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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, 2009

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 jurisdictionof incorporation or organization) |  | (IRS Employeridentification 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   ̈                      |  | Smaller reporting company   ̈
|                           |  |                      |  | (Do not check if a 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 6, 2009, 30,126,390 shares of the registrants Common Stock, $0.01 par value per share, were issued and outstanding.









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MEDIVATION, INC.

Form 10-Q

Table of Contents



|                              |  |                                                                                       |  |         
|----------------------------- |  | ------------------------------------------------------------------------------------- |  | --------
|                              |  |                                                                                       |  | Page No.
|                              | 
|PART I. Financial Information |  | 3                                                                                    
|                              |  |                                                                                      
|Item 1.                       |  | Financial Statements (unaudited):                                                     |  | 3       
|                              |  |                                                                                      
|                              |  | Condensed Consolidated Balance Sheets                                                 |  | 3       
|                              |  |                                                                                      
|                              |  | Condensed Consolidated Statements of Operations                                       |  | 4       
|                              |  |                                                                                      
|                              |  | Condensed Consolidated Statements of Cash Flows                                       |  | 5       
|                              |  |                                                                                      
|                              |  | Notes to Condensed Consolidated Financial Statements                                  |  | 6       
|                              |  |                                                                                      
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 13      
|                              |  |                                                                                      
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 20      
|                              |  |                                                                                      
|Item 4.                       |  | Controls and Procedures                                                               |  | 21      
|                              | 
|PART II. Other Information    |  | 21                                                                                   
|                              |  |                                                                                      
|Item 1.                       |  | Legal Proceedings                                                                     |  | 21      
|                              |  |                                                                                      
|Item 1A.                      |  | Risk Factors                                                                          |  | 22      
|                              |  |                                                                                      
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 33      
|                              |  |                                                                                      
|Item 3.                       |  | Defaults Upon Senior Securities                                                       |  | 33      
|                              |  |                                                                                      
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                   |  | 33      
|                              |  |                                                                                      
|Item 5.                       |  | Other Information                                                                     |  | 33      
|                              |  |                                                                                      
|Item 6.                       |  | Exhibits                                                                              |  | 34      
|                              |  |                                                                                      
|Signatures                    |  |                                                                                       |  | 35      
|                              |  |                                                                                      
|Exhibits                      |  |                                                                                       |  | 36      



2



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PART I  FINANCIAL INFORMATION



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

MEDIVATION, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)



|                                                                                                                             |  |               |          |   |                  |   |          |  
|---------------------------------------------------------------------------------------------------------------------------- |  | ------------- | -------- | - | ---------------- | - | -------- | -
|                                                                                                                             |  | March 31,2009 |          |   | December 31,2008 |  
|ASSETS                                                                                                                       |  |               |          |   |                  |   |          |  
|Current assets:                                                                                                              |  |               |          |   |                  |   |          |  
|Cash and cash equivalents                                                                                                    |  | $             | 50,718   |   |                  | $ | 71,454   |  
|Short-term investments                                                                                                       |  |               | 149,970  |   |                  |   | 149,968  |  
|Receivable from collaboration partner                                                                                        |  |               | 5,766    |   |                  |   | 3,522    |  
|Prepaid expenses and other current assets                                                                                    |  |               | 3,127    |   |                  |   | 1,957    |  
|                                                                                                                             |  |               |          |   |                  |   |          |  
|Total current assets                                                                                                         |  |               | 209,581  |   |                  |   | 226,901  |  
|Property and equipment, net                                                                                                  |  |               | 801      |   |                  |   | 768      |  
|Restricted cash                                                                                                              |  |               | 843      |   |                  |   | 843      |  
|Intellectual property, net                                                                                                   |  |               | 53       |   |                  |   | 54       |  
|Other non-current assets                                                                                                     |  |               | 664      |   |                  |   | 706      |  
|                                                                                                                             |  |               |          |   |                  |   |          |  
|Total assets                                                                                                                 |  | $             | 211,942  |   |                  | $ | 229,272  |  
|                                                                                                                             |  |               |          |   |                  |   |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                         |  |               |          |   |                  |   |          |  
|Current liabilities:                                                                                                         |  |               |          |   |                  |   |          |  
|Accounts payable                                                                                                             |  | $             | 5,044    |   |                  | $ | 7,166    |  
|Accrued expenses                                                                                                             |  |               | 10,241   |   |                  |   | 5,772    |  
|Deferred revenue                                                                                                             |  |               | 65,361   |   |                  |   | 64,286   |  
|Other current liabilities                                                                                                    |  |               | 103      |   |                  |   | 93       |  
|                                                                                                                             |  |               |          |   |                  |   |          |  
|Total current liabilities                                                                                                    |  |               | 80,749   |   |                  |   | 77,317   |  
|Deferred revenue, net of current                                                                                             |  |               | 130,722  |   |                  |   | 148,137  |  
|Other non-current liabilities                                                                                                |  |               | 425      |   |                  |   | 399      |  
|Series A redeemable preferred stock                                                                                          |  |               | 11       |   |                  |   | 11       |  
|                                                                                                                             |  |               |          |   |                  |   |          |  
|Total liabilities                                                                                                            |  |               | 211,907  |   |                  |   | 225,864  |  
|                                                                                                                             |  |               |          |   |                  |   |          |  
|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 30,125,556 shares at March 31, 2009 and 30,088,390 at December 31,
2008 |  |               | 301      |   |                  |   | 301      |  
|Additional paid-in capital                                                                                                   |  |               | 127,800  |   |                  |   | 125,074  |  
|Accumulated other comprehensive income                                                                                       |  |               | 203      |   |                  |   | 693      |  
|Accumulated deficit                                                                                                          |  |               | (128,269 | ) |                  |   | (122,660 | )
|                                                                                                                             |  |               |          |   |                  |   |          |  
|Total stockholders equity                                                                                                   |  |               | 35       |   |                  |   | 3,408    |  
|                                                                                                                             |  |               |          |   |                  |   |          |  
|Total liabilities and stockholders equity                                                                                   |  | $             | 211,942  |   |                  | $ | 229,272  |  
|                                                                                                                             |  |               |          |   |                  |   |          |  

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 EndedMarch 31, |       
|                                                                                               |  | 2009                        |        |   | 2008 |  
|Collaboration revenue                                                                          |  | $                           | 16,340 |   |      | $ |        |  
|Operating expenses:                                                                            |  |                             |        |   |      |   |         |  
|Research and development                                                                       |  |                             | 15,776 |   |      |   | 11,956  |  
|Selling, general and administrative                                                            |  |                             | 6,305  |   |      |   | 3,953   |  
|                                                                                               |  |                             |        |   |      |   |         |  
|Total operating expenses                                                                       |  |                             | 22,081 |   |      |   | 15,909  |  
|                                                                                               |  |                             |        |   |      |   |         |  
|Loss from operations                                                                           |  |                             | (5,741 | ) |      |   | (15,909 | )
|Other income (expense):                                                                        |  |                             |        |   |      |   |         |  
|Interest income, net                                                                           |  |                             | 509    |   |      |   | 382     |  
|Other income (expense), net                                                                    |  |                             | 51     |   |      |   | (1      | )
|                                                                                               |  |                             |        |   |      |   |         |  
|Total other income                                                                             |  |                             | 560    |   |      |   | 381     |  
|                                                                                               |  |                             |        |   |      |   |         |  
|Loss before provision for income taxes                                                         |  |                             | (5,181 | ) |      |   | (15,528 | )
|Provision for income taxes                                                                     |  |                             | 428    |   |      |   | 2       |  
|                                                                                               |  |                             |        |   |      |   |         |  
|Net loss                                                                                       |  | $                           | (5,609 | ) |      | $ | (15,530 | )
|                                                                                               |  |                             |        |   |      |   |         |  
|Basic and diluted net loss per share                                                           |  | $                           | (0.19  | ) |      | $ | (0.54   | )
|                                                                                               |  |                             |        |   |      |   |         |  
|Weighted average common shares used in the calculation of basic and diluted net loss per share |  |                             | 30,105 |   |      |   | 28,847  |  
|                                                                                               |  |                             |        |   |      |   |         |  

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, |        
|                                                                            |  | 2009                        |         |   | 2008 |  
|Cash flows from operating activities:                                       |  |                             |         |   |      |   |         |  
|Net loss                                                                    |  | $                           | (5,609  | ) |      | $ | (15,530 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                             |         |   |      |   |         |  
|Depreciation and amortization                                               |  |                             | 60      |   |      |   | 42      |  
|Accretion of discount on securities                                         |  |                             | (492    | ) |      |   |        |  
|Stock-based compensation                                                    |  |                             | 2,635   |   |      |   | 2,137   |  
|Changes in operating assets and liabilities:                                |  |                             |         |   |      |   |         |  
|Receivable from collaboration partner                                       |  |                             | (2,244  | ) |      |   |        |  
|Prepaid expenses and other current assets                                   |  |                             | (1,170  | ) |      |   | (571    | )
|Other assets                                                                |  |                             | 42      |   |      |   | (598    | )
|Accounts payable                                                            |  |                             | (2,122  | ) |      |   | 1,706   |  
|Accrued expenses                                                            |  |                             | 4,469   |   |      |   | 2,490   |  
|Other current liabilities                                                   |  |                             | 10      |   |      |   | 6       |  
|Deferred revenue                                                            |  |                             | (16,340 | ) |      |   |        |  
|Other non-current liabilities                                               |  |                             | 26      |   |      |   | (21     | )
|                                                                            |  |                             |         |   |      |   |         |  
|Net cash used in operating activities                                       |  |                             | (20,735 | ) |      |   | (10,339 | )
|                                                                            |  |                             |         |   |      |   |         |  
|Cash flows from investing activities:                                       |  |                             |         |   |      |   |         |  
|Purchase of property and equipment                                          |  |                             | (92     | ) |      |   | (95     | )
|                                                                            |  |                             |         |   |      |   |         |  
|Net cash used in investing activities                                       |  |                             | (92     | ) |      |   | (95     | )
|                                                                            |  |                             |         |   |      |   |         |  
|Cash flows from financing actitivies:                                       |  |                             |         |   |      |   |         |  
|Offering costs paid in cash                                                 |  |                             |        |   |      |   | (5      | )
|Stock option exercises                                                      |  |                             | 91      |   |      |   | 105     |  
|                                                                            |  |                             |         |   |      |   |         |  
|Net cash provided by financing activities                                   |  |                             | 91      |   |      |   | 100     |  
|                                                                            |  |                             |         |   |      |   |         |  
|Net change in cash and cash equivalents                                     |  |                             | (20,736 | ) |      |   | (10,334 | )
|Cash and cash equivalents at beginning of period                            |  |                             | 71,454  |   |      |   | 43,258  |  
|                                                                            |  |                             |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                  |  | $                           | 50,718  |   |      | $ | 32,924  |  
|                                                                            |  |                             |         |   |      |   |         |  

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, 2009

(unaudited)

NOTE 1  THE
COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

The Company 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 current lead clinical candidates are directed at treating Alzheimers disease, Huntingtons disease and castration-resistant prostate cancer. The Companys Alzheimers and
Huntingtons disease programs are partnered with Pfizer Inc, or Pfizer, and its prostate cancer program remains unpartnered. With Pfizer, the Company is conducting a broad Dimebon clinical development program, including a pivotal and
confirmatory Phase 3 trial in patients with mild-to-moderate Alzheimers disease. The program also includes additional Phase 3 trials beginning this year in both Alzheimers disease and Huntingtons disease. In addition, the
Company is conducting a Phase 1-2 clinical trial of MDV3100 in patients with castration-resistant (also known as hormone-refractory) prostate cancer, and plans to begin a Phase 3 trial this year.

In September 2008, the Company announced a Collaboration Agreement with Pfizer, which became effective on October 21, 2008. Under the terms of the
agreement, the Company and Pfizer will develop and commercialize Dimebon, the Companys investigational drug for treatment of Alzheimers disease and Huntingtons disease. The Company and Pfizer will 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. In October 2008, the Company received a non-refundable, up-front cash payment of $225.0 million
pursuant to its Collaboration Agreement with Pfizer.

In the first quarter of 2009, the Company recognized $16.3 million in collaboration
revenue attributable to its up-front payment from Pfizer. Previously the Company had recognized $12.6 million in collaboration revenue for the year ended December 31, 2008. The Company has funded its operations primarily through private and
public offerings of its common stock, and from the up-front payment and cost- sharing payments from its Collaboration Agreement with Pfizer. As of March 31, 2009, the Company had an accumulated deficit of $128.3 million and expects to incur
substantial and increasing additional losses in the future as it expands its research and development activities.

During the year ended
December 31, 2008, the Company exited the development stage. Previously from its inception, the Company was a development stage company in accordance with the Financial Accounting Standards Board, or FASB, Statement of Financial Accounting
Standards, or SFAS, No. 7, Accounting and Reporting by Development Stage Enterprises.

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.

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, 2008 has been derived from the audited financial statements at that date.



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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, 2008 included in the Companys Annual Report on Form 10-K filed
with the Securities and Exchange Commission, or the Commission, on March 16, 2009.

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

In the second quarter of 2008, the Company revised the classification of patent-related legal costs from research and development expense to general and
administrative expense as such costs typically would be excluded from research and development costs as defined by SFAS No. 2, Accounting for Research and Development Costs. Amounts related to prior periods are not considered material to
the financial statements taken as a whole, but were revised for purposes of comparability. Such amount for the three month period ended March 31, 2008, was $357,000. The revision did not affect previously reported total operating expenses, net
loss, earnings per share, assets, liabilities, stockholders equity or cash flows.

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, 2008. 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, 2008.

Recently Issued Accounting Pronouncements

In April 2009, the FASB issued FASB Staff Position SFAS 107-1 and APB No. 28-1, Interim Disclosures about Fair Value
of Financial Instruments. This FASB Staff Position amends FASB Statement No. 157, Disclosures About Fair Value Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly
traded companies as well as in annual financial statements. This FASB Staff Position also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting
periods. This FASB Staff Position is effective for interim and annual periods ending after June 15, 2009. The Company is currently evaluating the disclosure requirements of FASB Staff Position SFAS 107-1 and APB 28-1.

In April 2009, the FASB issued FASB Staff Position SFAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, which provides additional guidance for estimating fair value in accordance with FASB Statement No. 157, Disclosures About Fair Value
Instruments, when the volume and level of activity for the asset or liability have significantly decreased. This FASB Staff Position also includes guidance on identifying circumstances that indicate a transaction is not orderly. This
pronouncement is effective for periods ending after June 15, 2009. The Companys management does not expect this pronouncement to have a material effect on the Companys financial position and results of operations.

In April 2009, the FASB issued FASB Staff Position SFAS 115-2 and SFAS 124-2, Recognition and Presentation of Other-Than-Temporary
Impairments, to amend the other-than-temporary impairment guidance in debt securities to be based on intent to sell instead of ability to hold the security and to improve the presentation and disclosure of other-than-temporary impairments on
debt and equity securities in the financial statements. This pronouncement is effective for periods ending after June 15, 2009. The Companys management does not expect this pronouncement to have a material effect on the
Companys financial position and results of operations.

In June 2008, the FASB ratified Emerging Issues Task Force, or EITF, Issue
07-5, Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entitys Own Stock to provide guidance for determining whether an equity-linked financial instrument or embedded feature is considered indexed to an
entitys own stock. The consensus establishes a two-step approach as a framework for determining whether an instrument or embedded feature is indexed to an entitys own stock. The approach includes evaluating (1) the instruments
contingent exercise provisions, if any, and (2) the instruments settlement provisions. Entities that issue financial instruments such as warrants or options on their own shares, convertible debt, convertible preferred stock, forward
contracts on their own shares, or market-based employee stock option valuation instruments will be affected by EITF Issue 07-5. EITF Issue 07-5 was adopted January 1, 2009, and there was no material impact to the Companys financial
statements upon adoption.



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In February 2008, the FASB issued FASB Staff Position FAS 157-2, Effective Date of FASB Statement
No. 157, which deferred the effective date of SFAS No. 157 for one year, effective for fiscal years beginning after November 15, 2008, as it relates to non-financial assets and liabilities. The implementation of this standard did
not have an impact on the Companys consolidated financial statements.

NOTE 2  COLLABORATION AGREEMENT

In September 2008, the Company announced a Collaboration Agreement with Pfizer. Under this agreement, the Company and Pfizer are collaborating on
development of Dimebon for Alzheimers disease and Huntingtons disease for the United States market, including associated regulatory filings with the FDA. In addition, following FDA approval and launch of Dimebon in the United States, the
Company, at the Companys 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. After a period of transition from the Companys contract manufacturers to Pfizer, Pfizer will be responsible for all manufacture of Dimebon 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.

Under the Collaboration Agreement, Pfizer paid the Company an up-front cash payment of $225.0 million in
the fourth quarter of 2008. This payment was recorded to deferred revenue, which the Company is amortizing on a straight-line basis over the expected performance period of the Companys deliverables under the Collaboration Agreement. Management
currently expects this performance period to end in the first quarter of 2012. The Company recorded $16.3 million of amortized collaboration revenue in the three months ended March 31, 2009. At March 31, 2009, a remaining balance of $196.1
million of the up-front payment was recorded in deferred revenue. There were no revenues recorded in the three months ended March 31, 2008.

The Company and Pfizer 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.

For the three months ended March 31, 2009, the Company recorded development cost and commercialization cost true-up payments
receivable from Pfizer of $5.4 million and $0.4 million, respectively, and corresponding reductions in research and development expense and selling, general and administrative expense.

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, warrants and common stock subject to repurchase. 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, 2009 and 2008 these potentially dilutive securities were as follows (in thousands):



|                              |  |           |  |      
|----------------------------- |  | --------- |  | -----
|                              |  | March 31,
|                              |  | 2009      |  | 2008 
|Outstanding options           |  | 4,892     |  | 3,797
|Outstanding warrants          |  | 316       |  | 322  
|Outstanding restricted shares |  | 18        |  | 30   
|                              |  |           |  |      
|Total                         |  | 5,226     |  | 4,149
|                              |  |           |  |      



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NOTE 4 COMPREHENSIVE LOSS

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



|                                                           |  |                |        |   |      |   |         |  
|---------------------------------------------------------- |  | -------------- | ------ | - | ---- | - | ------- | -
|                                                           |  | March 31,      |       
|                                                           |  | 2009           |        |   | 2008 |  
|                                                           |  | (in thousands) |       
|Net loss                                                   |  | $              | (5,609 | ) |      | $ | (15,530 | )
|Change in unrealized gain on securities available-for-sale |  |                | (490   | ) |      |   |        |  
|                                                           |  |                |        |   |      |   |         |  
|Comprehensive loss                                         |  | $              | (6,099 | ) |      | $ | (15,530 | )
|                                                           |  |                |        |   |      |   |         |  

NOTE 5  STOCK-BASED COMPENSATION

2004 Equity Incentive Plan

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 and stock appreciation rights, 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. The options may contain an early exercise feature, pursuant to which the optionee may exercise the option before it has vested. However, so long
as an option remains unvested, all shares purchased upon early exercise remain subject to repurchase by the Company at the option exercise price if the optionees service with the Company terminates. For purposes of the following disclosures,
early exercise options are not considered to have been exercised, or to be exercisable, until this repurchase right has lapsed. To date, the Company has not issued any shares upon early exercise of stock options. 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, 2009:



|                                     |  |                  |  |                                       |       |                                                   |      |                                       |   |     
|------------------------------------ |  | ---------------- |  | ------------------------------------- | ----- | ------------------------------------------------- | ---- | ------------------------------------- | - | ----
|                                     |  | Number ofOptions |  | WeightedAverageExercisePrice PerShare |       | WeightedAverageRemainingContractualTerm(in
years) |      | AggregateIntrinsic Value(in millions)
|Outstanding at January 1, 2009       |  | 4,855,905        |  | $                                     | 12.81 |                                                   |      |                                       |   |     
|Granted                              |  | 64,900           |  | $                                     | 16.10 |                                                   |      |                                       |   |     
|Exercised                            |  | 25,500           |  | $                                     | 3.55  |                                                   |      |                                       |   |     
|Forfeited                            |  | 2,917            |  | $                                     | 18.41 |                                                   |      |                                       |   |     
|                                     |  |                  |  |                                       |       |                                                   |      |                                       |   |     
|Outstanding at March 31, 2009        |  | 4,892,388        |  | $                                     | 12.90 |                                                   | 7.93 |                                       | $ | 29.9
|                                     |  |                  |  |                                       |       |                                                   |      |                                       |   |     
|Exercisable/vested at March 31, 2009 |  | 2,276,445        |  | $                                     | 7.79  |                                                   | 6.88 |                                       | $ | 24.6
|                                     |  |                  |  |                                       |       |                                                   |      |                                       |   |     



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##### Table of Contents

The following table summarizes information about restricted stock unit activity for the three months
ended March 31, 2009:



|                                 |  |        |  |                                              |       |                                                   |     
|-------------------------------- |  | ------ |  | -------------------------------------------- | ----- | ------------------------------------------------- | ----
|                                 |  | Shares |  | WeightedAverageGrant DateFair ValuePer Share |       | WeightedAverageRemainingContractualTerm(in
years)
|Restricted Stock Awards:         |  |        |  |                                              |       |                                                   |     
|Outstanding at December 31, 2008 |  | 30,000 |  | $                                            | 15.71 |                                                   |     
|Granted                          |  |       |  | $                                            |      |                                                   |     
|Vested                           |  | 11,666 |  | $                                            | 15.71 |                                                   |     
|Cancelled                        |  |       |  | $                                            |      |                                                   |     
|                                 |  |        |  |                                              |       |                                                   |     
|Outstanding at March 31, 2009    |  | 18,334 |  | $                                            | 15.71 |                                                   | 1.79
|                                 |  |        |  |                                              |       |                                                   |     

Stock-Based Compensation

The Company accounts for stock-based compensation pursuant to SFAS No. 123R, Share-Based Payments. 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, the historical stock price volatility of comparable companies
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 Company does not have sufficient history of exercise behavior to develop estimates of expected term since as of March 31, 2009 only six percent of the options it has issued since inception had been exercised.
Accordingly, the Company uses the simplified method of estimating option term provided for in the Commissions Staff Accounting Bulletins 107 and 110 for options granted to employees and directors, which results in an estimated option term of
six years. For consultant options, the Company uses an estimated option term of four years, which is equal to the period required for the options to vest in full. As the Company gathers more history regarding its option exercise pattern, and as
information regarding the option exercise pattern of comparable companies in its industry becomes publicly available, it will review these estimates and revise them as appropriate. Different estimates of volatility and expected term could materially
change the value of an option and the resulting expense.

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 recognized by the Company in the three months ended March 31, 2009 and 2008 was as follows:



|                                       |  |                             |       |      |   |      
|-------------------------------------- |  | --------------------------- | ----- | ---- | - | -----
|                                       |  | Three months endedMarch 31,
|                                       |  | 2009                        |       | 2008
|                                       |  | (in thousands)             
|Research and development expense       |  | $                           | 1,414 |      | $ | 927  
|General and administrative expense     |  |                             | 1,221 |      |   | 1,210
|                                       |  |                             |       |      |   |      
|Total stock-based compensation expense |  | $                           | 2,635 |      | $ | 2,137
|                                       |  |                             |       |      |   |      

Unearned stock-based compensation attributable to employee and director awards totaled $25.3
million at March 31, 2009 and will be recognized as expense over a weighted-average period of 2.9 years.

NOTE 6  SHORT-TERM INVESTMENTS

As of March 31, 2009, the amortized cost, gross unrealized gain, and estimated fair value for available-for-sale securities,
consisting solely of United States treasury notes maturing in April and June 2009, was $149.8 million, $0.2 million and $150.0 million, respectively. As of December 31, 2008, the amortized cost, gross unrealized gain, and estimated fair value
for available-for-sale securities, consisting solely of United States treasury notes maturing in April and June 2009, was $149.3 million, $0.7 million and $150.0 million, respectively.



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NOTE 7  FAIR VALUE DISCLOSURES

As of March 31, 2009, the Company had cash and cash equivalents of $50.7 million and short-term investments of $150.0 million. Short-term investments at March 31, 2009 consisted solely of United States
treasury notes maturing in April and June 2009. 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, 2009 (in thousands):



|                       |  |                |         |                               |   |         |  |         |   |  |   |  
|---------------------- |  | -------------- | ------- | ----------------------------- | - | ------- |  | ------- | - |  | - | -
|                       |  | Fair value     |         | Fair value measurements using
|                       |  | March 31, 2009 |         | Level 1                       |   | Level 2 |  | Level 3
|Assets:                |  |                |         |                               |   |         |  |         |   |  |   |  
|Cash                   |  | $              | 50,718  |                               | $ | 50,718  |  | $       |  |  | $ | 
|Short-term investments |  |                | 149,970 |                               |   | 149,970 |  |         |  |  |   | 
|Restricted cash        |  |                | 843     |                               |   | 843     |  |         |  |  |   | 
|                       |  |                |         |                               |   |         |  |         |   |  |   |  
|Total assets           |  | $              | 201,531 |                               | $ | 201,531 |  | $       |  |  | $ | 
|                       |  |                |         |                               |   |         |  |         |   |  |   |  

NOTE 8  ACCRUED EXPENSES

At March 31, 2009 and December 31, 2008, accrued expenses consisted of the following (in thousands):



|                                |  |               |        |                  |   |      
|------------------------------- |  | ------------- | ------ | ---------------- | - | -----
|                                |  | March 31,2009 |        | December 31,2008
|Payroll and payroll related     |  | $             | 1,124  |                  | $ | 260  
|Preclinical and clinical trials |  |               | 7,771  |                  |   | 4,979
|Other                           |  |               | 1,346  |                  |   | 533  
|                                |  |               |        |                  |   |      
|Total accrued expenses          |  | $             | 10,241 |                  | $ | 5,772
|                                |  |               |        |                  |   |      

NOTE 9  INCOME TAXES

The Companys tax provision for the three months ended March 31, 2009 was $428,000. The March 31, 2009 tax provision expense differs from the expected rate because the Company is required to accelerate
revenue for income tax purposes which is deferred for financial statement purposes related to the Pfizer license payment the Company received in 2008. This acceleration of revenue brings the Company to a profit for tax purposes. For federal
purposes, the Company has fully offset taxable income with net operating loss carryforwards. California has suspended the utilization of net operating loss carryforwards for the tax years 2008 and 2009. The Company is therefore expecting a tax
provision for 2009.

The Company maintained a full valuation allowance on the net deferred tax assets as of March 31, 2009. The
valuation allowance was determined in accordance with the provisions of SFAS No. 109, Accounting for Income Taxes, or SFAS No. 109, which requires an assessment of both positive and negative evidence when determining whether it is more
likely than not that deferred tax assets are recoverable; such assessment is required on a jurisdiction by jurisdiction basis. The Company intends to maintain a full valuation allowance on the U.S. deferred tax assets until sufficient positive
evidence exists to support reversal of the valuation allowance.

NOTE 10  THIRD PARTY EQUITY INTERESTS IN OPERATING SUBSIDIARIES

Medivation Neurology, Inc.

At
March 31, 2009, the Company owned all of the issued and outstanding stock of its operating subsidiary Medivation Neurology, Inc., or MNI, and there were no outstanding options, warrants or any other third party rights to acquire any MNI stock.

Medivation Prostate Therapeutics, Inc.

At March 31, 2009, the Company owned all of the issued and outstanding stock of its operating subsidiary Medivation Prostate Therapeutics, Inc., or MPT, and is entitled to receive one additional share for each dollar that the Company
invests, directly or indirectly, in MPT. MPT has reserved an aggregate of 3,000,000 shares of its common stock for issuance upon the exercise of awards granted under the Medivation Prostate Therapeutics, Inc.



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##### Table of Contents

Equity Incentive Plan, or the MPT Plan. At March 31,2009, one option was outstanding under the MPT Plan. This option, which was issued to the licensor
of MDV3100, is exercisable without cash payment for 150,000 shares of MPT common stock, but vests and becomes exercisable only upon the occurrence of specified MPT liquidity events, including a sale of MPT, a public offering of MPTs common
stock, a corporate partnership involving MPT, or receipt of regulatory approval to market any MPT product. In accordance with EITF Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or
in Conjunction with Selling, Goods or Services, no expense will be recognized with respect to this option unless and until such a liquidity event occurs.

NOTE 11  SUBSEQUENT EVENT

The Companys equity line of credit agreement with Azimuth Opportunity, Ltd. expired
on April 1, 2009.



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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, 2008, included in our Annual Report on Form 10-K for the year ended December 31, 2008 filed with the Commission on March 16, 2009. 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 and Section 21E of the Securities Exchange Act of 1934. 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) our ability to successfully complete clinical and preclinical trials for our product candidates, (2) our
ability to obtain required regulatory approvals to develop and market our product candidates, (3) our ability to raise additional capital on favorable terms, (4) our ability to execute our development plan on time and on budget,
(5) our ability to obtain corporate partners, (6) our ability, whether alone or with corporate partners, to successfully commercialize any of our product candidates that may be approved for sale, and (7) 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 we
cannot be certain 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. 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 current lead clinical candidates are directed at treating Alzheimers disease, Huntingtons disease and castration-resistant prostate cancer. Our Alzheimers
and Huntingtons disease programs are partnered with Pfizer Inc, or Pfizer, and our prostate cancer program remains unpartnered. With Pfizer, we are conducting a broad clinical development program for Dimebon, our investigational drug for
treatment of Alzheimers disease and Huntingdons disease, including a pivotal and confirmatory six-month Phase 3 trial in patients with mild-to-moderate Alzheimers disease, and a 12-month Phase 3 trial of Dimebon in combination with
Aricept® in patients with mild-to-moderate Alzheimers disease. The program also includes additional Phase 3 trials expected to begin this year in both moderate-to-severe
Alzheimers disease and in Huntingtons disease. In addition, we are conducting a Phase 1-2 clinical trial of MDV3100 in patients with castration-resistant (also known as hormone-refractory) prostate cancer, and have received written
permission from the U.S. Food and Drug Administration to begin a Phase 3 trial in castration-resistant prostate cancer patients who have previously been treated with docetaxel-based chemotherapy. We plan to begin that Phase 3 trial this year.

In September 2008, we announced a Collaboration Agreement with Pfizer, which became effective on October 21, 2008. Under the terms of
the agreement, we and Pfizer will 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. In October 2008, we received a
non-refundable, up-front cash payment of $225.0 million pursuant to our Collaboration Agreement with Pfizer.



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In the first quarter of 2009, we recognized $16.3 million in collaboration revenue attributable to our
up-front payment from Pfizer. Previously we had recognized $12.6 million in collaboration revenue for the year ended December 31, 2008. We have funded our operations primarily through private and public offerings of our common stock, and from
the up-front payment and cost- sharing payments from our Collaboration Agreement with Pfizer. As of March 31, 2009, we had an accumulated deficit of $128.3 million and expect to incur substantial and increasing additional losses in the future
as we expand our research and development activities for our current clinical programs and for future assets that we may acquire or identify.

Our
Pipeline

Dimebon in Alzheimers Disease and Huntingtons Disease

Our lead product candidate, Dimebon, has successfully completed the first of two pivotal clinical trials required to seek marketing approval from the U.S.
Food and Drug Administration, or FDA, in the United States for mild-to-moderate Alzheimers disease. We began our confirmatory pivotal Phase 3 Alzheimers disease trial in the second quarter of 2008, and expect to complete enrollment
in that trial in June 2009. We have also successfully completed a Phase 2 clinical trial of Dimebon in patients with mild-to-moderate Huntingtons disease, the top-line results of which we reported in July 2008. Dimebon has been shown
to inhibit the death of brain cells, or neurons, in preclinical models of Alzheimers disease and Huntingtons disease, making it a potential novel treatment for these neurodegenerative diseases. Based on data generated in independent
third party laboratories, we believe that Dimebon operates through a novel mitochondrial mechanism of action.

MDV3100 in
Castration-Resistant Prostate Cancer

In March 2009, we received approval from the FDA to begin a Phase 3 clinical trial of our
proprietary compound MDV3100 in patients with castration-resistant prostate cancer, or CRPC. We will begin enrollment in that trial in 2009. MDV3100 is the lead clinical development candidate from a library of approximately 170 small molecules
licensed by our subsidiary, Medivation Prostate Therapeutics, Inc. These molecules were rationally designed to treat castration-resistant prostate cancer by modulating the androgen receptor, or AR, in a different manner from currently approved AR
antagonist drugs, which generally are ineffective in treating prostate cancers that have become castration-resistant.

New Product
Candidates

We remain actively engaged in identifying new product candidates, both internally and externally, to further expand our
pipeline of product candidates.

Recently Issued Accounting Pronouncements

In April 2009, the FASB issued FASB Staff Position SFAS 107-1 and APB No. 28-1, Interim Disclosures about Fair Value of Financial
Instruments. This FASB Staff Position amends FASB Statement No. 157, Disclosures About Fair Value Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded
companies as well as in annual financial statements. This FASB Staff Position also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods.
This FASB Staff Position is effective for interim and annual periods ending after June 15, 2009. We are currently evaluating the disclosure requirements of FASB Staff Position SFAS 107-1 and APB 28-1.

In April 2009, the FASB issued FASB Staff Position SFAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, which provides additional guidance for estimating fair value in accordance with FASB Statement No. 157, Disclosures About Fair Value
Instruments, when the volume and level of activity for the asset or liability have significantly decreased. This FASB Staff Position also includes guidance on identifying circumstances that indicate a transaction is not orderly. This
pronouncement is effective for periods ending after June 15, 2009. We do not expect this pronouncement to have a material effect on our financial position and results of operations.

In April 2009, the FASB issued FASB Staff Position SFAS 115-2 and SFAS 124-2, Recognition and Presentation of Other-Than-Temporary
Impairments, to amend the other-than-temporary impairment guidance in debt securities to be based on intent to sell instead of ability to hold the security and to improve the presentation and disclosure of other-than-temporary impairments on
debt and equity securities in the financial statements. This pronouncement is effective for periods ending after June 15, 2009. We do not expect this pronouncement to have a material effect on our financial position and results of
operations.



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In June 2008, the FASB ratified EITF Issue 07-5, Determining Whether an Instrument (or Embedded
Feature) is Indexed to an Entitys Own Stock to provide guidance for determining whether an equity-linked financial instrument or embedded feature is considered indexed to an entitys own stock. The consensus establishes a two-step
approach as a framework for determining whether an instrument or embedded feature is indexed to an entitys own stock. The approach includes evaluating (1) the instruments contingent exercise provisions, if any, and (2) the
instruments settlement provisions. Entities that issue financial instruments such as warrants or options on their own shares, convertible debt, convertible preferred stock, forward contracts on their own shares, or market-based employee stock
option valuation instruments will be affected by EITF Issue 07-5. The Company adopted EITF Issue 07-5 on January 1, 2009, and there was no material impact to the Companys financial statements upon adoption.

In February 2008, the FASB issued FASB Staff Position FAS 157-2, Effective Date of FASB Statement No. 157, which deferred the effective date
of SFAS No. 157 for one year, effective for fiscal years beginning after November 15, 2008, as it relates to non-financial assets and liabilities. The implementation of this standard did not have an impact on the Companys
consolidated financial statements.

Results of Operations

Three Months Ended March 31, 2009 and 2008

Collaboration Revenue



|                      |  |                             |        |      |   |  
|--------------------- |  | --------------------------- | ------ | ---- | - | -
|                      |  | Three Months EndedMarch 31,
|                      |  | 2009                        |        | 2008
|                      |  | (in thousands)             
|Collaboration revenue |  | $                           | 16,340 |      | $ | 

We recorded $16.3 million of amortized collaboration revenue in connection with our Collaboration
Agreement with Pfizer for the three months ended March 31, 2009. In October 2008, we received an upfront payment of $225.0 million, which we are amortizing on a straight-line basis over the expected performance period of our deliverables
under the Collaboration Agreement. We currently expect this performance period to end in the first quarter of 2012. Further, we are eligible to receive payments of up to $500.0 million upon the attainment of certain development and regulatory
milestones plus certain additional undisclosed commercial milestone payments. At present, we are unable to predict the timing or likelihood of such milestone payments, although we do not expect to receive any milestone payments from Pfizer in the
year ended December 31, 2009. There were no revenues in the three months ended March 31, 2008.

Research and Development
Expense



|                                 |  |                             |        |   |      |   |       
|-------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------
|                                 |  | Three Months EndedMarch 31,
|                                 |  | 2009                        |        |   | 2008
|                                 |  | (in thousands)             
|Research and development expense |  | $                           | 15,776 |   |      | $ | 11,956
|Percentage increase              |  |                             | 32     | % |      |   |       



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##### Table of Contents

The increase in research and development expense of 32% or $3.8 million for the three months ended
March 31, 2009 as compared to the comparable period in 2008 was primarily due to an increase in clinical and preclinical study expense of $7.5 million and payroll related costs of $1.8 million, partially offset by a development cost share
reimbursement under our Collaboration Agreement with Pfizer of $5.4 million, and other department costs of $0.1 million. The increases in clinical and preclinical study costs, including associated payroll costs, were driven primarily by significant
expansions in our clinical development work for both Dimebon and MDV3100, including initiation of our Phase 3 CONCERT trial of Dimebon in combination with Aricept in Alzheimers disease, and continuation of our ongoing confirmatory
Phase 3 CONNECTION trial of Dimebon in Alzheimers disease and our Phase 1-2 clinical trial of MDV3100 in castration-resistant prostate cancer. Research and development headcount increased to 45 employees at March 31, 2009
compared to 24 at March 31, 2008.

Under our Collaboration Agreement with Pfizer, we share certain Dimebon-related development costs
in the United States on a 60% Pfizer, 40% Medivation basis. The parties make quarterly true-up payments between themselves to ensure that each has borne its applicable percentage of the shared development costs. We account for development cost
true-up payments as additions to research and development expense when such payments are made by us and as reductions to research and development expense when such payments are made to us. For the three months ended March 31, 2009, the total
development cost true-up receivable payable to us is $5.4 million. There were no such payments in the comparable period in 2008.

To date,
we have been engaged in two major research and development programs: the development of Dimebon for the treatment of Alzheimers disease and Huntingtons disease, and the development of MDV3100 for the treatment of castration-resistant
prostate cancer. Other research and development programs consist of preclinical stage programs, primarily our Dimebon analog program. Research and development costs are identified as either directly allocable to one of our research and development
programs or as an indirect cost, which are not 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 respective period.



|                                        |  |                             |        |      |   |       
|--------------------------------------- |  | --------------------------- | ------ | ---- | - | ------
|                                        |  | Three Months EndedMarch 31,
|                                        |  | 2009                        |        | 2008
|                                        |  | (in thousands)             
|Direct Costs:                           |  |                             |        |      |   |       
|Dimebon                                 |  | $                           | 6,875  |      | $ | 6,463 
|MDV3100                                 |  |                             | 2,494  |      |   | 1,907 
|Other                                   |  |                             | 1,573  |      |   | 464   
|                                        |  |                             |        |      |   |       
|Total direct costs                      |  |                             | 10,942 |      |   | 8,835 
|Indirect costs                          |  |                             | 4,834  |      |   | 3,121 
|                                        |  |                             |        |      |   |       
|Total research and development expenses |  | $                           | 15,776 |      | $ | 11,956
|                                        |  |                             |        |      |   |       

We expect our research and development expenses to increase in 2009 and thereafter as we further
expand development of Dimebon for the treatment of Alzheimers disease and Huntingtons disease, and MDV3100 for the treatment of castration-resistant prostate cancer, and other programs. 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.



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Selling, General and Administrative Expense



|                                            |  |                             |       |   |      |   |      
|------------------------------------------- |  | --------------------------- | ----- | - | ---- | - | -----
|                                            |  | Three Months EndedMarch 31,
|                                            |  | 2009                        |       |   | 2008
|                                            |  | (in thousands)             
|Selling, general and administrative expense |  | $                           | 6,305 |   |      | $ | 3,953
|Percentage increase                         |  |                             | 59    | % |      |   |      

Selling, general and administrative expenses consisted of primarily payroll and related costs
associated with corporate administration and executive management, facilities, marketing and medical science personnel, professional services including legal and accounting services, medical education and other administrative costs.

The increase in selling, general and administrative expenses of 59% or $2.4 million in the three months ended March 31, 2009 as compared to the
comparable period in 2008 was due primarily to increased payroll and related costs of $1.2 million, professional fees related to audit services, patent and legal services of $0.9 million and other departmental costs of $0.3 million. These increases
in selling, general and administrative costs were incurred primarily in support of our expanded research and development work, and our Collaboration Agreement with Pfizer. Selling, general and administrative headcount increased to 27 employees at
March 31, 2009 compared to 10 at March 31, 2008.

Under our Collaboration Agreement with Pfizer, we share certain Dimebon-related
commercialization costs in the United States, including pre-launch commercialization costs, on a 60% Pfizer, 40% Medivation basis. The parties make quarterly true-up payments between themselves to ensure that each has borne its applicable percentage
of the shared commercialization costs. We account for commercialization cost true-up payments as additions to selling, general and administrative expense when such payments are made by us, and as reductions to selling, general and administrative
expense when such payments are made to us. For the three months ended March 31, 2009, total commercialization cost true-up payments payable to us were $0.4 million. There were no such payments in the comparable period in 2008.

We expect total selling, general and administrative expenses to increase in 2009 and thereafter, as those costs tend to move in parallel with our
research and development expenses.

Interest Income, net



|                     |  |                             |     |   |      |   |    
|-------------------- |  | --------------------------- | --- | - | ---- | - | ---
|                     |  | Three Months EndedMarch 31,
|                     |  | 2009                        |     |   | 2008
|                     |  | (in thousands)             
|Interest income, net |  | $                           | 509 |   |      | $ | 382
|Percentage increase  |  |                             | 33  | % |      |   |    

The increase in net interest income of 33% or $0.1 million in the three months ended
March 31, 2009 as compared the comparable period in 2008 was primarily attributable to interest income on higher average cash balances. We received our $225.0 million up-front license fee from Pfizer on October 27, 2008, which resulted in
a significant increase to our average cash balance for the three months ended March 31, 2009.

Other Income (Expense), net



|                            |  |                             |    |      |   |    |  
|--------------------------- |  | --------------------------- | -- | ---- | - | -- | -
|                            |  | Three Months EndedMarch 31, |   
|                            |  | 2009                        |    | 2008 |  
|                            |  | (in thousands)              |   
|Other income (expense), net |  | $                           | 51 |      | $ | (1 | )



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The increase in other income (expense), net in the three months ended March 31, 2009 as compared to
the comparable period in 2008 was due entirely to recognized gains on foreign exchange payables. There were no such realized gains in the comparable period in 2008. As currency rates change and our international clinical activities increase, we may
record income or expense to other income (expense), net related to our clinical vendor payable balances.

Provision for Income Taxes



|                           |  |                             |     |      |   |  
|-------------------------- |  | --------------------------- | --- | ---- | - | -
|                           |  | Three Months EndedMarch 31,
|                           |  | 2009                        |     | 2008
|                           |  | (in thousands)             
|Provision for income taxes |  | $                           | 428 |      | $ | 2

The tax provision for the first quarter of 2009 was approximately $428,000. This tax provision
expense is mainly due to the net income generated by the recognition for tax purposes of deferred revenue from the Pfizer up-front payment under our Collaboration Agreement, and the nondeductibility of stock-based compensation expense. Based upon
the weight of available evidence, which includes our historical operating performance, reported cumulative net losses since inception and difficulty in accurately forecasting our future results, we maintained a full valuation allowance on our net
deferred tax assets as of March 31, 2009. The valuation allowance was determined in accordance with the provisions of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, or SFAS No. 109, which
requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable; such assessment is required on a jurisdiction by jurisdiction basis. We intend to maintain a
full valuation allowance on the United States deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance.

Liquidity and Capital Resources

Sources of Liquidity

We have incurred cumulative net losses of $128.3 million through March 31, 2009, and we expect to incur substantial and increasing additional losses
in the future as we expand our research and development activities. We have not generated any revenue from product sales to date, and we and do not expect to generate product revenue for several years, if ever. In the three months ended
March 31, 2009, we generated $16.3 million in collaboration revenue from the Pfizer Collaboration Agreement. All of our operations to date have been funded through the sale of our debt and equity securities, the $225.0 million up-front payment
we received from Pfizer on October 27, 2008, and cost-sharing true-up payments from Pfizer. As of March 31, 2009 we had cash, cash equivalents and short-term investments of $200.7 million available to fund operations. Our committed equity
line of credit with Azimuth Opportunity, Ltd. of $78.8 million expired on April 1, 2009. Based upon our current expectations, we believe our capital resources at March 31, 2009 will be sufficient to fund our currently planned operations
for at least the next twelve months.

Pfizer Collaboration Agreement

In September 2008, we announced a Collaboration Agreement with Pfizer. Under this agreement, we and Pfizer are collaborating on development of Dimebon for
Alzheimers disease and Huntingtons disease for the United States market, including associated regulatory filings with the FDA. In addition, following FDA approval and launch of Dimebon in the United States, we, at our 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.



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Pfizer will be responsible for development and seeking regulatory approval for, and commercialization of, Dimebon outside the United States. After a period
of transition from our contract manufacturers to Pfizer, Pfizer will be responsible 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 will 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 to whom the contract grants 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 with the 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
Collaboration Agreement, Pfizer paid us an 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, after 18 months following Dimebons first commercial sale, but can earlier terminate at its discretion with advance written notice to us if clinical
data for Dimebon generated after the effective date do not meet certain specified criteria or if regulatory approval is conditioned or delayed. 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, and will supply product to us during a specified
transition period.



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Cash Flow



|                                        |  |                             |         |   |      |   |         |  
|--------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                        |  | Three Months EndedMarch 31, |        
|                                        |  | 2009                        |         |   | 2008 |  
|                                        |  | (in thousands)              |        
|Net cash provided by (used in):         |  |                             |         |   |      |   |         |  
|Operating activities                    |  | $                           | (20,735 | ) |      | $ | (10,339 | )
|Investing activities                    |  |                             | (92     | ) |      |   | (95     | )
|Financing activities                    |  |                             | 91      |   |      |   | 100     |  
|                                        |  |                             |         |   |      |   |         |  
|Net change in cash and cash equivalents |  | $                           | (20,736 | ) |      | $ | (10,334 | )
|                                        |  |                             |         |   |      |   |         |  

Cash, cash equivalents and short-term investments totaled $200.7 million and $221.4 million at
March 31, 2009 and December 31, 2008, respectively. The net decrease in cash, cash equivalents and short-term investments of $20.7 million in the three months ended March 31, 2009 compared the year ended December 31, 2008 was due
primarily to cash used in operating activities of $20.7 million.

Operating Activities

Net cash used in operating activities totaled $20.7 million in the three months ended March 31, 2009. Cash used in operating activities during 2009
was primarily driven by our operating expenses of $22.1 million and increases in current assets of $3.4 million, partially offset by non-cash stock-based compensation of $2.6 million and increases in accounts payable and accrued expenses of $2.4
million. The increase in current assets was primarily due to an increase in the cost-share receivable from Pfizer. The increase in accounts payable and accrued expenses was primarily due to an increase in our operating expenses.

Net cash used in operating activities totaled $10.3 million in the three months ended March 31, 2008, and was primarily driven by our net operating
loss of $15.5 million and an increase in current and other assets of $1.2 million, offset by non-cash stock-based compensation of $2.1 million and an increase in accounts payable and accrued expenses of $4.2 million.

Investing Activities

Net cash
used in investing activities totaled $0.09 million and $0.1 million in the three months ended March 31, 2009 and 2008, respectively, consisting of purchases of property and equipment.

Financing Activities

Net cash
provided by financing activities totaled $0.09 million and $0.1 million in the three months ended March 31, 2009 and 2008, respectively, and were primarily due to proceeds from the issuance of common stock related to the exercise of employee
stock options.

Commitments and Contingencies

During the three months ended March 31, 2009, there were no material changes to our commitments and contingencies disclosures 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, 2008.

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, 2009, 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, 2008.



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

Evaluation of disclosure controls and
procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our
reports under the Securities Exchange Act of 1934, as amended, or 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 accumulated
and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures,
management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

As required by 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 our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of
the end of the quarter 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, 2009 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, 2009 that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

Limitations on the effectiveness of controls.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our
internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because
of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and we cannot be certain that
any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute,
assurance that the objectives of our disclosure control system are met.

PART II. OTHER INFORMATION



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

None.



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

Our business and prospects are
subject to the following material risks described below. 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, filed with the SEC on March 16, 2009.

Risks Related to Our Business

We
have incurred net losses since inception, expect to incur increasingly large losses in the future as we expand our development activities and may never achieve sustained revenues or profitability. Our only revenue to date has been collaboration
revenue under our collaboration agreement with Pfizer. 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 and increasing losses for the foreseeable future as we increase our spending to finance clinical and preclinical studies of our existing product candidates,
the evaluation, acquisition and development of additional product candidates, additional headcount and the costs associated with operating as a public company. 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 additional collaboration revenue under our Collaboration Agreement with Pfizer, or become profitable
because of the significant uncertainties with respect to our ability to generate product revenue from and obtain approval from the FDA 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 the $225 million up-front payment we received pursuant to our collaboration agreement with Pfizer. We
believe that our existing capital resources and interest thereon, including the $225 million up-front payment we received from Pfizer in October 2008, will be sufficient to meet our current operating requirements for at least the next 12 months.
However, if we change our development plans, acquire rights to new product candidates or cannot find third party collaborators for our other product candidates, we may need additional capital sooner than we expect. Our future capital requirements
will depend on many factors, including without limitation:



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



| |  |  | whether we experience delays in our preclinical and clinical development programs, or slower than anticipated product development;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | whether opportunities to acquire additional product candidates arise and the 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 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;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.

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 field 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.

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 who 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.

Future interest income and value of our investments may be impacted by further declines in interest rates and broader effect of the recent disruption
of credit markets.While we are conservative in our investment policies and have invested the $225 million payment from Pfizer in short-term U.S. Treasury securities and in money market funds consisting solely of short-term U.S. Treasury
securities, the interest paid on this type of investment and the value of certain securities may decline in the future as credit markets continue to adjust to the current global financial crisis.



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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, uncertain and takes many years. If we
are unable to complete 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 attract additional partners or obtain marketing approval for any 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.

Positive results in any of our clinical trials, including our first pivotal clinical trial of Dimebon in
Alzheimers disease, may not be predictive of future clinical trial results. Even where we achieve positive results in clinical trials, including our first pivotal clinical trial of Dimebon in Alzheimers disease conducted in Russia,
we do not know whether subsequent clinical trials, including the confirmatory Phase 3 pivotal Alzheimers disease clinical trial currently underway in the United States, Europe and South America will also generate positive results. Product
candidates in clinical trials, including Phase 3 clinical trials, often fail to show the desired safety and efficacy traits despite having progressed successfully through prior stages of preclinical and clinical testing. In addition, we do not
know whether interim results from any of our ongoing clinical trials, including the interim results of our Phase 1-2 clinical trial of MDV3100 in castration-resistant prostate cancer, will be predictive of final results of any such trial.

We are dependent upon our collaborative relationship with Pfizer to further develop, manufacture and commercialize Dimebon. There may
be circumstances that delay or prevent Pfizers ability to develop, manufacture and commercialize Dimebon. 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s disease. We are dependent on Pfizer for developing, manufacturing and commercializing Dimebon. Under the agreement, Pfizer is responsible for development and
seeking regulatory approval for, and commercialization of, Dimebon outside the United States, and is responsible 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 will share the costs, profits and losses on a 60%/40% basis, with Pfizer assuming the larger share.

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



| |  |  | adverse decisions by Pfizer regarding the amount and timing of resource expenditures for the development and commercialization of Dimebon;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | the right of Pfizer to terminate its collaboration agreement with us on limited notice for its convenience;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | loss of significant rights if we fail to meet our obligations under the collaboration agreement;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | withdrawal of support by Pfizer following the development or acquisition by it of competing products, including advances in the development of competing
Alzheimers disease development candidates that Pfizer already has in its portfolio, or change of Pfizer corporate strategy;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in key management personnel at Pfizer that are members of the collaborations various operating committees; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------



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| |  |  | possible disagreements with Pfizer regarding the collaboration agreement or ownership of proprietary rights.
| | - |  | ------------------------------------------------------------------------------------------------------------

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

The term of
our collaboration agreement with Pfizer extends, on a country by country basis, until Pfizer no longer is obligated to pay us royalties for countries outside the United States, or no longer sells the product in the United States. If Pfizer were to
unilaterally terminate our collaborative relationship, we would need to undertake development, manufacturing and marketing activities for Dimebon solely at our own expense and/or seek another partner 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 and might limit the indications we are able to pursue and could prevent us from effectively developing and commercializing
Dimebon. If we sought to find another pharmaceutical company partner for some or all of these activities, we may not be successful in such efforts, or they may result in a collaboration that has us expending greater funds and efforts than our
current relationship with Pfizer.

We are dependent on the efforts of and funding by Pfizer for the development of Dimebon. Under
the terms of the collaboration agreement, we and Pfizer must agree on any changes to the development plan for Dimebon that is set forth in the collaboration agreement. If we and Pfizer cannot agree, clinical trial progress could be significantly
delayed or halted. Subject to certain limitations set forth in the collaboration agreement, Pfizer is generally free to terminate the agreement at its discretion on limited notice to us. If Pfizer terminates its co-funding of Dimebon development, we
may be unable to fund the development costs on our own and may be unable to find a new collaborator, which could cause our business to fail. In the event of an uncured material breach of the agreement by us, Pfizer may elect either to terminate the
agreement or to keep the agreement in place, but 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 our 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.

The financial returns to us, if any, under our collaboration agreement with Pfizer depend in
large part on the achievement of development and commercialization milestones, plus a share of any profits from sales in the United States and royalties from sales outside 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 under the agreement. If Pfizer fails to perform or satisfy its obligations to us, the development, regulatory approval or commercialization of Dimebon 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 to market and promote Dimebon. Under our collaboration with Pfizer, we 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. Outside the United States, Pfizer will solely 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. We have limited ability to direct Pfizer in its commercialization of Dimebon in any country, including the United States. If Pfizer fails to
adequately market and promote Dimebon, whether inside or outside of the United States, we may be unable to obtain any remedy against Pfizer. If this were to happen, sales of Dimebon may be harmed, which would negatively impact our business, results
of operations, cash flows and liquidity.



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We will need to hire additional employees in order to complete development of, and co-promote,
Dimebon. Any inability to manage future growth could harm our ability to develop and commercialize Dimebon, comply with our obligations under our collaboration agreement with Pfizer, increase our costs and adversely impact our ability to compete
effectively.In order to complete development of and co-promote Dimebon with Pfizer, we will need to expand the number of our clinical, commercial and administrative personnel. We will need to hire additional clinical development personnel in
order to perform our share of the expanded Phase 3 development program for Dimebon that we and Pfizer announced in November 2008. In addition, should Dimebon receive marketing approval in the United States and should we exercise our co-promotion
option, we would need to hire a substantial number of commercial and medical affairs personnel, including field based sales and medical affairs representatives. We would also need to increase our finance and other administrative headcount to support
these expanded development and commercialization operations. The competition for qualified personnel in the biotechnology field is intense. Future growth will impose significant added responsibilities on members of management, including the need to
identify, recruit, maintain and integrate additional employees. Our future financial performance and our ability to develop and commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future
growth effectively. Should we be unable to do this, we may not be able to comply with our contractual obligations to Pfizer under the collaboration agreement, or to successfully develop or commercialize Dimebon.

We are dependent on Pfizer to manufacture clinical and commercial requirements of Dimebon, which could result in the delay of clinical trials or
regulatory approval or lost sales.Under our collaboration agreement with Pfizer, after a transition period Pfizer has the primary right and responsibility to supply Dimebon for clinical trials and all commercial requirements pursuant to a joint
manufacturing plan. Consequently, we are, and expect to remain, dependent on Pfizer to manufacture Dimebon. Pfizer may encounter difficulties in production scale-up, including problems involving production yields, quality control and quality
assurance, and shortage of qualified personnel. Pfizer may not perform as agreed or may default in its obligations to supply clinical trial supplies and/or commercial product. Pfizer may fail to deliver the required quantities of our products or
product candidates on a timely basis. Any such failure by Pfizer could delay our future clinical trials and our applications for regulatory approval, or could impair our ability to meet the market demand for Dimebon and therefore result in decreased
sales. If Pfizer does not adequately perform, we may be forced to incur additional expenses, delays, or both, to arrange for other third parties to manufacture products on our behalf, as we do not have any internal manufacturing capabilities.

*If Pfizers business strategy changes, it may adversely affect our collaborative relationship. Pfizer may change its business
strategy. Decisions by Pfizer to either reduce or eliminate its participation in the Alzheimers field, to emphasize other competitive agents currently in its portfolio at the expense of Dimebon, or to add additional competitive agents to its
portfolio, could reduce its financial incentive to continue to develop, seek regulatory approval for, or commercialize Dimebon. For example, in January 2009, Pfizer signed an agreement to merge with 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 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.

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 or
our 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 will be 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;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | negative or inconclusive results from a preclinical test or clinical trial 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 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;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any regulatory approval we, Pfizer 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
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Furthermore, as is typically the case at this stage of the regulatory review process, the FDA has not yet performed an in-depth review of our preclinical and clinical data. Any views the FDA has expressed to us thus
remain subject to change, including the view that our previously completed trial conducted in Russia can be used as one of the two pivotal studies required to support the approval of Dimebon to treat mild-to-moderate Alzheimers disease, as
long as a significant proportion of the sites in the confirmatory Phase 3 trial are located in the United States.

*Enrollment of
patients in clinical trials is often an expensive and time-consuming process, and could result in significant delays, cost overruns, or both, in our product development activities. We may encounter delays in enrolling a sufficient number of
patients to complete our clinical trials. Patient enrollment depends on many factors, including the size of the patient population, the nature of the trial protocol, the proximity of patients to clinical sites and the eligibility criteria for the
study. Delays in planned patient enrollment may result in increased costs, program delays or both, which could have a harmful effect on our ability to develop Dimebon or any other product candidates.

Although we have entered into a collaboration agreement with Pfizer for Dimebon, we have not yet partnered any of our other product development
candidates with third party collaborators, and we cannot control whether we will be able to do so on favorable terms or at all. Our business strategy relies in part on potentially partnering successful product development candidates with larger
companies to complement our internal development and commercialization efforts. We may also be required to enter into collaborative relationships to complement our internal efforts, whether in research and development, manufacturing or
commercialization and/or to generate necessary financing. It may be difficult for us to find third parties that are willing to enter into such transactions on acceptable economic terms or at all. We also will be competing with many other companies
as we seek partners for our product candidates and we may not be able to compete successfully against those other firms. If we are not able to enter into collaboration transactions for our other product development candidates, we would be required
to undertake and fund further development, clinical trials, manufacturing and commercialization activities solely at our own expense and risk. If we are unable to finance and/or successfully execute those expensive activities, our business and
prospects would be materially and adversely harmed for that reason.



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We expect that the financial returns to us in any collaboration agreement would depend in large part on
the achievement of development and/or commercialization milestones for, and royalties, co-promotion fees or other payments based upon sales of, our product candidates. Therefore, our success, and any associated financial returns to us and our
investors, will depend on the ability of Pfizer and any of our future collaborators to obtain and maintain regulatory approvals from the FDA and other foreign regulatory agencies and successfully commercialize our product candidates. We may also be
dependent on our collaborators for the commercial scale manufacture, distribution, sales, marketing and reimbursement of our product candidates. These collaborators may not be successful. If Pfizer or any future collaborator terminates its
collaboration with us or fails to perform or satisfy its obligations to us, the development, regulatory approval or commercialization of our product candidates would be delayed or may not occur and our business and prospects could be materially and
adversely affected for that reason.

If our product candidates cannot be manufactured in a cost-effective manner and in compliance with
current good manufacturing practices 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 current good manufacturing practices, or cGMP, and other applicable regulatory standards. Establishing a cGMP-compliant process to manufacture pharmaceutical and medical device 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, 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 agreement with Pfizer, Pfizer is responsible for all manufacture of Dimebon for both clinical and commercial purposes, but we cannot guarantee that Pfizer will be able to manufacture Dimebon in a timely
manner or at all. Furthermore, neither Dimebon nor MDV3100 has been manufactured 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, there are four branded drugs and one generic
drug currently marketed to treat Alzheimers disease. These drugs are all dosed once or twice per day, while Dimebon was dosed three times per day in our first pivotal clinical trial and is being dosed three times per day in all of our ongoing
and planned Phase 3 trials. This difference in dosing regimen may make Dimebon less competitive than alternative Alzheimers disease drugs if Dimebon receives marketing approval based on a thrice per day dosing regimen. In addition, one of the
four branded Alzheimers disease drugs has already lost patent protection, and the other three branded drugs are expected to lose patent protection between 2010 and 2015. Such loss of patent protection typically results in the entry of generic
competition for, and significant reductions in the commercial pricing of, those approved drugs. A generic version of one Alzheimers disease drug received FDA marketing approval in 2008. This development would put significant competitive
pressure on the prices we or our potential partners could charge for Dimebon should it ever be approved. Companies marketing currently approved Alzheimers disease therapeutics include some of the worlds largest and most experienced
pharmaceutical companies, such as Novartis AG and Johnson & Johnson. Pfizer also already markets a currently approved Alzheimers disease drug. In addition, in January 2009, Pfizer signed an agreement to merge with Wyeth which is
co-developing an Alzheimers disease product candidate that, like Dimebon, is currently in Phase 3 development. There are also dozens of additional small molecule and recombinant protein candidates in development targeting the clinical
indications we are pursuing, particularly Alzheimers disease and CRPC, including compounds already in Phase 3 clinical trials and one compound for which positive Phase 3 results in CRPC were reported in April 2009. 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



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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. 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 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 which generates an acceptable commercial return for us and any collaborative partner. It is increasingly difficult to obtain coverage and acceptable reimbursement 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. 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, 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 all four currently
marketed Alzheimers disease drugs are expected to lose patent protection prior to, or shortly following, Dimebons potential commercial launch, and thus are likely to be available at generic price levels that are more attractive to
individual payors. One such drug already has lost patent protection and a generic version is on the market. 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 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.



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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;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we or our licensors might not have been the first to file patent applications for these inventions;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | others may independently develop similar or alternative technologies or duplicate any of our technologies;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | it is possible that none of our pending patent applications or the pending patent applications of our licensors will result in issued patents;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 MDV300 series compounds. Since our 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 also 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.



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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 United States 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 United States patent and any other United States
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 the challenged intellectual property; or
| | - |  | --------------------------------------------------------------------------



| |  |  | obtain from the owner of the 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.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

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 may need to obtain 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. From time to time we may be required to license technology from 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



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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 or 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 agreement with Pfizer, 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 our 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.

Risks Related to Ownership of Our Common Stock

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 or our future collaborative partners or
licensees, if any;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 or any future collaborations;
| | - |  | -----------------------------------------------------------------------------------



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



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



| |  |  | litigation;
| | - |  | -----------



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



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

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. In addition, 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 the company and an interested stockholder of the company. 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. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
|------- | ----------------------------------------------------

None.



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

None.



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



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NO. |  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | 
|3.1(a)      |  | Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1(a) to the Quarterly Report on Form 10-QSB of Medivation, Inc. for the quarter ended June 30, 2005).                                                                                                                                                                                                                                                                                                            
|            | 
|3.1(b)      |  | Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1(b) to the Quarterly Report on Form 10-QSB of Medivation, Inc. for the
quarter ended June 30, 2005).                                                                                                                                                                                                                                                                                
|            | 
|3.1(c)      |  | Certificate of Amendment to the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1(c) to the Quarterly Report on Form 10-QSB of Medivation, Inc. for the
quarter ended June 30, 2005).                                                                                                                                                                                                                                                                            
|            | 
|3.1(d)      |  | Certificate of Designations of the Series C Junior Participating Preferred Stock of Medivation, Inc. (incorporated by reference to Exhibit 3.1(d) to the Annual Report on Form 10-KSB of
Medivation, Inc. for the year ended December 31, 2007).                                                                                                                                                                                                                                                           
|            | 
|3.2         |  | Amended and Restated Bylaws of Medivation, Inc. (incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K filed on March 16, 2009).                                                                                                                                                                                                                                                                                                                                                      
|            | 
|4.1         |  | Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form SB-2 of Medivation, Inc. (formerly Orion Acquisition Corp. II) (No.
333-03252)).                                                                                                                                                                                                                                                                                                                  
|            | 
|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 (incorporated by reference to Exhibit
4.1 to the Current Report on Form 8-K filed on December 4, 2006).
|            | 
|10.11*      |  | Change of Control Severance Benefits Agreement, dated as of February 2, 2009, between Medivation, Inc. and David Hung, M.D. (incorporated by reference to Exhibit 10.11 to the Annual report on
Form 10-K filed on March 16, 2009).                                                                                                                                                                                                                                                                        
|            | 
|10.12*      |  | Severance Benefits Agreement, dated as of February 9, 2009, between Medivation, Inc. and Rohan Palekar (incorporated by reference to Exhibit 10.12 to the Annual report on Form 10-K filed on
March 16, 2009).                                                                                                                                                                                                                                                                                             
|            | 
|10.13*      |  | Form of Medivation, Inc. Change of Control Severance Benefits Agreement (incorporated by reference to Exhibit 10.13 to the Annual report on Form 10-K filed on March 16, 2009).                                                                                                                                                                                                                                                                                                                            
|            | 
|31.1        |  | Certification of President and Chief Executive Officer pursuant to Rules 13a-14(a) or 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended                                                                                                                                                                                                                                                                                                                                          
|            | 
|31.2        |  | Certification of Senior Vice President and Chief Financial Officer pursuant to Rules 13a-14(a) or 15d-14(a) promulgated under the Securities Exchange Act of 1934, as
amended                                                                                                                                                                                                                                                                                                                              
|            | 
|32.1        |  | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                        



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



34



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##### 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.



|                   |  |  |  |                  |  |                                                          
|------------------ |  |  |  | ---------------- |  | ---------------------------------------------------------
|                   |  |  |  | MEDIVATION, INC.
|                   |  |  | 
|Date: May 11, 2009 |  |  |  | By:              |  | /s/ C. PATRICK MACHADO                                   
|                   |  |  |  | Name:            |  | C. Patrick Machado                                       
|                   |  |  |  | Title:           |  | Senior Vice President and Chief Financial Officer        
|                   |  |  |  |                  |  | (Duly Authorized Officer and Principal Financial Officer)



35



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##### Table of Contents

EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NO. |  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | 
|3.1(a)      |  | Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1(a) to the Quarterly Report on Form 10-QSB of Medivation, Inc. for the quarter ended June 30, 2005).                                                                                                                                                                                                                                                                                                            
|            | 
|3.1(b)      |  | Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1(b) to the Quarterly Report on Form 10-QSB of Medivation, Inc. for the
quarter ended June 30, 2005).                                                                                                                                                                                                                                                                                
|            | 
|3.1(c)      |  | Certificate of Amendment to the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1(c) to the Quarterly Report on Form 10-QSB of Medivation, Inc. for the
quarter ended June 30, 2005).                                                                                                                                                                                                                                                                            
|            | 
|3.1(d)      |  | Certificate of Designations of the Series C Junior Participating Preferred Stock of Medivation, Inc. (incorporated by reference to Exhibit 3.1(d) to the Annual Report on Form 10-KSB of
Medivation, Inc. for the year ended December 31, 2007).                                                                                                                                                                                                                                                           
|            | 
|3.2         |  | Amended and Restated Bylaws of Medivation, Inc. (incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K filed on March 16, 2009).                                                                                                                                                                                                                                                                                                                                                      
|            | 
|4.1         |  | Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form SB-2 of Medivation, Inc. (formerly Orion Acquisition Corp. II) (No.
333-03252)).                                                                                                                                                                                                                                                                                                                  
|            | 
|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 (incorporated by reference to Exhibit
4.1 to the Current Report on Form 8-K filed on December 4, 2006).
|            | 
|10.11*      |  | Change of Control Severance Benefits Agreement, dated as of February 2, 2009, between Medivation, Inc. and David Hung, M.D. (incorporated by reference to Exhibit 10.11 to the Annual report on
Form 10-K filed on March 16, 2009).                                                                                                                                                                                                                                                                        
|            | 
|10.12*      |  | Severance Benefits Agreement, dated as of February 9, 2009, between Medivation, Inc. and Rohan Palekar (incorporated by reference to Exhibit 10.12 to the Annual report on Form 10-K filed on
March 16, 2009).                                                                                                                                                                                                                                                                                             
|            | 
|10.13*      |  | Form of Medivation, Inc. Change of Control Severance Benefits Agreement (incorporated by reference to Exhibit 10.13 to the Annual report on Form 10-K filed on March 16, 2009).                                                                                                                                                                                                                                                                                                                            
|            | 
|31.1        |  | Certification of President and Chief Executive Officer pursuant to Rules 13a-14(a) or 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended                                                                                                                                                                                                                                                                                                                                          
|            | 
|31.2        |  | Certification of Senior Vice President and Chief Financial Officer pursuant to Rules 13a-14(a) or 15d-14(a) promulgated under the Securities Exchange Act of 1934, as
amended                                                                                                                                                                                                                                                                                                                              
|            | 
|32.1        |  | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                        



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



36