of short-term investments.

Financing Activities

Net cash provided by financing activities totaled $3.8 million in the three months ended March 31, 2011, consisting of $0.8 million
in proceeds from the exercise of employee stock options and $3.0 million in net proceeds from a stockholder securities law settlement.

Net cash provided by financing activities totaled $3.1 million in the three months ended March 31, 2010, representing proceeds from the exercise of employee stock options.

Commitments and Contingencies

During the three months ended March 31, 2011 there were no material changes to our commitments and contingencies as set forth under the caption Commitments and Contingencies in Part II,
Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2010.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements as defined in Regulation S-K 303(a)(4)(ii).



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|------- | -----------------------------------------------------------

During the three months ended March 31, 2011, there were no material changes to our market risk disclosures as set forth in Part II, Item 7A, Quantitative and Qualitative Disclosures About
Market Risk, of our Annual Report on Form 10-K for the year ended December 31, 2010.



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|ITEM 4. | CONTROLS AND PROCEDURES.
|------- | ------------------------

Evaluation
of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as such term is defined
in Rule 13a-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Commissions rules and forms and that such information is communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required
disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, but not absolute, assurance that
the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet the reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management
necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As required by Rule 13a-15(b) or Rule 15d-15(b) of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on the foregoing, our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2011 at the reasonable assurance level.

Changes in Internal Controls

There were no changes in our internal control
over financial reporting during the three months ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS.
|------- | ------------------

In
March 2010, the first of three purported securities class action lawsuits was commenced in the U.S. District Court for the Northern District of California, naming as defendants us and certain of our officers. The lawsuits are largely identical and
allege violations of the Securities Exchanges Act of 1934 in connection with allegedly false and misleading statements made by us related to dimebon. The plaintiffs allege among other things that we disseminated false and misleading statements about
the effectiveness of dimebon for the treatment of Alzheimers disease, making it impossible for stockholders to gain a realistic understanding of the drugs progress toward FDA approval. The plaintiffs purport to seek damages, an award of
their costs and injunctive relief on behalf of a class of stockholders who purchased or otherwise acquired our common stock between July 17, 2008 and March 2, 2010. In September 2010, the court entered an order consolidating the actions
and in April 2011, the court entered an order appointing Catoosa Fund, L.P. and its attorneys as lead plaintiff and lead counsel. Plaintiff has until May 9, 2011 to file a consolidated, amended complaint.

Our management believes that we have meritorious defenses and intends to defend this lawsuit vigorously. However, this lawsuit is subject
to inherent uncertainties, the actual cost may be significant, and we may not prevail. We believe we are entitled to coverage under our relevant insurance policies, subject to a $350,000 retention, but coverage could be denied or prove to be
insufficient.



|ITEM 1A. | RISK FACTORS.
|-------- | -------------

Our
business faces significant risks, some of which are set forth below to enable readers to assess, and be appropriately apprised of, many of the risks and uncertainties applicable to the forward-looking statements made in this Quarterly Report on Form
10-Q. You should carefully consider these risk factors as each of these risks could adversely affect our business, operating results and financial condition. If any of the events or circumstances described in the following risks actually occurs, our
business may suffer, the trading price of our common stock could decline and our financial condition or results of operations could be harmed. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking
statements. These risks should be read in



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conjunction with the other information set forth in this Quarterly Report on Form 10-Q. The risks and uncertainties described below are not the only ones we face. Additional risks and
uncertainties not presently known to us, or that we currently believe to be immaterial, may also adversely affect our business.

We have marked with an asterisk (*) those risks described below that reflect substantive changes from the risks described in our Annual Report on Form 10-K for the year ended December 31,
2010, filed with the SEC on March 16, 2011.

Risks Related to Our Business

We have incurred net losses since inception, expect to incur additional losses in the future as we continue our development activities
and may never achieve sustained revenues or profitability. Our only revenue to date has been collaboration revenue under our collaboration agreements with Pfizer and Astellas. We have not completed development of any of our product candidates
and do not expect that any of our present or future product candidates will be commercially available for a number of years, if at all. We have incurred losses since inception and expect to continue to incur substantial additional losses for the
foreseeable future as we continue to finance clinical and preclinical studies of our existing and potential future product candidates and our corporate overhead costs. Our operating losses have had, and will continue to have, an adverse impact on
our working capital, total assets and stockholders equity. We do not know when or if we will ever generate any additional revenue, including any milestone payments, profit sharing payments or royalty payments under our collaboration agreements
with Pfizer and Astellas, or become profitable, because of the significant uncertainties with respect to our ability to generate product revenue from, and obtain approval from the FDA or comparable foreign regulatory authorities for, any of our
current or future product candidates.

*Because we depend on financing from third parties for our operations, our business
may fail if such financing becomes unavailable or is offered on commercially unreasonable terms. To date, we have financed our operations primarily through the sale of our debt and equity securities, and from up-front, development milestone and
cost-sharing payments received pursuant to our collaboration agreements with Pfizer and Astellas. As of March 31, 2011 we had cash, cash equivalents and short-term investments of $195.0 million available to fund operations. Based upon our
current expectations, we believe our capital resources at March 31, 2011 will be sufficient to fund our currently planned operations beyond the end of 2012, regardless of whether Pfizer elects to terminate our collaboration agreement. This
estimate is based on a number of assumptions that may prove to be wrong and we could exhaust our available cash reserves earlier than we currently anticipate. Our future capital requirements will depend on many factors, including without limitation:



| |  |  | whether any changes are made to the scope of our ongoing clinical development activities;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | the scope and results of our and our corporate partners preclinical and clinical trials;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | whether we experience delays in our preclinical and clinical development programs, including potential delays in recruiting, or inability to recruit,
patients into our ongoing PREVAIL trial of MDV3100 in chemotherapy-naïve advanced prostate cancer as a result of the availability of abiraterone acetate, which was approved by the FDA in April 2011, or other investigational and approved
prostate cancer therapies, or slower than anticipated product development;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | whether opportunities to acquire additional product candidates arise and the timing and costs of acquiring and developing those product candidates;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | whether we are able to enter into additional third-party collaborative partnerships to develop and/or commercialize any of our product candidates on
terms, including development cost share terms, that are acceptable to us;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the timing and requirements of, and the costs involved in, conducting studies required to obtain regulatory approvals for our product candidates from
the FDA and comparable foreign regulatory agencies;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | whether we elect to exercise our co-promotion rights for either MDV3100 or dimebon, should either of those drugs receive marketing approval in the
United States;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the availability of third parties to perform the key development tasks for our product candidates, including conducting preclinical and clinical
studies and manufacturing our product candidates to be tested in those studies, and the associated costs of those services;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | expenses associated with the pending purported securities class action lawsuits, as well as any unforeseen litigation; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | the costs involved in preparing, filing, prosecuting, maintaining, defending the validity of and enforcing patent claims and other costs related to
patent rights and other intellectual property rights, including litigation costs and the results of such litigation.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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We may not be able to obtain additional financing when we need it on acceptable terms or at
all. If we cannot raise funds on acceptable terms, we may not be able to continue developing our product candidates, acquire or develop additional product candidates or respond to competitive pressures or unanticipated requirements. For these
reasons, any inability to raise additional capital when we require it would seriously harm our business. In March 2010, we announced a reduction of approximately 20% of our workforce in order to reduce our operating costs and focus our resources on
prioritized dimebon trials and the continued development of MDV3100, and we may need to further reduce our operating costs in the future, perhaps significantly, to preserve our cash. The cost-cutting measures we have taken and may take in the future
may not be sufficient to enable us to meet our cash requirements, and they may negatively affect our business and growth prospects.

Our business strategy depends on our ability to identify and acquire additional product candidates which we may never acquire or identify for reasons that may not be in our control, or are otherwise
unforeseen or unforeseeable to us. A key component of our business strategy is to diversify our product development risk by identifying and acquiring new product opportunities for development. However, we may not be able to identify promising
new technologies. In addition, the competition to acquire promising biomedical technologies is fierce, and many of our competitors are large, multinational pharmaceutical, biotechnology and medical device companies with considerably more financial,
development and commercialization resources and experience than we have. Thus, even if we succeed in identifying promising technologies, we may not be able to acquire rights to them on acceptable terms or at all. If we are unable to identify and
acquire new technologies, we will be unable to diversify our product risk. We believe that any such failure would have a significant negative impact on our prospects because the risk of failure of any particular development program in the
pharmaceutical industry, including our ongoing dimebon and MDV3100 development programs, is high.

Because we depend on our
management to oversee the execution of development plans for our existing product candidates and to identify and acquire promising new product candidates, the loss of any of our executive officers would harm our business. Our future success
depends upon the continued services of our executive officers. We are particularly dependent on the continued services of David Hung, M.D., our president and chief executive officer and a member of our board of directors. Dr. Hung identified
all of our existing product candidates for acquisition and has primary responsibility for identifying and evaluating other potential product candidates. We believe that Dr. Hungs services in this capacity would be difficult to replace.
None of our executive officers is bound by an employment agreement for any specific term, and they may terminate their employment at any time. In addition, we do not have key person life insurance policies covering any of our executive
officers. The loss of the services of any of our executive officers could delay the development of our existing product candidates and delay or preclude the identification and acquisition of new product candidates, either of which events could harm
our business. In addition, our March 2010 workforce reduction and any future workforce reductions may negatively affect our ability to retain or attract key scientific and executive personnel.

Our reliance on third parties for the operation of our business may result in material delays, cost overruns and/or quality
deficiencies in our development programs. We rely on outside vendors to perform key product development tasks, such as conducting preclinical and clinical studies and manufacturing our product candidates at appropriate scale for preclinical and
clinical trials and, in situations where we are unable to transfer those responsibilities to a corporate partner, for commercial use as well. In order to manage our business successfully, we will need to identify, engage and properly manage
qualified external vendors that will perform these development activities. For example, we need to monitor the activities of our vendors closely to ensure that they are performing their tasks correctly, on time, on budget and in compliance with
strictly enforced regulatory standards. Our ability to identify and retain key vendors with the requisite knowledge is critical to our business and the failure to do so could negatively impact our business. Because all of our key vendors perform
services for other clients in addition to us, we also need to ensure that they are appropriately prioritizing our projects. If we fail to manage our key vendors well, we could incur material delays, cost overruns or quality deficiencies in our
development programs, as well as other material disruptions to our business.

Risks Related to Our Product Development Candidates

Our product candidates require extensive, time-consuming and expensive preclinical and clinical testing to establish
safety and efficacy. We may never attract additional partners for our technologies or receive marketing approval in any jurisdiction. The research and development of pharmaceuticals is an extremely risky industry. Only a small percentage of
product candidates that enter the development process ever receive marketing approval. Except for dimebons approval in Russia as an antihistamine, which is not a commercially attractive opportunity for us, none of our product candidates is
currently approved for sale anywhere in the world, and none of them may ever receive such approval. The process of conducting the preclinical and clinical testing required to establish safety and efficacy and obtain marketing approval is expensive
and uncertain and takes many years. If we are unable to complete



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preclinical or clinical trials of any of our current or future product candidates, or if the results of these trials are not satisfactory to convince regulatory authorities or partners of their
safety or efficacy, we will not be able to obtain marketing approval or attract additional partners for those product candidates. Furthermore, even if we or our partners are able to obtain marketing approvals for any of our product candidates, those
approvals may be for indications that are not as broad as desired or may contain other limitations that would adversely affect our ability to generate revenue from sales of those products. If this occurs, our business will be materially harmed and
our ability to generate revenue will be severely impaired.

*Because our ongoing Phase 3 AFFIRM and PREVAIL trials of
MDV3100 both have overall survival as a primary endpoint, the availability of approved and/or experimental agents that prolong survival, including the approved hormonal agent abiraterone acetate, the approved chemotherapy agents docetaxel and
cabazitaxel, and the approved prostate cancer vaccine sipuleucel-T, may make it more difficult for our AFFIRM and PREVAIL trials to succeed or may prevent them from succeeding, and could reduce the magnitude of any potential survival benefit that
MDV3100 may demonstrate in either such trial even if such trial does succeed. Our ongoing Phase 3 AFFIRM and PREVAIL trials in advanced prostate cancer are attempting to demonstrate a statistically significant difference in survival between
drug-treated and placebo-treated patients. Overall survival is the sole primary endpoint in our ongoing AFFIRM trial, and a co-primary endpoint, together with progression-free survival, in our ongoing PREVAIL trial. Patients participating in our
AFFIRM and PREVAIL trials may elect to leave our trials and switch to alternative treatments that are available to them commercially, such as abiraterone acetate, docetaxel, cabazitaxel, and sipuleucel-T. Each of these alternative treatments has
demonstrated statistically significant survival benefits of between two and one-half and five months in advanced prostate cancer patients and is commercially available. The survival of any patients who leave our AFFIRM or PREVAIL trials to take an
alternative treatment will continue to be included in the analysis of our trials. Any survival benefit conferred by these alternative treatments may have a negative impact on the results of our AFFIRM and PREVAIL trials, particularly in the case of
patients who were randomized to placebo in our AFFIRM and PREVAIL trials. One third of the patients in our AFFIRM trial, and half the patients in our PREVAIL trial, were randomized to placebo. Patients in our AFFIRM and PREVAIL trials are free to
leave our trials at any time, and are free to take any alternative treatment once they have left our trials. We have no ability to control or influence either of these decisions. Use of other alternative life-prolonging treatments by patients
leaving our AFFIRM and PREVAIL trials could make it more difficult for these trials to succeed, could prevent them from succeeding, and could reduce any potential survival benefit that may be shown in these trials even if they do succeed. Failure of
either our AFFIRM or PREVAIL trials could have significant negative effects on us, including preventing us from obtaining marketing approval in the patient populations being studied in those trials, being required to conduct additional trials, or
causing our partner Astellas to elect to terminate our collaboration agreement. Even if our AFFIRM or PREVAIL trials succeed, any negative impact on the survival benefit shown in those trials could reduce or eliminate MDV3100s ability to
compete effectively with other treatments that have shown longer survival benefits.

*Enrollment and retention of patients
in clinical trials is an expensive and time-consuming process, could be made more difficult or rendered impossible by multiple factors outside our control, including the availability of competing treatments or clinical trials of competing drugs for
the same indication and the results of other studies of our product candidates in the same or other indications, and could result in significant delays, cost overruns, or both, in our product development activities, or in the failure of such
activities. We may encounter delays in enrolling, or be unable to enroll, a sufficient number of patients to complete any of our clinical trials, and even once enrolled we may be unable to retain a sufficient number of patients to complete any
of our trials. Patient enrollment and retention in clinical trials depends on many factors, including the size of the patient population, the nature of the trial protocol, the existing body of safety and efficacy data with respect to the study drug,
the number and nature of competing treatments and ongoing clinical trials of competing drugs for the same indication, the proximity of patients to clinical sites and the eligibility criteria for the study. For example, there are multiple ongoing
Phase 3 trials competing with our ongoing PREVAIL trial to recruit advanced prostate cancer patients who are chemotherapy-naïve, including an ongoing Phase 3 trial of an investigational agent from Takeda Pharmaceuticals that operates
by the same molecular mechanism of action as the approved drug abiraterone acetate. Furthermore, because patients in our PREVAIL trial have a 50% chance of being randomized to placebo, the availability of competing treatments may make it more
difficult, or impossible, to complete enrollment in the PREVAIL trial. Such competing treatments include the approved hormonal agent abiraterone acetate, the approved chemotherapy agents cabazitaxel and docetaxel, and the approved prostate cancer
vaccine sipuleucel-T, all of which have been shown to prolong overall survival in advanced prostate cancer patients. Furthermore, any negative results we may report in clinical trials of any of our product candidates may make it difficult or
impossible to recruit and retain patients in other clinical studies of that same product candidate. For example, the failure of our Phase 3 trials of dimebon in mild-to-moderate Alzheimers disease and in Huntington disease could cause
patients participating in our ongoing Phase 3 CONCERT trial of dimebon in mild-to-moderate Alzheimers disease to leave our trial and prevent us from completing the CONCERT trial. Similarly, should our Phase 3 AFFIRM trial of MDV3100
in post-chemotherapy advanced prostate



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cancer fail or produce insufficiently positive results, this could make patient recruitment and retention in our ongoing and any subsequent MDV3100 trials, including our ongoing Phase 3
PREVAIL trial, our ongoing Phase 2 TERRAIN trial and our upcoming Phase 2 trial in hormone-naïve patients, difficult or impossible. Delays or failures in planned patient enrollment and/or retention may result in increased costs, program delays
or both, which could have a harmful effect on our ability to develop dimebon, MDV3100 or any other product candidates, or could render further development impossible.

*Positive results in the Russian Study were not predictive of results in the CONNECTION study, which was designed as a confirmatory study, positive results in our Phase 2 clinical trial of dimebon
in Huntington disease patients were not predictive of results in the HORIZON study, and positive results seen in our Phase 1-2 clinical trial of MDV3100 in advanced prostate cancer may not be predictive of results of any of our ongoing and potential
future clinical trials of MDV3100. The CONNECTION study was designed expressly to replicate the positive results seen in the Russian Study, but failed to do so. In addition, the HORIZON study failed to replicate the cognition benefit seen in our
prior Phase 2 trial of dimebon in Huntington disease. As evidenced by these examples, even where we achieve positive results in clinical trials, subsequent clinical trials may fail, even if those subsequent trials are designed very similarly to
their predecessors. Accordingly, despite the positive results seen to date in our Phase 1-2 trial of MDV3100 in advanced prostate cancer, our ongoing Phase 3 AFFIRM trial of MDV3100 in post-chemotherapy advanced prostate cancer, our ongoing
Phase 3 PREVAIL trial in chemotherapy-naïve advanced prostate cancer, our ongoing Phase 2 TERRAIN trial comparing MDV3100 to bicalutamide, our upcoming Phase 2 study of MDV3100 in hormone-naïve patients, and any other of our
ongoing or planned studies of MDV3100 may fail. In addition, despite the positive results seen in our Russian Study, our ongoing Phase 3 CONCERT trial may fail. Product candidates in clinical trials, including Phase 3 clinical trials, often fail to
show the desired safety and efficacy outcomes despite having progressed successfully through prior stages of preclinical and clinical testing.

*Given the negative results in the CONNECTION and HORIZON trials, our revised dimebon clinical development plan, even if completed successfully, may be inadequate to obtain approval in mild-to-moderate
Alzheimers disease. The FDA informed us in January 2008 that the Russian Study and the CONNECTION trial could be used as the two pivotal studies required to support the approval of dimebon to treat mild-to-moderate Alzheimers
disease, as long as a significant portion of the sites in the CONNECTION trial were located in the United States. Given the failure of the CONNECTION trial, we now propose to rely on the Russian Study and the CONCERT trial as our two pivotal studies
in support of registration for mild-to-moderate Alzheimers disease. In June 2010, we presented the CONNECTION results and our proposed post-CONNECTION development plans to the FDA, and asked whether that combination of studies would be
acceptable to support approval of dimebon to treat mild-to-moderate Alzheimers disease. The FDA answered this question in the affirmative, provided that the results of the CONCERT trial are robustly positive. We have not presented the
CONNECTION data and our proposed post-CONNECTION development plans to the regulatory authorities in any other country, and any or all of such other regulatory authorities may give a different answer than did the FDA. Such other regulatory
authorities may, for example, require one or more additional Phase 3 trials to approve dimebon in mild-to-moderate Alzheimers disease even if the results of the ongoing CONCERT trial are positive. Furthermore, the FDA may decline to approve
dimebon for mild-to-moderate Alzheimers disease even if the data from the CONCERT trial are positive if the FDA does not consider the CONCERT data to be robustly positive or for other reasons, and may require us to conduct one or more
additional Phase 3 trials to support approval for this reason or other reasons. In addition, we have not presented the negative HORIZON results to the FDA or any other regulatory agency. These results, despite being in a different patient
population, may also make it more difficult for us to obtain, or preclude us from obtaining, regulatory approval of dimebon for mild-to-moderate Alzheimers disease even if the CONCERT results are positive. If this or any other negative
regulatory development were to occur, it may not be feasible for us to continue the development of dimebon for Alzheimers disease. Furthermore, even if we are able to obtain regulatory approval for mild-to-moderate Alzheimers disease
based on the Russian Study and the CONCERT study, that approval would not include severe Alzheimers disease, which would decrease the size of the potential market opportunity for dimebon, as may the negative results of the CONNECTION and
HORIZON trials. If we and Pfizer (or either of us individually) determines that clinical development of dimebon should be further curtailed or abandoned as a result of any such negative regulatory development or otherwise, our potential future
milestone payments and potential future revenues from the potential commercialization of dimebon would be reduced or eliminated.

*We are dependent upon our collaborative relationships with Pfizer and Astellas to further develop, manufacture and commercialize dimebon and MDV3100, respectively. There may be circumstances that
delay or prevent Pfizers or Astellas ability to develop, manufacture and commercialize dimebon or MDV3100, respectively, or that result in Pfizer or Astellas terminating our agreements with each of them.In September 2008, we
announced that we had entered into a collaboration agreement with Pfizer for the development, manufacture and commercialization of dimebon to treat Alzheimers disease and Huntington disease. In April 2011, we and Pfizer discontinued
development of dimebon for Huntington disease based on the negative HORIZON results. Under the agreement, Pfizer is responsible for development and seeking regulatory approval for, and commercialization of, dimebon outside the United States and is
responsible globally for all manufacture of product for both clinical and commercial purposes. In the United States, we and Pfizer are responsible for jointly developing and commercializing dimebon, and we share the costs, profits and losses on a
60%/40% basis, with Pfizer assuming the larger share. Under the terms of the agreement, Pfizer has the unilateral right to



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terminate the agreement at any time based on the negative results of the CONNECTION trial. Should the CONCERT trial fail, we expect that development of dimebon would be discontinued and that
Pfizer would elect to terminate our collaboration agreement. In October 2009, we announced that we had entered into a collaboration agreement with Astellas for the development, manufacture and commercialization of MDV3100 to treat prostate cancer.
Under the agreement, Astellas is responsible for developing, seeking regulatory approval for, and commercializing MDV3100 outside the United States and, following a transition period, is responsible globally for all manufacture of product for both
clinical and commercial purposes. We and Astellas are jointly responsible for developing, seeking regulatory approval for, and commercializing MDV3100 in the United States. We and Astellas share equally the costs, profits and losses arising from
development and commercialization of MDV3100 in the United States. For clinical trials useful both in the United States and in Europe or Japan, including all three of our ongoing Phase 3 and Phase 2 trials of MDV3100, we will be
responsible for one-third of the total costs and Astellas will be responsible for the remaining two-thirds.

We are subject to
a number of risks associated with our dependence on our collaborative relationships with Pfizer and Astellas, including:



| |  |  | the rights of Pfizer or Astellas to terminate the respective collaboration agreement with us on limited notice for convenience (subject to certain
limitations in the case of Astellas), or for other reasons specified in the respective collaboration agreements;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the need for us to identify and secure on commercially reasonable terms the services of third parties to perform key activities currently performed by
Pfizer and Astellas in the event that either or both of our partners were to terminate their collaborations with us, including clinical and commercial manufacturing, development activities outside of the United States and commercialization
activities globally;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | adverse decisions by Pfizer or Astellas regarding the amount and timing of resource expenditures for the development and commercialization of dimebon
or MDV3100, respectively;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | possible disagreements as to the timing, nature and extent of our development plans, including clinical trials or regulatory approval strategy;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in key management personnel that are members of each collaborations various committees; and
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | possible disagreements with Pfizer or Astellas, including those regarding the development and/or commercialization of products, interpretation of the
collaboration agreement and ownership of proprietary rights.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Due to these factors and other possible
disagreements with Pfizer or Astellas, we may be delayed or prevented from further developing, manufacturing or commercializing dimebon or MDV3100, respectively, or we may become involved in litigation or arbitration, which would be time consuming
and expensive.

If Pfizer or Astellas were to unilaterally terminate our collaborative relationship, we would need to
undertake development, manufacturing and marketing activities for dimebon or MDV3100, respectively, solely at our own expense and/or seek one or more other partners for some or all of these activities, worldwide. If we pursued these activities on
our own, it would significantly increase our capital and infrastructure requirements, might limit the indications we are able to pursue for MDV3100, and could prevent us from effectively developing and commercializing dimebon and MDV3100. If we
sought to find one or more other pharmaceutical company partners for some or all of these activities, we may not be successful in such efforts, or they may result in collaborations that have us expending greater funds and efforts than our current
relationships with Pfizer and Astellas.

We are dependent on the efforts of, and funding by, Pfizer and Astellas for the
development of dimebon and MDV3100, respectively. Under the terms of both the Pfizer collaboration agreement and the Astellas collaboration agreement, we and each of Pfizer and Astellas must agree on any changes to the development plan for
dimebon or MDV3100, respectively, that is set forth in each agreement. If we and Pfizer or we and Astellas cannot agree on any such changes, clinical trial progress could be significantly delayed or halted. Pfizer has the unilateral right to
terminate our collaboration agreement at any time based on the negative results of the CONNECTION trial. If Pfizer terminates its co-funding of our dimebon program, we may be unable to fund the development and commercialization costs on our own and
may be unable to find a new collaborator, which could cause our dimebon program to fail. Subject to certain limitations set forth in the Astellas Collaboration Agreement, Astellas is generally free to terminate the Astellas agreement at its
discretion on limited notice to us. Similarly, in the event of an uncured material breach of the Astellas agreement by us, Astellas may elect to terminate the agreement, in which case all rights to develop and commercialize MDV3100 will revert to
us. If Astellas terminates its co-funding of our MDV3100 program, we may be unable to fund the development and commercialization costs on our own and may be unable to find another partner, which could cause our MDV3100 program to fail. In the event
of an uncured material breach of the Pfizer agreement by us, Pfizer may elect either to terminate the agreement or to keep the agreement in place, but



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terminate our right to participate in development, commercialization (other than co-promoting dimebon, which right Pfizer may terminate only if our uncured material breach pertains to our
exercise of that right) and other activities for dimebon, including the joint committees and decision making for dimebon. If Pfizer terminates our right to participate in such activities, we would be entirely dependent on Pfizers actions with
respect to the development and commercialization of dimebon. In addition, under the Pfizer agreement, Pfizer is solely responsible for the development and regulatory approval of dimebon outside the United States, so we are entirely dependent on
Pfizer for the successful completion of those activities. Similarly, under the Astellas agreement, Astellas is solely responsible for the development and regulatory approval of MDV3100 outside the United States, so we are entirely dependent on
Astellas for the successful completion of those activities.

The financial returns to us, if any, under our collaboration
agreements with Pfizer and Astellas depend in large part on the achievement of development and commercialization milestones, plus a share of any profits from any product sales in the United States and royalties on any product sales outside of the
United States. Therefore, our success, and any associated financial returns to us and our investors, will depend in large part on the performance of Pfizer and Astellas under each respective agreement. If Pfizer or Astellas fails to perform or
satisfy its obligations to us, the development, regulatory approval or commercialization of dimebon or MDV3100, respectively, would be delayed or may not occur and our business and prospects could be materially and adversely affected for that
reason.

We are dependent on the efforts of Pfizer and Astellas to market and promote dimebon and MDV3100, respectively, if
approved for commercial sale. Under our collaboration with Pfizer, we and Pfizer have the right to co-promote dimebon to specialty physicians in the United States and Pfizer has the sole right to promote dimebon to primary care physicians in the
United States. Outside the United States, Pfizer has the sole right to promote dimebon. We are thus solely dependent on Pfizer to successfully promote dimebon to primary care physicians in the United States and to all customers outside of the United
States and are partially dependent on Pfizer to successfully promote dimebon to specialty physicians in the United States. Under our collaboration with Astellas, we and Astellas have the right to co-promote MDV3100 to all customers in the United
States, and Astellas has the sole right to promote MDV3100 to all customers outside of the United States. We are thus partially dependent on Astellas to successfully promote MDV3100 in the United States and solely dependent on Astellas to
successfully promote MDV3100 outside of the United States. We have limited ability to direct Pfizer or Astellas in their potential commercialization of dimebon or MDV3100, respectively, in any country, including the United States. If Pfizer or
Astellas fail to adequately market and promote dimebon or MDV3100, respectively, whether inside or outside of the United States, we may be unable to obtain any remedy against Pfizer or Astellas. If this were to happen, any sales of dimebon or
MDV3100, respectively, may be harmed, which would negatively impact our business, results of operations, cash flows and liquidity.

We are dependent on Pfizer and Astellas to manufacture clinical and commercial requirements of dimebon and MDV3100, respectively, which could result in the delay of clinical trials or regulatory
approval or lost sales. Under both of our agreements with each of Pfizer and Astellas, after a transition period, Pfizer and Astellas have the primary right and responsibility to manufacture and/or manage the supply of dimebon and MDV3100,
respectively, for clinical trials and all commercial requirements. We transitioned substantially all of the manufacturing obligations for dimebon to Pfizer in 2009, and are in the process of transitioning the manufacturing obligations for MDV3100 to
Astellas. Consequently, we are, and expect to remain, dependent on Pfizer and Astellas to supply dimebon and MDV3100, respectively. In the event that Pfizer terminates the dimebon collaboration, at our request it will supply us with dimebon for
clinical and commercial use for a reasonable period of time not to exceed 18 months following its notice of termination, on terms to be negotiated by the parties in good faith. Pfizer or Astellas may encounter difficulties in production scale-up,
including problems involving production yields, quality control and quality assurance, and shortage of qualified personnel. Pfizer or Astellas may not perform as agreed or may default in their obligations to supply clinical trial supplies and/or
commercial product. Pfizer or Astellas may fail to deliver the required quantities of our products or product candidates on a timely basis. Any such failure by Pfizer or Astellas could delay our future clinical trials and our applications for
regulatory approval, or, if approved for commercial sale, could impair our ability to meet the market demand for dimebon or MDV3100, respectively, and therefore result in decreased sales. If Pfizer or Astellas does not adequately perform, we may be
forced to incur additional expenses, delays, or both, to arrange or take responsibility for other third parties to manufacture products on our behalf, as we do not have any internal manufacturing capabilities.

*If Pfizers or Astellas business strategies change, any such changes may adversely affect our collaborative relationships
with each party. Either Pfizer or Astellas may change its business strategy. Decisions by either Pfizer or Astellas to either reduce or eliminate its participation in the Alzheimers disease field or prostate cancer field, respectively, to
emphasize other competitive agents currently in its portfolio at the expense of dimebon or MDV3100, respectively, or to add additional competitive agents to its portfolio, could reduce its financial incentives to continue to develop, seek regulatory
approval for, or commercialize dimebon or MDV3100, respectively. For example, in October 2009 Pfizer completed its acquisition of Wyeth, which is co-developing an Alzheimers disease product candidate that, like dimebon, is currently in Phase 3
development. A change in Pfizers business strategy as a result of the



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Wyeth acquisition or for other reasons, including the negative results of the CONNECTION and HORIZON trials or potential negative results in the ongoing CONCERT trial, may adversely affect
activities under our collaboration agreement with Pfizer, which could cause significant delays and funding shortfalls impacting the activities under the collaboration and seriously harming our business, or could result in changes to the terms of our
collaboration or its outright termination. Should the CONCERT trial fail, we expect that development of dimebon would be discontinued and that Pfizer would elect to terminate our collaboration agreement. In addition, Astellas has partnered with us
based in part on Astellas desire to use MDV3100 as a component of building a global oncology franchise, which Astellas presently does not have. If Astellas strategic objective of building a global oncology franchise were to change, such
change could negatively impact any commercial prospects of MDV3100.

*Our industry is highly regulated by the FDA and
comparable foreign regulatory agencies. We must comply with extensive, strictly enforced regulatory requirements in order to develop and obtain marketing approval for any of our product candidates. Before we, Pfizer, Astellas or any potential
future partners can obtain regulatory approval for the sale of our product candidates, our product candidates must be subjected to extensive preclinical and clinical testing to demonstrate their safety and efficacy for humans. The preclinical and
clinical trials of any product candidates that we develop must comply with regulation by numerous federal, state and local government authorities in the United States, principally the FDA, and by similar agencies in other countries. We are required
to obtain and maintain an effective investigational new drug application to commence human clinical trials in the United States and must obtain and maintain additional regulatory approvals before proceeding to successive phases of our clinical
trials. Securing FDA approval requires the submission of extensive preclinical and clinical data and supporting information for each therapeutic indication to establish the product candidates safety and efficacy for its intended use. It takes
years to complete the testing of a new drug or medical device and development delays and/or failure can occur at any stage of testing. Any of our present and future clinical trials may be delayed or halted due to any of the following:



| |  |  | any preclinical test or clinical trial may fail to produce safety and efficacy results satisfactory to the FDA or foreign regulatory authorities;
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| |  |  | preclinical and clinical data can be interpreted in different ways, which could delay, limit or prevent regulatory approval;
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| |  |  | negative or inconclusive results from a preclinical test or clinical trial, such as the negative results from the CONNECTION trial in mild-to-moderate
Alzheimers disease reported in March 2010 and the negative results from the HORIZON trial in Huntington disease reported in April 2011, or adverse medical events during a clinical trial could cause a preclinical study or clinical trial to be
repeated or a program to be terminated, even if other studies or trials relating to the program are ongoing or have been completed and were successful;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the FDA or foreign regulatory authorities can place a clinical hold on a trial if, among other reasons, it finds that patients enrolled in the trial
are or would be exposed to an unreasonable and significant risk of illness or injury;
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| |  |  | the FDA might not approve the clinical processes or facilities that we utilize, or the processes or facilities of our consultants, including without
limitation the vendors who will be manufacturing drug substance and drug product for us or any potential collaborators;
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| |  |  | any regulatory approval we, Pfizer, Astellas or any potential future collaborators ultimately obtain may be limited or subject to restrictions or
post-approval commitments that render the product not commercially viable; and
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| |  |  | we may encounter delays or rejections based on changes in FDA policies or the policies of foreign regulatory authorities during the period in which we
develop a product candidate or the period required for review of any final regulatory approval before we are able to market our product candidates.
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In addition, information generated during the clinical trial process is susceptible to varying interpretations that could delay, limit, or prevent regulatory approval at any stage of the approval process.
Failure to demonstrate adequately the quality, safety and efficacy of any of our product candidates would delay or prevent regulatory approval of the applicable product candidate. There can be no assurance that if clinical trials are completed,
either we or our collaborative partners will submit applications for required authorizations to manufacture or market potential products or that any such application will be reviewed and approved by appropriate regulatory authorities in a timely
manner, if at all.

If our product candidates cannot be manufactured in a cost-effective manner and in compliance with
current good manufacturing practices, or cGMP, and other applicable regulatory standards, they will not be commercially successful. All pharmaceutical and medical device products in the United States, Europe and other countries must be
manufactured in strict compliance with cGMP and other applicable regulatory standards. Establishing a cGMP-compliant process to manufacture pharmaceutical products involves significant time, cost and uncertainty. Furthermore, in order to be
commercially viable, any such process would have to yield product on a cost-effective basis,



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using raw materials that are commercially available on acceptable terms. We face the risk that our contract manufacturers may have interruptions in raw material supplies, be unable to comply with
strictly enforced regulatory requirements, or for other reasons beyond their or our control, be unable to complete their manufacturing responsibilities on time, on budget, or at all. Under our collaboration agreements with Pfizer and Astellas,
Pfizer and Astellas are responsible for all manufacture of dimebon and MDV3100, respectively, for commercial purposes, but we cannot guarantee that either Pfizer or Astellas will be able to supply dimebon or MDV3100, respectively, in a timely manner
or at all. Furthermore, commercial manufacturing processes have not yet been validated for either dimebon or MDV3100. In the event that Pfizer elects to terminate our dimebon collaboration agreement, following a period of transition assistance from
Pfizer, we will be responsible for manufacturing dimebon or finding a different third party to manufacture dimebon and neither we nor any other third party have experience manufacturing dimebon at commercial scale under cGMP-compliant conditions. We
thus cannot guarantee that commercial-scale cGMP manufacture of dimebon and/or MDV3100 will be possible, on a cost-effective basis or at all, which would materially and adversely affect the value of these programs.

*Any of our product development candidates that receive marketing approval will face significant competition from other approved
products, including generic products and products with more convenient dosing regimens, and other products in development. The biopharmaceutical industry is intensely competitive in general. Furthermore, our business strategy is to target large
unmet medical needs, and those markets are even more highly competitive. For example, in 2010 and 2011 a new second-line chemotherapy drug, cabazitaxel, and a new hormonal drug, abiraterone acetate, received marketing approval in the
post-chemotherapy advanced prostate cancer patient population we are studying in our ongoing Phase 3 AFFIRM trial of MDV3100, and a new prostate cancer vaccine, sipuleucel-T, received marketing approval covering both the post-chemotherapy
advanced prostate cancer population we are studying in our Phase 3 AFFIRM trial and the chemotherapy-naïve advanced prostate cancer population we are studying in our Phase 3 PREVAIL trial. In addition, abiraterone acetate has already
completed enrollment in a Phase 3 trial in the chemotherapy-naïve advanced prostate cancer population, and could report positive results from that trial at any time. Several other drugs are also in advanced clinical development in both
populations. In Alzheimers disease, there are four currently marketed drugs, two of which already have generic equivalents and the remaining two of which are expected to have generic equivalents by 2015. These drugs are all dosed once or twice
per day, while dimebon dosing is three times daily in all of our completed clinical trials and in our ongoing CONCERT trial. This difference in dosing regimen may make dimebon less competitive than alternative drugs if dimebon receives marketing
approval based on a thrice per day dosing regimen. In addition, the past and expected future loss of patent protection on the approved Alzheimers disease drugs has and is likely to continue to significantly reduce the commercial pricing of
those approved drugs, which puts significant competitive pressure on the prices we or our potential partners could charge for dimebon should it ever be approved. Companies currently marketing, or expected to be marketing in the near future, products
that will compete directly with any of our investigational drugs that may receive marketing approval include some of the worlds largest and most experienced pharmaceutical companies, such as Johnson & Johnson, sanofi-aventis and
Forest Laboratories. There are also dozens of additional small molecule and recombinant protein candidates in development targeting Alzheimers disease and advanced prostate cancer, including compounds already in Phase 3 clinical trials. One or
more such compounds may be approved in each of our target indications before any of our product candidates could potentially be approved. Most, if not all, of these competing drug development programs are being conducted by pharmaceutical and
biotechnology companies with considerably greater financial resources, human resources and experience than ours. Any of our product candidates that receives regulatory approval will face significant competition from both approved drugs and from any
of the drugs currently under development that may subsequently be approved. Bases upon which our product candidates would have to compete successfully include efficacy, safety, price and cost-effectiveness. Even if dimebon were ever to receive
marketing approval, the negative data from the CONNECTION trial could be included in the product label, which could make dimebon less attractive to physicians and patients than other products that are currently, or that in the future may be,
approved for Alzheimers disease, which could limit potential sales of dimebon. In addition, our product candidates would have to compete against these other drugs with several different categories of decision makers, including physicians,
patients, government and private third-party payors, technology assessment groups and patient advocacy organizations. Even if one of our product candidates is approved, we cannot guarantee that we, Pfizer, Astellas or any of our potential future
partners will be able to compete successfully on any of these bases. Any future product candidates that we may subsequently acquire will face similar competitive pressures. If we or our partners cannot compete successfully on any of the bases
described above, our business will not succeed.

Any of our product candidates that is eventually approved for sale may not
be commercially successful if not widely-covered and appropriately reimbursed by third-party payors. Third-party payors, including public insurers such as Medicare and Medicaid and private insurers, pay for a large share of health care products
and services consumed in the United States. In Europe, Canada and other major international markets, third-party payors also pay for a significant portion of health care products and services and many of those countries have nationalized health care
systems in which the government pays for all such products and services and must approve product pricing. Even if approved by the FDA and foreign regulatory agencies, our product candidates are unlikely to achieve commercial success unless they are
covered widely by third-party payors and reimbursed at a rate that generates an acceptable commercial return for us and any collaborative partner. It is increasingly difficult to obtain coverage and acceptable reimbursement



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levels from third-party payors and we may be unable to achieve these objectives. Achieving coverage and acceptable reimbursement levels typically involves negotiating with individual payors and
is a time-consuming and costly process. Moreover, comprehensive health care reform legislation was recently enacted in the United States that substantially changes the way health care is financed by both governmental and private insurers, and
significantly impacts the pharmaceutical industry. The new legislation contains a number of provisions that are expected to impact our business and operations, including those relating to the increased use of comparative effectiveness research on
health care products, changes to enrollment in federal healthcare programs, reimbursement changes and fraud and abuse provisions, all of which will impact existing government health care programs and will result in the development of new programs.
Many of the details regarding the implementation of this legislation have yet to be determined and implementation may ultimately adversely affect our business. Further, we expect that there will continue to be a number of federal and state proposals
to implement government controls over drug product pricing. We are currently unable to predict what additional legislation or regulations, if any, relating to the pharmaceutical industry or third-party payor coverage and reimbursement may be enacted
in the future, or what effect the recently enacted federal health care reform legislation or any such additional legislation or regulation will or would have on our business. In addition, we would face competition in such negotiations from other
approved drugs against which we compete, which may include other approved drugs marketed by Pfizer or Astellas, and the marketers of such other drugs are likely to be significantly larger than us and therefore enjoy significantly more negotiating
leverage with respect to the individual payors than we may have. The competition for coverage and reimbursement level with individual payors will be particularly intense for dimebon, if approved to treat Alzheimers disease, because two of the
four currently marketed Alzheimers disease drugs have already lost patent protection and the other two are expected to do so prior to, or shortly following, dimebons potential commercial launch. Drugs available at generic price levels
are generally more attractive to individual payors than branded price drugs. Our commercial prospects would be further weakened if payors approved coverage for our product candidates only as second- or later-line treatments, or if they placed any of
our product candidates in tiers requiring unacceptably high patient co-payments. Failure to achieve acceptable coverage and reimbursement levels could materially harm our or our partners ability to successfully market our product candidates.

We may be subject to product liability or other litigation, which could result in an inefficient allocation of our
critical resources, delay the implementation of our business strategy and, if successful, materially and adversely harm our business and financial condition as a result of the costs of liabilities that may be imposed thereby. Our business
exposes us to the risk of product liability claims that is inherent in the development of pharmaceutical products. If any of our product candidates harms people, or is alleged to be harmful, we may be subject to costly and damaging product liability
claims brought against us by clinical trial participants, consumers, health care providers, corporate partners or others. We have product liability insurance covering our ongoing clinical trials, but do not have insurance for any of our other
development activities. If we are unable to obtain insurance at an acceptable cost or otherwise protect against potential product liability claims, we may be exposed to significant litigation costs and liabilities, which may materially and adversely
affect our business and financial position. If we are sued for injuries allegedly caused by any of our product candidates, our litigation costs and liability could exceed our total assets and our ability to pay. In addition, we may from time to time
become involved in various lawsuits and legal proceedings which arise in the ordinary course of our business. Any litigation to which we are subject, including the purported securities class action lawsuits described in the section entitled
Legal Proceedings under Part II, Item 1 of this Quarterly Report on Form 10-Q, could require significant involvement of our senior management and may divert managements attention from our business and operations. Litigation
costs or an adverse result in any litigation that may arise from time to time may adversely impact our operating results or financial condition.

Risks Related to Intellectual Property

Intellectual property protection
for our product candidates is crucial to our business, and is subject to a significant degree of legal risk, particularly in the life sciences industry. The success of our business will depend in part on our ability to obtain and maintain
intellectual property protectionprimarily patent protectionof our technologies and product candidates, as well as successfully defending these patents against third-party challenges. We and our collaborators will only be able to protect
our technologies and product candidates from unauthorized use by third parties to the extent that valid and enforceable patents or trade secrets cover them. Furthermore, the degree of future protection of our proprietary rights is uncertain because
legal means afford only limited protection and may not adequately protect our rights or permit us or our potential future collaborators to gain or keep our competitive advantage.

The patent positions of life sciences companies can be highly uncertain and involve complex legal and factual questions for which
important legal principles remain unresolved. Further, changes in either the patent laws or in interpretations of patent laws in the United States or other countries may diminish the value of our intellectual property rights. Accordingly, we cannot
predict the breadth of claims that may be granted or enforced for our patents or for third-party patents that we have licensed. For example:



| |  |  | we or our licensors might not have been the first to make the inventions covered by each of our pending patent applications and issued patents;
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| |  |  | we or our licensors might not have been the first to file patent applications for these inventions;
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| |  |  | others may independently develop similar or alternative technologies or duplicate any of our technologies;
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| |  |  | it is possible that none of our pending patent applications or the pending patent applications of our licensors will result in issued patents;
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| |  |  | our issued patents and future issued patents, or those of our licensors, may not provide a basis for protecting commercially viable products, may not
provide us with any competitive advantages, or may be challenged by third parties and invalidated or rendered unenforceable; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we may not develop additional proprietary technologies or product candidates that are patentable.
| | - |  | -------------------------------------------------------------------------------------------------

Our existing and any future patent rights may not adequately protect any of our product candidates, which could prevent us from ever
generating any revenues or profits. We cannot guarantee that any of our pending or future patent applications will mature into issued patents, or that any of our current or future issued patents will adequately protect our product candidates
from competitors. For example, there is a large body of prior art, including multiple issued patents and published patent applications, disclosing molecules in the same chemical class as our licensed MDV300 series compounds. Since our licensed
MDV300 series compounds include approximately 170 specific molecules, we expect that some members of this series may not be patentable in light of this prior art, or may infringe the claims of patents presently issued or issued in the future.
Furthermore, we cannot guarantee that any of our present or future issued patents will not be challenged by third parties, or that they will withstand any such challenge. If we are not able to obtain adequate protection for, or defend, the
intellectual property position of our technologies and product candidates, then we may not be able to attract collaborators to acquire or partner our development programs. Further, even if we can obtain protection for and defend the intellectual
property position of our technologies and product candidates, we or any of our potential future collaborators still may not be able to exclude competitors from developing or marketing competing drugs. Should this occur, we and our potential future
collaborators may not generate any revenues or profits from our product candidates or our revenue or profits would be significantly decreased.

We could become subject to litigation or other challenges regarding intellectual property rights, which could divert management attention, cause us to incur significant costs, prevent us from selling
or using the challenged technology and/or subject us to competition by lower priced generic products. In recent years, there has been significant litigation in the United States and elsewhere involving pharmaceutical patents and other
intellectual property rights. In particular, generic pharmaceutical manufacturers have been very aggressive in challenging the validity of patents held by proprietary pharmaceutical companies, especially if these patents are commercially
significant. If any of our present or future product candidates succeed, we may face similar challenges to our existing or future patents. For example, in the prosecution of our issued U.S. patents claiming the use of dimebon and certain related
compounds to treat neurodegenerative diseases, including Alzheimers disease, the prior owners missed a filing deadline with the U.S. Patent & Trademark Office, or PTO, which resulted in the patent application being deemed abandoned.
The prior owners petitioned the PTO to revive the patent application alleging that missing the deadline was unintentional and the PTO approved the petition and issued the patent. However, as with any other decision the PTO makes, this decision could
be challenged in subsequent litigation in an attempt to invalidate this issued U.S. patent and any other U.S. patent that may issue based on the same patent application. If a generic pharmaceutical company or other third party were able to
successfully invalidate any of our present or future patents, any of our product candidates that may ultimately receive marketing approval could face additional competition from lower priced generic products that would result in significant price
and revenue erosion and have a significantly negative impact on the commercial viability of the affected product candidate(s).

In the future, we may be a party to litigation to protect our intellectual property or to defend our activities in response to alleged
infringement of a third partys intellectual property. These claims and any resulting lawsuit, if successful, could subject us to significant liability for damages and invalidation, or a narrowing of the scope, of our proprietary rights. These
lawsuits, regardless of their success, would likely be time-consuming and expensive to litigate and resolve and would divert management time and attention. Any potential intellectual property litigation also could force us to do one or more of the
following:



| |  |  | discontinue our products that use or are covered by the challenged intellectual property; or
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| |  |  | obtain from the owner of the allegedly infringed intellectual property right a license to sell or use the relevant technology, which license may not be
available on reasonable terms, or at all.
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If we are forced to take any of these actions, our business may
be seriously harmed. Although we carry general liability insurance, our insurance does not cover potential claims of this type.



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In addition, our patents and patent applications, or those of our licensors, could face
other challenges, such as interference proceedings, opposition proceedings and re-examination proceedings. Any such challenge, if successful, could result in the invalidation of, or in a narrowing of the scope of, any of our patents and patent
applications subject to the challenge. Any such challenges, regardless of their success, would likely be time-consuming and expensive to defend and resolve and would divert our managements time and attention.

We may in the future initiate claims or litigation against third parties for infringement in order to protect our proprietary rights or
to determine the scope and validity of our proprietary rights or the proprietary rights of competitors. These claims could result in costly litigation and the diversion of our technical and management personnel and we may not prevail in making these
claims.

We rely on license agreements for certain aspects of our product candidates and technology. We may in the future
need to obtain additional licenses of third-party technology that may not be available to us or are available only on commercially unreasonable terms, and which may cause us to operate our business in a more costly or otherwise adverse manner that
was not anticipated. We have entered into agreements with third-party commercial and academic institutions to license intellectual property rights and technology for use in our product candidates. For example, we have a license agreement with
UCLA pursuant to which we were granted exclusive worldwide rights to certain UCLA patents related to our MDV300 series compounds. Some of these license agreements, including our license agreement with UCLA, contain diligence and milestone-based
termination provisions, in which case our failure to meet any agreed upon diligence requirements or milestones may allow the licensor to terminate the agreement. If our licensors terminate our license agreements or if we are unable to maintain the
exclusivity of our exclusive license agreements, we may be unable to continue to develop and commercialize our product candidates, including MDV3100.

From time to time we may be required to license technology from additional third parties to develop our existing and future product candidates. For example, in our industry there are a large number of
issued patents and published patent applications with claims to treating diseases generically through use of any product that produces one or more biological activities, such as inhibiting a specific biological target. We are aware of several such
issued patents relating to Alzheimers disease and expect to continue to encounter such patents relating to other diseases targeted by our present and future product candidates. We have not conducted experiments to analyze whether, and we have
no evidence that, any of our product candidates produce the specific biological activities covered in any of the issued patents or published patent applications of which we are presently aware. We have not sought to acquire licenses to any such
patents. In addition, the commercial scale manufacturing processes that we are developing for our product candidates may require licenses to third-party technology. Should we be required to obtain licenses to any third-party technology, including
any such patents based on biological activities or required to manufacture our product candidates, such licenses may not be available to us on commercially reasonable terms, or at all. The inability to obtain any third-party license required to
develop any of our product candidates could cause us to abandon any related development efforts, which could seriously harm our business and operations.

We may become involved in disputes with Pfizer, Astellas or any potential future collaborators over intellectual property ownership, and publications by our research collaborators and scientific
advisors could impair our ability to obtain patent protection or protect our proprietary information, which, in either case, could have a significant impact on our business.Inventions discovered under research, material transfer or other
such collaborative agreements, including our collaboration agreements with Pfizer and Astellas, may become jointly owned by us and the other party to such agreements in some cases and the exclusive property of either party in other cases. Under some
circumstances, it may be difficult to determine who owns a particular invention, or whether it is jointly owned, and disputes could arise regarding ownership of those inventions. These disputes could be costly and time consuming and an unfavorable
outcome could have a significant adverse effect on our business if we were not able to protect or license rights to these inventions. In addition, our research collaborators and scientific advisors generally have contractual rights to publish our
data and other proprietary information, subject to our prior review. Publications by our research collaborators and scientific advisors containing such information, either with our permission or in contravention of the terms of their agreements with
us, may impair our ability to obtain patent protection or protect our proprietary information, which could significantly harm our business.

Trade secrets may not provide adequate protection for our business and technology. We also rely on trade secrets to protect our technology, especially where we believe patent protection is not
appropriate or obtainable. However, trade secrets are difficult to protect. While we use reasonable efforts to protect our trade secrets, our or any potential collaborators employees, consultants, contractors or scientific and other advisors
may unintentionally or willfully disclose our information to competitors. If we were to enforce a claim that a third party had illegally obtained and was using our trade secrets, our enforcement efforts would be expensive and time consuming, and the
outcome would be unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, if our competitors independently develop equivalent knowledge, methods or know-how, it will be more
difficult or impossible for us to enforce our rights and our business could be harmed.



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Risks Related to Ownership of Our Common Stock

*We have been named as a defendant in a purported securities class action lawsuit. This lawsuit could result in substantial damages
and may divert managements time and attention from our business and operations. In March 2010, the first of three purported securities class action lawsuits was commenced in the U.S. District Court for the Northern District of California,
naming as defendants us and certain of our officers. The lawsuits, which have now been consolidated into a single action, are largely identical and allege violations of the Exchange Act in connection with allegedly false and misleading statements
made by us related to dimebon. The plaintiffs allege, among other things, that we disseminated false and misleading statements about the effectiveness of dimebon for the treatment of Alzheimers disease, making it impossible for stockholders to
gain a realistic understanding of the drugs progress toward FDA approval. The plaintiffs purport to seek damages, an award of their costs and injunctive relief on behalf of a class of stockholders who purchased or otherwise acquired our common
stock between July 17, 2008 and March 2, 2010. In September 2010, the court entered an order consolidating the actions and in April 2011, the court entered an order appointing Catoosa Fund, L.P. and its attorneys as lead plaintiff and lead
counsel. Plaintiff has until May 9, 2011 to file a consolidated, amended complaint.

Our management believes that we have
meritorious defenses and intends to defend this lawsuit vigorously. However, this lawsuit is subject to inherent uncertainties, and the actual cost will depend upon many unknown factors. The outcome of the litigation is necessarily uncertain, we
could be forced to expend significant resources in the defense of the suit and we may not prevail. Monitoring and defending against legal actions is time consuming for our management and detracts from our ability to fully focus our internal
resources on our business activities. In addition, we may incur substantial legal fees and costs in connection with the litigation and, although we believe the company is entitled to coverage under the relevant insurance policies, subject to a
$350,000 retention, coverage could be denied or prove to be insufficient. We are not currently able to estimate the possible cost to us from this matter, as this lawsuit is currently at an early stage and we cannot be certain how long it may take to
resolve this matter or the possible amount of any damages that we may be required to pay. We have not established any reserves for any potential liability relating to this lawsuit. It is possible that we could, in the future, incur judgments or
enter into settlements of claims for monetary damages. A decision adverse to our interests on these actions could result in the payment of substantial damages, or possibly fines, and could have a material adverse effect on our cash flow, results of
operations and financial position. In addition, the uncertainty of the currently pending litigation could lead to more volatility in our stock price.

*Our stock price may be volatile, and our stockholders investment in our stock could decline in value. The market prices for our securities and those of other life sciences companies
have been highly volatile and may continue to be highly volatile in the future. The following factors, in addition to other risk factors described in this Quarterly Report on Form 10-Q, may have a significant impact on the market price of our common
stock:



| |  |  | the receipt or failure to receive the additional funding necessary to conduct our business;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | the progress and success of preclinical studies and clinical trials of our product candidates conducted by us, Pfizer, Astellas or any future
collaborative partners or licensees, if any, including any delays in enrolling a sufficient number of patients to complete clinical trials of our product candidates;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | selling by existing stockholders and short-sellers;
| | - |  | ---------------------------------------------------



| |  |  | announcements of technological innovations or new commercial products by our competitors or us;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | developments concerning proprietary rights, including patents;
| | - |  | --------------------------------------------------------------



| |  |  | developments concerning our collaboration with Pfizer, our collaboration with Astellas, or any future collaborations, including any potential decision
by Pfizer to terminate our dimebon collaboration due to the negative results of the CONNECTION trial in mild-to-moderate Alzheimers disease reported in March 2010, the negative results of the HORIZON trial in Huntington disease reported in
April 2011, or other factors;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | publicity regarding us, our product candidates or those of our competitors, including research reports published by securities analysts;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | regulatory developments in the United States and foreign countries;
| | - |  | -------------------------------------------------------------------



| |  |  | litigation, including the purported securities class action lawsuits pending against us and certain of our officers;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | economic and other external factors or other disaster or crisis; and
| | - |  | --------------------------------------------------------------------



| |  |  | period-to-period fluctuations in financial results.
| | - |  | ---------------------------------------------------



34



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##### Table of Contents

We do not intend to pay dividends on our common stock for the foreseeable
future. We do not expect for the foreseeable future to pay dividends on our common stock. Any future determination to pay dividends on or repurchase shares of our common stock will be at the discretion of our board of directors and will
depend upon, among other factors, our success in completing sales or partnerships of our programs, our results of operations, financial condition, capital requirements, contractual restrictions and applicable law.

Our principal stockholders exert substantial influence over us and may exercise their control in a manner adverse to your
interests. Certain stockholders and their affiliates own a substantial amount of our outstanding common stock. These stockholders may have the power to direct our affairs and be able to determine the outcome of certain matters submitted to
stockholders for approval. Because a limited number of persons controls us, transactions could be difficult or impossible to complete without the support of those persons. Subject to applicable law, it is possible that these persons will exercise
control over us in a manner adverse to your interests.

Provisions of our charter documents, our stockholder rights plan
and Delaware law could make it more difficult for a third party to acquire us, even if the offer may be considered beneficial by our stockholders.Provisions of the Delaware General Corporation Law could discourage potential acquisition
proposals and could delay, deter or prevent a change in control. The anti-takeover provisions of the Delaware General Corporation Law impose various impediments to the ability of a third party to acquire control of us, even if a change in control
would be beneficial to our existing stockholders. Specifically, Section 203 of the Delaware General Corporation Law, unless its application has been waived, provides certain default anti-takeover protections in connection with transactions
between us and an interested stockholder. Generally, Section 203 prohibits stockholders who, alone or together with their affiliates and associates, own more than 15% of the subject company from engaging in certain business
combinations for a period of three years following the date that the stockholder became an interested stockholder of such subject company without approval of the board or the vote of two-thirds of the shares held by the independent stockholders. Our
board of directors has also adopted a stockholder rights plan, or poison pill, which would significantly dilute the ownership of a hostile acquirer. Additionally, provisions of our amended and restated certificate of incorporation and
bylaws could deter, delay or prevent a third party from acquiring us, even if doing so would benefit our stockholders, including without limitation, the authority of the board of directors to issue, without stockholder approval, preferred stock with
such terms as the board of directors may determine.



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
|------- | ------------------------------------------------------------

None.



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES.
|------- | --------------------------------

None.



|ITEM 4. | (REMOVED AND RESERVED).
|------- | -----------------------



|ITEM 5. | OTHER INFORMATION.
|------- | ------------------

None.



35



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##### Table of Contents

|ITEM 6. | EXHIBITS.
|------- | ---------



|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |           |  |         |  |             |  |              
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- |  | --------- |  | ------- |  | ----------- |  | -------------
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  | Incorporated By Reference |  |          
|ExhibitNumber |  | Exhibit Description                                                                                                                                                                                                                                                                                                                                                                                  |  | Form                      |  | File No.  |  | Exhibit |  | Filing Date |  | FiledHerewith
|3.1           |  | Amended and Restated Certificate of Incorporation.                                                                                                                                                                                                                                                                                                                                                   |  | 10-QSB                    |  | 000-20837 |  | 3.1(a)  |  | 8/15/2005   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|3.2           |  | Certificate of Amendment of Amended and Restated Certificate of Incorporation.                                                                                                                                                                                                                                                                                                                       |  | 10-QSB                    |  | 000-20837 |  | 3.1(b)  |  | 8/15/2005   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|3.3           |  | Certificate of Amendment to the Amended and Restated Certificate of Incorporation.                                                                                                                                                                                                                                                                                                                   |  | 10-QSB                    |  | 000-20837 |  | 3.1(c)  |  | 8/15/2005   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|3.4           |  | Certificate of Designations of the Series C Junior Participating Preferred Stock of Medivation, Inc.                                                                                                                                                                                                                                                                                                 |  | 10-KSB                    |  | 001-32836 |  | 3.1(d)  |  | 2/19/2008   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|3.5           |  | Amended and Restated Bylaws of Medivation, Inc.                                                                                                                                                                                                                                                                                                                                                      |  | 10-K                      |  | 001-32836 |  | 3.2     |  | 3/16/2009   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|4.1           |  | Common Stock Certificate.                                                                                                                                                                                                                                                                                                                                                                            |  | SB-2/A                    |  | 333-03252 |  | 4.1     |  | 6/14/1996   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|4.2           |  | Rights Agreement, dated as of December 4, 2006, between Medivation, Inc. and American Stock Transfer & Trust Company, as Rights Agent, which includes the form of Certificate of
Designations of the Series C Junior Participating Preferred Stock of Medivation, Inc. as Exhibit A, the form of Right Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C. |  | 8-K                       |  | 001-32836 |  | 4.1     |  | 12/4/2006   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|10.1*         |  | Base Salaries for Fiscal Year 2011 for Certain Executive Officers.                                                                                                                                                                                                                                                                                                                                   |  | 10-K                      |  | 001-32836 |  | 10.20   |  | 3/16/2011   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|10.2*         |  | Medivation, Inc. 2011 Bonus Plan Summary.                                                                                                                                                                                                                                                                                                                                                            |  | 10-K                      |  | 001-32836 |  | 10.21   |  | 3/16/2011   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|31.1          |  | Certification pursuant to Rule 13a-14(a)/15d-14(a).                                                                                                                                                                                                                                                                                                                                                  |  |                           |  |           |  |         |  |             |  | X            
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|31.2          |  | Certification pursuant to Rule 13a-14(a)/15d-14(a).                                                                                                                                                                                                                                                                                                                                                  |  |                           |  |           |  |         |  |             |  | X            
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|32.1         |  | Certifications of Chief Executive Officer and Chief Financial Officer.                                                                                                                                                                                                                                                                                                                               |  |                           |  |           |  |         |  |             |  | X            



|* | Indicates management contract or compensatory plan or arrangement.
|- | ------------------------------------------------------------------

| | The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and
are not to be incorporated by reference into any filing of Medivation, Inc., under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on
Form 10-Q, irrespective of any general incorporation language contained in such filing.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



36



---

##### Table of Contents

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.



|                  |  |  |  |                                                           |  |                       
|----------------- |  |  |  | --------------------------------------------------------- |  | ----------------------
|Date: May 6, 2011 |  |  |  | MEDIVATION, INC.                                         
|                  |  |  | 
|                  |  |  |  | By:                                                       |  | /s/ C. Patrick Machado
|                  |  |  |  | Name:                         C. Patrick
Machado         
|                  |  |  |  | Title: Chief Business Officer and Chief Financial Officer
|                  |  |  |  | (Duly Authorized Officer and Principal Financial Officer)



37



---

##### Table of Contents

EXHIBIT INDEX



|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |           |  |         |  |             |  |              
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- |  | --------- |  | ------- |  | ----------- |  | -------------
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  | Incorporated By Reference |  |          
|ExhibitNumber |  | Exhibit Description                                                                                                                                                                                                                                                                                                                                                                                  |  | Form                      |  | File No.  |  | Exhibit |  | Filing Date |  | FiledHerewith
|3.1           |  | Amended and Restated Certificate of Incorporation.                                                                                                                                                                                                                                                                                                                                                   |  | 10-QSB                    |  | 000-20837 |  | 3.1(a)  |  | 8/15/2005   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|3.2           |  | Certificate of Amendment of Amended and Restated Certificate of Incorporation.                                                                                                                                                                                                                                                                                                                       |  | 10-QSB                    |  | 000-20837 |  | 3.1(b)  |  | 8/15/2005   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|3.3           |  | Certificate of Amendment to the Amended and Restated Certificate of Incorporation.                                                                                                                                                                                                                                                                                                                   |  | 10-QSB                    |  | 000-20837 |  | 3.1(c)  |  | 8/15/2005   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|3.4           |  | Certificate of Designations of the Series C Junior Participating Preferred Stock of Medivation, Inc.                                                                                                                                                                                                                                                                                                 |  | 10-KSB                    |  | 001-32836 |  | 3.1(d)  |  | 2/19/2008   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|3.5           |  | Amended and Restated Bylaws of Medivation, Inc.                                                                                                                                                                                                                                                                                                                                                      |  | 10-K                      |  | 001-32836 |  | 3.2     |  | 3/16/2009   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|4.1           |  | Common Stock Certificate.                                                                                                                                                                                                                                                                                                                                                                            |  | SB-2/A                    |  | 333-03252 |  | 4.1     |  | 6/14/1996   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|4.2           |  | Rights Agreement, dated as of December 4, 2006, between Medivation, Inc. and American Stock Transfer & Trust Company, as Rights Agent, which includes the form of Certificate of
Designations of the Series C Junior Participating Preferred Stock of Medivation, Inc. as Exhibit A, the form of Right Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C. |  | 8-K                       |  | 001-32836 |  | 4.1     |  | 12/4/2006   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|10.1*         |  | Base Salaries for Fiscal Year 2011 for Certain Executive Officers.                                                                                                                                                                                                                                                                                                                                   |  | 10-K                      |  | 001-32836 |  | 10.20   |  | 3/16/2011   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|10.2*         |  | Medivation, Inc. 2011 Bonus Plan Summary.                                                                                                                                                                                                                                                                                                                                                            |  | 10-K                      |  | 001-32836 |  | 10.21   |  | 3/16/2011   |  |              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|31.1          |  | Certification pursuant to Rule 13a-14(a)/15d-14(a).                                                                                                                                                                                                                                                                                                                                                  |  |                           |  |           |  |         |  |             |  | X            
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|31.2          |  | Certification pursuant to Rule 13a-14(a)/15d-14(a).                                                                                                                                                                                                                                                                                                                                                  |  |                           |  |           |  |         |  |             |  | X            
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                      |  |                           |  |          
|32.1         |  | Certifications of Chief Executive Officer and Chief Financial Officer.                                                                                                                                                                                                                                                                                                                               |  |                           |  |           |  |         |  |             |  | X            



|* | Indicates management contract or compensatory plan or arrangement.
|- | ------------------------------------------------------------------

| | The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and
are not to be incorporated by reference into any filing of Medivation, Inc., under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on
Form 10-Q, irrespective of any general incorporation language contained in such filing.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



38