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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2008

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number: 001-32836





MEDIVATION, INC.

(Exact name of registrant as specified in its charter)







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

201 Spear Street, 3rd floor

San Francisco, California 94105

(Address of principal executive offices) (Zip
Code)

(415) 543-3470

(Registrants telephone number, including area code)





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

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



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

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

As of August 8, 2008, 30,004,998 shares of the registrants Common Stock, $0.01 par value per share, were issued and outstanding.









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##### Table of Contents

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 |  | 10      
|                              |  |                                                                                      
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 15      
|                              |  |                                                                                      
|Item 4.                       |  | Controls and Procedures                                                               |  | 15      
|                              | 
|PART II. Other Information    |  | 16                                                                                   
|                              |  |                                                                                      
|Item 1.                       |  | Legal Proceedings                                                                     |  | 16      
|                              |  |                                                                                      
|Item 1A.                      |  | Risk Factors                                                                          |  | 16      
|                              |  |                                                                                      
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 23      
|                              |  |                                                                                      
|Item 3.                       |  | Defaults Upon Senior Securities                                                       |  | 23      
|                              |  |                                                                                      
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                   |  | 23      
|                              |  |                                                                                      
|Item 5.                       |  | Other Information                                                                     |  | 23      
|                              |  |                                                                                      
|Item 6.                       |  | Exhibits                                                                              |  | 23      
|                              | 
|Signatures                    |  | 25                                                                                   
|                              | 
|Exhibits                      |  | 27                                                                                   



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PART I  FINANCIAL INFORMATION



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

MEDIVATION, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)



|                                                                                                                            |  |              |         |   |                      |   |         |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | -------------------- | - | ------- | -
|                                                                                                                            |  | June 30,2008 |         |   | December 31,2007 (1) |  
|                                                                                                                            | 
|ASSETS                                                                                                                      |  |              |         |   |                      |   |         |  
|Current assets:                                                                                                             |  |              |         |   |                      |   |         |  
|Cash and cash equivalents                                                                                                   |  | $            | 33,434  |   |                      | $ | 43,258  |  
|Prepaid expenses and other current assets                                                                                   |  |              | 2,321   |   |                      |   | 991     |  
|                                                                                                                            |  |              |         |   |                      |   |         |  
|Total current assets                                                                                                        |  |              | 35,755  |   |                      |   | 44,249  |  
|                                                                                                                            |  |             
|Property and equipment, net                                                                                                 |  |              | 739     |   |                      |   | 689     |  
|Intellectual property, net                                                                                                  |  |              | 56      |   |                      |   | 58      |  
|Other non-current assets                                                                                                    |  |              | 1,254   |   |                      |   | 600     |  
|                                                                                                                            |  |              |         |   |                      |   |         |  
|Total assets                                                                                                                |  | $            | 37,804  |   |                      | $ | 45,596  |  
|                                                                                                                            |  |              |         |   |                      |   |         |  
|                                                                                                                            |  |             
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                        |  |              |         |   |                      |   |         |  
|                                                                                                                            |  |             
|Current liabilities:                                                                                                        |  |              |         |   |                      |   |         |  
|Accounts payable                                                                                                            |  | $            | 3,889   |   |                      | $ | 1,747   |  
|Accrued expenses                                                                                                            |  |              | 7,101   |   |                      |   | 2,218   |  
|Other current liabilities                                                                                                   |  |              | 82      |   |                      |   | 70      |  
|                                                                                                                            |  |              |         |   |                      |   |         |  
|Total current liabilities                                                                                                   |  |              | 11,072  |   |                      |   | 4,035   |  
|                                                                                                                            |  |             
|Other non-current liabilities                                                                                               |  |              | 450     |   |                      |   | 492     |  
|Series A redeemable preferred stock                                                                                         |  |              | 11      |   |                      |   | 11      |  
|                                                                                                                            |  |              |         |   |                      |   |         |  
|Total liabilities                                                                                                           |  |              | 11,533  |   |                      |   | 4,538   |  
|                                                                                                                            |  |              |         |   |                      |   |         |  
|Commitments and contingencies (Note 7)                                                                                      |  |              |         |   |                      |   |         |  
|                                                                                                                            |  |             
|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 30,004,998 shares at June 30, 2008 and 28,837,290 at December 31,
2007 |  |              | 300     |   |                      |   | 288     |  
|Additional paid-in capital                                                                                                  |  |              | 120,244 |   |                      |   | 100,970 |  
|Deficit accumulated during the development stage                                                                            |  |              | (94,273 | ) |                      |   | (60,200 | )
|                                                                                                                            |  |              |         |   |                      |   |         |  
|Total stockholders equity                                                                                                  |  |              | 26,271  |   |                      |   | 41,058  |  
|                                                                                                                            |  |              |         |   |                      |   |         |  
|Total liabilities and stockholders equity                                                                                  |  | $            | 37,804  |   |                      | $ | 45,596  |  
|                                                                                                                            |  |              |         |   |                      |   |         |  



|(1) | The balance sheet data at December 31, 2007 is derived from audited financial statements included in the Companys Annual Report on form 10-KSB for the year ended
December 31, 2007 filed with the Securities Exchange Commission.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



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MEDIVATION, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)



|                                                                                               |  |                            |         |   |                          |   |        |      |  |   |         |   |  |                                                         |         |   |  |   |         |  
|---------------------------------------------------------------------------------------------- |  | -------------------------- | ------- | - | ------------------------ | - | ------ | ---- |  | - | ------- | - |  | ------------------------------------------------------- | ------- | - |  | - | ------- | -
|                                                                                               |  |                            |         |   |                          |   |        |      |  |   |         |   |  | Period fromInception(September 4, 2003)to June 30, 2008 |        
|                                                                                               |  | Three
Months EndedJune 30, |         |   | Six Months EndedJune 30, |   |       
|                                                                                               |  | 2008                       |         |   | 2007                     |   |        | 2008 |  |   | 2007    |   | 
|Operating expenses:                                                                            |  |                            |         |   |                          |   |        |      |  |   |         |   |  |                                                         |         |   |  |   |         |  
|Research and development                                                                       |  | $                          | 14,258  |   |                          | $ | 5,257  |      |  | $ | 26,214  |   |  | $                                                       | 9,509   |   |  | $ | 68,553  |  
|General and administrative                                                                     |  |                            | 4,457   |   |                          |   | 2,407  |      |  |   | 8,410   |   |  |                                                         | 4,357   |   |  |   | 27,572  |  
|                                                                                               |  |                            |         |   |                          |   |        |      |  |   |         |   |  |                                                         |         |   |  |   |         |  
|Total operating expenses                                                                       |  |                            | 18,715  |   |                          |   | 7,664  |      |  |   | 34,624  |   |  |                                                         | 13,866  |   |  |   | 96,125  |  
|                                                                                               |  |                            |         |   |                         
|Loss from operations                                                                           |  |                            | (18,715 | ) |                          |   | (7,664 | )    |  |   | (34,624 | ) |  |                                                         | (13,866 | ) |  |   | (96,125 | )
|                                                                                               |  |                            |         |   |                          |   |        |      |  |   |         |   |  |                                                         |         |   |  |   |         |  
|Other income (expense):                                                                        |  |                            |         |   |                          |   |        |      |  |   |         |   |  |                                                         |         |   |  |   |         |  
|Interest and other income                                                                      |  |                            | 184     |   |                          |   | 504    |      |  |   | 565     |   |  |                                                         | 1,062   |   |  |   | 3,504   |  
|Other expense                                                                                  |  |                            | (12     | ) |                          |   |       |      |  |   | (14     | ) |  |                                                         | (3      | ) |  |   | (1,652  | )
|                                                                                               |  |                            |         |   |                          |   |        |      |  |   |         |   |  |                                                         |         |   |  |   |         |  
|Total other income (expense)                                                                   |  |                            | 172     |   |                          |   | 504    |      |  |   | 551     |   |  |                                                         | 1,059   |   |  |   | 1,852   |  
|                                                                                               |  |                            |         |   |                          |   |        |      |  |   |         |   |  |                                                         |         |   |  |   |         |  
|Net loss                                                                                       |  | $                          | (18,543 | ) |                          | $ | (7,160 | )    |  | $ | (34,073 | ) |  | $                                                       | (12,807 | ) |  | $ | (94,273 | )
|                                                                                               |  |                            |         |   |                          |   |        |      |  |   |         |   |  |                                                         |         |   |  |   |         |  
|Basic and diluted net loss per share                                                           |  | $                          | (0.64   | ) |                          | $ | (0.26  | )    |  | $ | (1.18   | ) |  | $                                                       | (0.46   | ) |  |   |         |  
|                                                                                               |  |                            |         |   |                          |   |        |      |  |   |         |   |  |                                                         |         |   |  |   |         |  
|Weighted average common shares used in the calculation of basic and diluted net loss per share |  |                            | 28,943  |   |                          |   | 27,785 |      |  |   | 28,895  |   |  |                                                         | 27,765  |   |  |   |         |  
|                                                                                               |  |                            |         |   |                          |   |        |      |  |   |         |   |  |                                                         |         |   |  |   |         |  

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



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MEDIVATION, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



|                                                                                |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ------------------------------------------------------- | - | ------- | - |  | - | -------- | -
|                                                                                |  | Six months endedJune 30, |         |   | Period fromInception(September 4, 2003)to June 30, 2008 |  
|                                                                                |  | 2008                     |         |   | 2007                                                    |   |        
|Cash flows from operating activities:                                           |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|Net loss                                                                        |  | $                        | (34,073 | ) |                                                         | $ | (12,807 | ) |  | $ | (94,273  | )
|Adjustments to reconcile net loss to net cash used in operating activities:     |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|Impairment of intellectual property                                             |  |                          |        |   |                                                         |   |        |   |  |   | 143      |  
|Depreciation and amortization                                                   |  |                          | 88      |   |                                                         |   | 5       |   |  |   | 184      |  
|Loss on disposal of property and equipment                                      |  |                          |        |   |                                                         |   | 6       |   |  |   | 6        |  
|Accretion of discount on securities                                             |  |                          |        |   |                                                         |   | (70     | ) |  |   | (79      | )
|Stock-based compensation                                                        |  |                          | 4,190   |   |                                                         |   | 2,635   |   |  |   | 13,755   |  
|Warrants issued to related party guarantors                                     |  |                          |        |   |                                                         |   |        |   |  |   | 18       |  
|Changes in operating assets and liabilities:                                    |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|Prepaid expenses and other current assets                                       |  |                          | (1,330  | ) |                                                         |   | (100    | ) |  |   | (2,321   | )
|Other non-current assets                                                        |  |                          | (654    | ) |                                                         |   | (489    | ) |  |   | (1,254   | )
|Accounts payable                                                                |  |                          | 2,142   |   |                                                         |   | (321    | ) |  |   | 3,889    |  
|Accrued expenses                                                                |  |                          | 4,883   |   |                                                         |   | 1,399   |   |  |   | 7,101    |  
|Other current liabilities                                                       |  |                          | 12      |   |                                                         |   | (2      | ) |  |   | 82       |  
|Other non-current liabilities                                                   |  |                          | (42     | ) |                                                         |   |        |   |  |   | 450      |  
|                                                                                |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|Net cash used in operating activities                                           |  |                          | (24,784 | ) |                                                         |   | (9,744  | ) |  |   | (72,299  | )
|                                                                                |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|Cash flows from investing activities:                                           |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|Medivation cash balances at closing of December 2004 merger                     |  |                          |        |   |                                                         |   |        |   |  |   | 1,933    |  
|Purchase of short-term investments                                              |  |                          |        |   |                                                         |   |        |   |  |   | (101,527 | )
|Maturities of short-term investments                                            |  |                          |        |   |                                                         |   | 42,264  |   |  |   | 101,606  |  
|Purchase of property and equipment                                              |  |                          | (136    | ) |                                                         |   | (82     | ) |  |   | (903     | )
|Purchase of intellectual property                                               |  |                          |        |   |                                                         |   |        |   |  |   | (225     | )
|                                                                                |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|Net cash provided by (used in) investing activities                             |  |                          | (136    | ) |                                                         |   | 42,182  |   |  |   | 884      |  
|                                                                                |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|Cash flows from financing activities:                                           |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|Issuance of Series B preferred stock                                            |  |                          |        |   |                                                         |   |        |   |  |   | 2        |  
|Issuance of convertible notes:                                                  |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|To related party                                                                |  |                          |        |   |                                                         |   |        |   |  |   | 1,250    |  
|To other party                                                                  |  |                          |        |   |                                                         |   |        |   |  |   | 600      |  
|Principal repayment on notes held by related party                              |  |                          |        |   |                                                         |   |        |   |  |   | (596     | )
|Issuance of common stock                                                        |  |                          | 15,000  |   |                                                         |   |        |   |  |   | 107,653  |  
|Offering costs paid in cash                                                     |  |                          | (42     | ) |                                                         |   | (5      | ) |  |   | (4,681   | )
|Class B warrant exercises                                                       |  |                          |        |   |                                                         |   |        |   |  |   | 25       |  
|Stock option exercises                                                          |  |                          | 138     |   |                                                         |   | 172     |   |  |   | 596      |  
|                                                                                |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|Net cash provided by financing activities                                       |  |                          | 15,096  |   |                                                         |   | 167     |   |  |   | 104,849  |  
|                                                                                |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|Net increase (decrease) in cash and cash equivalents                            |  |                          | (9,824  | ) |                                                         |   | 32,605  |   |  |   | 33,434   |  
|Cash and cash equivalents at beginning of period                                |  |                          | 43,258  |   |                                                         |   | 4,649   |   |  |   |         |  
|                                                                                |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|Cash and cash equivalents at end of period                                      |  | $                        | 33,434  |   |                                                         | $ | 37,254  |   |  | $ | 33,434   |  
|                                                                                |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|Supplemental schedule of non-cash investing and financing activities:           |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|Shares issued for conversion of convertible notes (including accrued interest): |  |                          |         |   |                                                         |   |         |   |  |   |          |  
|To related party                                                                |  |                          |        |   |                                                         |   |        |   |  |   | 689      |  
|To other party                                                                  |  |                          |        |   |                                                         |   |        |   |  |   | 611      |  
|Shares issued for placement agent services in the December 2004 financing       |  |                          |        |   |                                                         |   |        |   |  |   | 970      |  
|Warrants issued for placement agent services in the December 2004 financing     |  |                          |        |   |                                                         |   |        |   |  |   | 633      |  

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



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##### Table of Contents

MEDIVATION, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

June 30, 2008

(Unaudited)

NOTE 1  THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Medivation, Inc., or the Company,
together with its operating subsidiaries, is a biopharmaceutical company with small molecule drugs in clinical development to treat three large, unmet medical needsAlzheimers disease, Huntingtons disease and castration-resistant
(also known as hormone-refractory) prostate cancer. To date, the Companys operations have been directed primarily toward developing proprietary product candidates. Accordingly, the Company is considered to be in the development stage. The
Company has not generated any revenue from operations to date and does not expect to generate any product revenue for several years, if ever.

The Company has incurred cumulative net losses of $94.3 million through June 30, 2008, and expects to incur substantial and increasing additional losses in the future as it expands its research and development activities. At
June 30, 2008, the Company had cash and cash equivalents of $33.4 million and remaining capacity under its committed equity line of credit with Azimuth Opportunity, Ltd., or Azimuth, of $78.8 million. The Company obtained its equity line of
credit from Azimuth pursuant to a Common Stock Purchase Agreement dated September 7, 2007. Subject to the conditions set forth in that agreement, Azimuth is committed to purchase up to $100 million of the Companys common stock
pursuant to draw down notices that the Company may give to Azimuth from time to time at the Companys discretion until April 1, 2009. The price of shares sold is determined by reference to the volume weighted average price of the
Companys common stock on the Nasdaq Global Market during a ten trading day pricing period at the time of each draw down notice, less a discount of 4.65 to 6.15 percent.

The Company expects to require additional financing beyond that available under its committed equity line of credit to fund development of its product
candidates through receipt of marketing approval. Potential sources of additional financing include the sale of debt or equity securities in public or private financing transactions, as well as entering into co-development or co-commercialization
transactions covering the Companys product candidates. The Companys strategy is to consider all of these financing opportunities and to prioritize those which, in its judgment, are most attractive to the Company and its stockholders.
However, the successful completion of any of these potential transactions is largely beyond the Companys control, and there can be no assurance that the Company will be able to raise additional financing in a timely manner, on acceptable
terms, or at all. If the Company is unable to raise additional financing, it will be unable to continue development of its product candidates.

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 statements 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 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, 2007 included in the Companys annual report on Form 10-KSB filed with the Securities and
Exchange Commission, or the Commission, on February 19, 2008.

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. The Company acquired its operating subsidiary
Medivation Neurology, Inc. by merger on December 17, 2004. Because the merger was accounted for as a reverse merger under generally accepted accounting principles, the consolidated financial statements of the Company for periods prior to that
date reflect only the operations of Medivation Neurology, Inc.



6



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##### Table of Contents

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 Statement of Financial Accounting Standards 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 amounts for the six month period ended June 30, 2008, the
three and six month periods ended June 30, 2007 and the cumulative period from inception (September 4, 2003) to June 30, 2008 were $357,000, $186,000, $419,000, and $2,668,510, respectively. The revision did not affect previously reported
total operating expenses, net loss, earnings per share, assets, liabilities, stockholders equity or cash flows.

Recently Issued Accounting
Pronouncements

In June 2008, the Financial Accounting Standards Board, or FASB, issued FASB Staff Position, or FSP, EITF 03-6-1,
Determining Whether Instruments Granted in Share-Based Transactions Are Participating Securities. This standard provides guidance in determining whether unvested instruments granted under share-based payment transactions are participating securities
and, therefore, should be included in earnings per share calculations under the two-class method provided under Statement of Financial Accounting Standards, or SFAS, No. 128, Earnings per Share. FSP EITF 03-6-1 is effective for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal years. The Company does not expect that the adoption of FSP EITF 03-6-1 will have a significant impact on its condensed consolidated financial statements.

In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets. FSP FAS 142-3 amends the factors that should be
considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. FSP FAS 142-3 aims to improve the consistency between the
useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R) and other applicable accounting literature. FSP FAS 142-3 is effective
for financial statements issued for fiscal years beginning after December 15, 2008 and must be applied prospectively to intangible assets acquired after the effective date. The Company does not expect that the adoption of FSP FAS 142-3 will
have a significant impact on its condensed consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging Activitiesan amendment of FASB Statement No. 133. This Statement is intended to enhance the current disclosure framework in Statement No. 133. The Statement requires that
objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. This disclosure better conveys the purpose of derivative use in terms of the risks that the entity is intending to manage. Disclosing
the fair values of derivative instruments and their gains and losses in a tabular format should provide a more complete picture of the location in an entitys financial statements of both the derivative positions existing at period end and the
effect of using derivatives during the reporting period. Disclosing information about credit-risk-related contingent features should provide information on the potential effect on an entitys liquidity from using derivatives. Finally, this
Statement requires cross-referencing within the footnotes, which should help users of financial statements locate important information about derivative instruments. The Company does not expect that the adoption of SFAS No. 161 will have a
significant impact on the consolidated results of operations or financial position of the Company.

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 Company does not expect that the adoption of FAS 157-2 will have a significant impact on the consolidated results of operations or financial position of the Company.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations, or SFAS No. 141R, which replaces SFAS
No. 141. SFAS No. 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree
and the goodwill acquired. SFAS No. 141R also establishes disclosure requirements which will enable users to evaluate the nature and financial effects of the business combination. SFAS No. 141R is effective for business combinations for
which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does not expect that the adoption of SFAS No. 141R will have a significant impact on the
consolidated results of operations or financial position of the Company.

In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statementsan Amendment of Accounting Research Bulletin No. 51, which establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other
than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parents ownership interest and the valuation of retained noncontrolling equity investments when a subsidiary is
deconsolidated. SFAS No. 160 also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160
is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company does not expect that the adoption of SFAS No. 160 will have a significant impact on the consolidated results
of operations or financial position of the Company.

NOTE 2  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. At June 30,
2008 and 2007 these potentially dilutive securities were as follows:



|                              |  |                          |  |      
|----------------------------- |  | ------------------------ |  | -----
|                              |  | Six Months EndedJune 30,
|                              |  | 2008                     |  | 2007 
|                              |  | (In thousands)          
|Outstanding options           |  | 4,000                    |  | 2,558
|Outstanding warrants          |  | 322                      |  | 322  
|Outstanding restricted shares |  | 30                       |  |     
|                              |  |                          |  |      
|Total                         |  | 4,352                    |  | 2,880
|                              |  |                          |  |      



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##### Table of Contents

NOTE 3  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 activity under the Plan during the six-month period ended June 30, 2008.



|                                        |  |                  |  |                              |       |                           |       
|--------------------------------------- |  | ---------------- |  | ---------------------------- | ----- | ------------------------- | ------
|                                        |  | Number ofOptions |  | WeightedAverageExercisePrice |       | Number ofRestrictedShares
|Outstanding at January 1, 2008          |  | 3,359,326        |  | $                            | 10.10 |                           |      
|Granted                                 |  | 693,620          |  | $                            | 15.53 |                           | 30,000
|Exercised                               |  | 38,190           |  | $                            | 3.60  |                           |      
|Forfeited                               |  | 14,700           |  | $                            | 21.17 |                           |      
|                                        |  |                  |  |                              |       |                           |       
|Outstanding at June 30, 2008            |  | 4,000,056        |  | $                            | 11.07 |                           | 30,000
|                                        |  |                  |  |                              |       |                           |       
|Exercisable and vested at June 30, 2008 |  | 1,581,402        |  | $                            | 4.66  |                           |      
|                                        |  |                  |  |                              |       |                           |       

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. The Company presently weights historical volatility more heavily than implied volatility because
options on its common stock began trading publicly only in the second quarter of 2007. 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 June 30, 2008 less than five 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.

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.



8



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##### Table of Contents

Total stock-based compensation recognized by the Company in the three and six months ended June 30,
2008 and 2007 was as follows:



|                                       |  |                                      |       |                          |   |       |  |      |       |  |   |      
|-------------------------------------- |  | ------------------------------------ | ----- | ------------------------ | - | ----- |  | ---- | ----- |  | - | -----
|                                       |  | Three months endedJune 30,           |       | Six months endedJune 30,
|                                       |  | 2008                                 |       | 2007                     |   | 2008  |  | 2007
|                                       |  | (In thousands except per share data)
|Research and development expense       |  | $                                    | 889   |                          | $ | 459   |  | $    | 1,815 |  | $ | 860  
|General and administrative expense     |  |                                      | 1,164 |                          |   | 956   |  |      | 2,375 |  |   | 1,775
|                                       |  |                                      |       |                          |   |       |  |      |       |  |   |      
|Total stock-based compensation expense |  | $                                    | 2,053 |                          | $ | 1,415 |  | $    | 4,190 |  | $ | 2,635
|                                       |  |                                      |       |                          |   |       |  |      |       |  |   |      

Unearned stock-based compensation attributable to employee and director awards totaled $19.2
million at June 30, 2008 and will be recognized as expense over a weighted-average period of 2.9 years.

NOTE 4  ACCRUED EXPENSES

At June 30, 2008 and December 31, 2007, accrued expenses consisted of the following (in thousands):



|                                |  |              |       |                  |   |      
|------------------------------- |  | ------------ | ----- | ---------------- | - | -----
|                                |  | June 30,2008 |       | December 31,2007
|Payroll and payroll related     |  | $            | 906   |                  | $ | 75   
|Preclinical and clinical trials |  |              | 5,566 |                  |   | 1,583
|Other                           |  |              | 629   |                  |   | 560  
|                                |  |              |       |                  |   |      
|Total accrued expenses          |  | $            | 7,101 |                  | $ | 2,218
|                                |  |              |       |                  |   |      

NOTE 5  THIRD PARTY EQUITY INTERESTS IN OPERATING SUBSIDIARIES

(a) Medivation Neurology, Inc.

At June 30, 2008,
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.

(b) Medivation Prostate Therapeutics, Inc.

At
June 30, 2008, 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. Equity Incentive Plan, or the MPT Plan. At
June 30, 2008, one option was outstanding under the MPT Plan. This option, which was issued to the licensor of MPTs MDV300 series technology, 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 Emerging Issues Task Force, or 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 6  COMMON STOCK OFFERING

In June 2008, the Company raised $15 million in a public offering of 1,129,518 shares of its Common Stock pursuant to an effective registration
statement on Form S-3 previously filed with the Commission. Cash offering costs of $42,000 incurred in connection with this public offering were charged against additional paid-in capital in the three-month period ended June 30, 2008.

NOTE 7  COMMITMENTS AND CONTINGENCIES

The Company has commitments under operating leases for its current and former offices in San Francisco, California, which leases run through August 2012 and April 2011, respectively. The future minimum lease payments under the two operating
leases, net of sublease income, at June 30, 2008 are as follows (in thousands):



|                            |  |   |          
|--------------------------- |  | - | ---------
|Years Ending December 31,   |  |  
|2008 (remaining six months) |  | $ | 289,759  
|2009                        |  |   | 593,215  
|2010                        |  |   | 615,479  
|2011                        |  |   | 692,336  
|2012                        |  |   | 396,825  
|                            |  |   |          
|Total                       |  | $ | 2,587,614
|                            |  |   |          



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##### Table of Contents

|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, 2007, included in our Annual Report on Form 10-KSB for the year ended December 31, 2007 filed with the Commission on February 19, 2008. 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 with small molecule drugs in clinical development to treat three large, unmet medical needsAlzheimers disease, Huntingtons disease and castration-resistant (also
known as hormone-refractory) prostate cancer. Our strategy is to identify promising product candidates, to develop them in a rapid, cost-effective manner, and to seek development and/or commercialization partners as appropriate to complement our
internal efforts.

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 U.S. for mild-to-moderate Alzheimers disease. We began our confirmatory pivotal
Phase 3 Alzheimers disease trial in the second quarter of 2008. Dimebon has successfully completed a Phase 1-2 clinical trial 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 novel potential treatment for these and potentially other
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

Our proprietary compound MDV3100 is currently in a Phase 1-2 clinical trial in approximately 100 patients with castration-resistant prostate cancer. MDV3100 is the lead clinical development candidate from a
library of approximately 170 small molecules licensed by the Company. 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.



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##### Table of Contents

Results of Operations

Three Months Ended June 30, 2008 and 2007

Research and Development Expense



|                                 |  |                            |        |               |   |       |  |     |  
|-------------------------------- |  | -------------------------- | ------ | ------------- | - | ----- |  | --- | -
|                                 |  | Three Months EndedJune 30, |        | PercentChange |  
|                                 |  | 2008                       |        | 2007          |   |       | 
|                                 |  | (in thousands)             |        |               |  
|Research and development expense |  | $                          | 14,258 |               | $ | 5,257 |  | 171 | %

The increase of 171% or $9.0 million in research and development expense in the three months ended
June 30, 2008 as compared to the prior year period was due primarily to an increase in clinical and preclinical study expense of $7.9 million, and an increase in payroll expense of $1.0 million. These increases were driven primarily by
significant expansions in our clinical development work for both Dimebon and MDV3100, including initiation of our ongoing confirmatory Phase 3 clinical trial of Dimebon in Alzheimers disease and continuation of our ongoing Phase 1-2
clinical trial of MDV3100 in castration-resistant prostate cancer, and associated increases in research and development headcount to 27 at June 30, 2008 from 11 a year earlier.

Research and development costs are identified as either directly allocable to one of our research and development programs or as an indirect cost, with
only direct costs being tracked by specific program. Direct costs consist primarily of preclinical and clinical study costs, cost of supplying drug substance and drug product for use in preclinical and clinical studies, contract research
organization fees, and other contracted services pertaining to specific preclinical and clinical studies. Indirect costs consist of personnel costs (including both cash costs and non-cash stock-based compensation costs), facilities and other
corporate overhead costs, and other administrative and support costs.

To date, we have been engaged in two major research and development
projects: the development of Dimebon for Alzheimers disease and Huntingtons disease, and the development of MDV3100 for castration-resistant prostate cancer. The following table summarizes the direct costs attributable to each project
and the total indirect costs for each respective period.



|                                        |  |                            |        |      |   |      
|--------------------------------------- |  | -------------------------- | ------ | ---- | - | -----
|                                        |  | Three Months EndedJune 30,
|                                        |  | 2008                       |        | 2007
|                                        |  | (in thousands)            
|Direct costs:                           |  |                            |        |      |   |      
|Dimebon                                 |  | $                          | 8,187  |      | $ | 2,390
|MDV 3100                                |  |                            | 1,860  |      |   | 717  
|Other                                   |  |                            | 1,082  |      |   | 106  
|                                        |  |                            |        |      |   |      
|Total direct costs                      |  |                            | 11,129 |      |   | 3,213
|Indirect costs                          |  |                            | 3,129  |      |   | 2,044
|                                        |  |                            |        |      |   |      
|Total research and development expenses |  | $                          | 14,258 |      | $ | 5,257
|                                        |  |                            |        |      |   |      

General and Administrative Expense



|                                   |  |                            |       |               |   |       |  |    |  
|---------------------------------- |  | -------------------------- | ----- | ------------- | - | ----- |  | -- | -
|                                   |  | Three Months EndedJune 30, |       | PercentChange |  
|                                   |  | 2008                       |       | 2007          |   |       | 
|                                   |  | (in thousands)             |       |               |  
|General and administrative expense |  | $                          | 4,457 |               | $ | 2,407 |  | 85 | %

The increase of 85% or $2.1 million in general and administrative expense in the three months
ended June 30, 2008 as compared to the prior year period was due primarily to increases in payroll expense, patent and other professional fees, and facilities costs, incurred primarily in support of our expanded research and development work.
General and administrative headcount increased to 13 at June 30, 2008 from six a year earlier.



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##### Table of Contents

Interest and Other Income



|                          |  |                            |     |               |   |     |  |     |  
|------------------------- |  | -------------------------- | --- | ------------- | - | --- |  | --- | -
|                          |  | Three Months EndedJune 30, |     | PercentChange |  
|                          |  | 2008                       |     | 2007          |   |     | 
|                          |  | (in thousands)             |     |               |  
|Interest and other income |  | $                          | 184 |               | $ | 504 |  | -63 | %

The decrease of 63% or $0.3 million in interest and other income in the three months ended
June 30, 2008 as compared to the prior year period was due to decreased interest income, attributable to lower average cash balances and lower prevailing interest rates.

Six Months Ended June 30, 2008 and 2007

Research and Development Expense



|                                 |  |                          |        |               |   |       |  |     |  
|-------------------------------- |  | ------------------------ | ------ | ------------- | - | ----- |  | --- | -
|                                 |  | Six Months EndedJune 30, |        | PercentChange |  
|                                 |  | 2008                     |        | 2007          |   |       | 
|                                 |  | (in thousands)           |        |               |  
|Research and development expense |  | $                        | 26,214 |               | $ | 9,509 |  | 176 | %

The increase of 176% or $16.7 million in research and development expense in the six months ended
June 30, 2008 as compared to the prior year period was due primarily to an increase in clinical and preclinical study expense of $14.1 million, and an increase in payroll expense of $2.6 million. These increases were driven primarily by
significant expansions in our clinical development work for both Dimebon and MDV3100, including initiation of our ongoing confirmatory Phase 3 clinical trial of Dimebon in Alzheimers disease and continuation of our ongoing Phase 1-2
clinical trial of MDV3100 in castration-resistant prostate cancer, and associated increases in research and development headcount to 27 at June 30, 2008 from 11 a year earlier.

The following table summarizes the direct costs attributable to each project and the total indirect costs for each respective period.



|                                        |  |                          |        |      |   |      
|--------------------------------------- |  | ------------------------ | ------ | ---- | - | -----
|                                        |  | Six Months EndedJune 30,
|                                        |  | 2008                     |        | 2007
|                                        |  | (in thousands)          
|Direct costs:                           |  |                          |        |      |   |      
|Dimebon                                 |  | $                        | 14,651 |      | $ | 4,323
|MDV 3100                                |  |                          | 3,766  |      |   | 1,413
|Other                                   |  |                          | 1,547  |      |   | 145  
|                                        |  |                          |        |      |   |      
|Total direct costs                      |  |                          | 19,964 |      |   | 5,881
|Indirect costs                          |  |                          | 6,250  |      |   | 3,628
|                                        |  |                          |        |      |   |      
|Total research and development expenses |  | $                        | 26,214 |      | $ | 9,509
|                                        |  |                          |        |      |   |      

General and Administrative Expense



|                                   |  |                          |       |               |   |       |  |    |  
|---------------------------------- |  | ------------------------ | ----- | ------------- | - | ----- |  | -- | -
|                                   |  | Six Months EndedJune 30, |       | PercentChange |  
|                                   |  | 2008                     |       | 2007          |   |       | 
|                                   |  | (in thousands)           |       |               |  
|General and administrative expense |  | $                        | 8,410 |               | $ | 4,357 |  | 93 | %

The increase of 93% or $4.1 million in general and administrative expense in the six months ended
June 30, 2008 as compared to the prior year period was due primarily to increases in payroll expense, patent and other professional fees, and facilities costs, incurred primarily in support of our expanded research and development work. General
and administrative headcount increased to 13 at June 30, 2008 from six a year earlier.



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##### Table of Contents

Interest and Other Income



|                          |  |                          |     |               |   |       |  |     |  
|------------------------- |  | ------------------------ | --- | ------------- | - | ----- |  | --- | -
|                          |  | Six Months EndedJune 30, |     | PercentChange |  
|                          |  | 2008                     |     | 2007          |   |       | 
|                          |  | (in thousands)           |     |               |  
|Interest and other income |  | $                        | 565 |               | $ | 1,062 |  | -47 | %

The decrease of 47% or $0.5 million in interest and other income in the six months ended
June 30, 2008 as compared to the prior year period was due to decreased interest income, attributable to lower average cash balances and lower prevailing interest rates.

Liquidity and Capital Resources

We have incurred cumulative net losses of $94.3 million through
June 30, 2008, 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 operations to date and do not expect to generate
product revenue for several years, if ever. All of our operations to date have been funded through the sale of our debt and equity securities. We had cash and cash equivalents of $33.4 million and $43.3 million as of June 30, 2008 and
December 31, 2007, respectively, available to fund operations. In addition, at June 30, 2008, the remaining capacity under our committed equity line of credit with Azimuth was $78.8 million. We may draw on that remaining capacity at our
discretion during the term of the facility, which expires on April 1, 2009. We obtained our equity line of credit from Azimuth pursuant to a Common Stock Purchase Agreement dated September 7, 2007. Subject to the conditions set forth in
that agreement, Azimuth is committed to purchase up to $100 million of our common stock pursuant to draw down notices that we may give to Azimuth from time to time at our discretion until April 1, 2009. The price of shares sold is
determined by reference to the volume weighted average price of our common stock on the Nasdaq Global Market during a ten trading day pricing period at the time of each draw down notice, less a discount of 4.65 to 6.15 percent.

Net cash used in operating activities for the six months ended June 30, 2008 and 2007 was $24.8 million and $9.7 million, respectively. The increase
of $15.1 million in net cash used in operations was primarily attributable to a higher net loss in 2008, partially offset by non-cash stock-based compensation expense and an increase in accounts payable, accrued expenses and other current
liabilities arising in the ordinary course of business as a result of the Companys increasing research and development activities.

Net cash used in investing activities for the six months ended June 30, 2008 was $0.1 million, compared to net cash provided by investing activities of $42.2 million in the six months ended June 30, 2007. The $42.3 million
decrease in net cash provided by investing activities in the six months ended June 30, 2008 compared to the prior year period was due primarily to decreases in maturities of short-term investments.

Net cash provided by financing activities for the six months ended June 30, 2008 and 2007 was $15.1 million and $0.2 million, respectively. The
increase was due to our sale in June 2008 of 1,129,518 shares of our common stock in a registered direct offering, raising gross proceeds of approximately $15 million.

We believe that our current cash and cash equivalent balances, together with the remaining capacity available under our existing committed equity line of credit, will be sufficient to meet our capital requirements
through at least the next twelve months. However, we expect to require additional financing beyond our current cash and cash equivalent balances and the financing available under our committed equity line of credit to fund development of our product
candidates until they receive marketing approval and become cash flow positive. Potential sources of additional financing available to us may include the sale of debt or equity securities in public or private financing transactions, as well as
entering into co-development or co-commercialization transactions covering our product candidates. Our strategy is to consider all of these financing opportunities and to prioritize those which, in our judgment, are most attractive to us and our
stockholders. However, the successful completion of any of these potential transactions is largely beyond our control, and there can be no assurance that we will be able to raise additional financing in a timely manner, on acceptable terms, or at
all. If we are unable to raise additional financing, we will be unable to continue development of our product candidates.

Critical Accounting Policies,
Estimates and Judgments

This discussion and analysis of financial condition and results of operations is based upon our financial
statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosures. On an on-going basis, we evaluate our estimates, including those related to clinical trial accruals and stock-based compensation. We base our estimates on historical experience and on
various other factors what we believe are reasonable under the circumstances. Actual results, however, may differ significantly from these estimates under different assumptions or conditions and may adversely affect the financial statements.

We believe the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of our
financial statements and accompanying notes.

Research and Development Expenses and Accruals

Research and development expenses include personnel and facility-related expenses, outside contracted services including clinical trial costs,
manufacturing and process development costs, research costs and other consulting services. Research and development costs are expensed as incurred. In instances where we enter into agreements with third parties to provide research and development
services to us, costs are expensed as services are performed. Amounts due under such arrangements may be either fixed fee or fee for service, and may include upfront payments, monthly payments, and payments upon the completion of milestones or
receipt of deliverables.



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Our cost accruals for clinical trials and other research and development activities are based on
estimates of the services received and efforts expended pursuant to contracts with numerous clinical trial centers and contract research organizations. In the normal course of business we contract with third parties to perform various research and
development activities in the on-going development of our product candidates, including without limitation, third party clinical trial centers and contract research organizations that perform and administer our clinical trials on our behalf. The
financial terms of these agreements are subject to negotiation and vary from contract to contract and may result in uneven payment flows. Payments under these agreements depend on factors such as the achievement of certain events, the successful
enrollment of patients, and the completion of portions of the clinical trial or similar conditions. The objective of our accrual policy is to match the recording of expenses in our financial statements to the actual services received and efforts
expended. As such, expense accruals related to clinical trials and other research and development activities are recognized based on our estimate of the degree of completion of the event or events specified in the specific agreement.

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. The Company presently weights historical volatility more heavily than implied volatility because options on its common stock began trading publicly only in the second quarter of 2007. 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 June 30,
2008 less than five 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 other 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.

Recently Issued Accounting Pronouncements

In June 2008, the Financial Accounting Standards Board, or FASB, issued
FASB Staff Position, or FSP, EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Transactions Are Participating Securities. This standard provides guidance in determining whether unvested instruments granted under share-based payment
transactions are participating securities and, therefore, should be included in earnings per share calculations under the two-class method provided under Statement of Financial Accounting Standards, or SFAS, No. 128, Earnings per Share. FSP
EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company does not expect that the adoption of FSP EITF 03-6-1 will have a significant impact on its condensed
consolidated financial statements.

In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets.
FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. FSP FAS 142-3
aims to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R) and other applicable
accounting literature. FSP FAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and must be applied prospectively to intangible assets acquired after the effective date. The Company does not
expect that the adoption of FSP FAS 142-3 will have a significant impact on its condensed consolidated financial statements.

In March
2008, FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activitiesan amendment of FASB Statement No. 133. This Statement is intended to enhance the current disclosure framework in Statement
No. 133. The Statement requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. This disclosure better conveys the purpose of derivative use in terms of the risks that the
entity is intending to manage. Disclosing the fair values of derivative instruments and their gains and losses in a tabular format should provide a more complete picture of the location in an entitys financial statements of both the derivative
positions existing at period end and the effect of using derivatives during the reporting period. Disclosing information about credit-risk-related contingent features should provide information on the potential effect on an entitys liquidity
from using derivatives. Finally, this Statement requires cross-referencing within the footnotes, which should help users of financial statements locate important information about derivative instruments. The Company does not expect that the adoption
of SFAS No. 161 will have a significant impact on the consolidated results of operations or financial position of the Company.

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 Company does not expect that the adoption of FAS 157-2 will have a significant impact on the consolidated results of operations or financial position of the Company.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations, or SFAS No. 141R, which replaces SFAS
No. 141. SFAS No. 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree
and the goodwill acquired. SFAS No. 141R also establishes disclosure requirements which will enable users to evaluate the nature and financial effects of the business combination. SFAS No. 141R is effective for business combinations for
which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does not expect that the adoption of SFAS No. 141R will have a significant impact on the
consolidated results of operations or financial position of the Company.

In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statementsan Amendment of Accounting Research Bulletin No. 51, which establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other
than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parents ownership interest and the valuation of retained noncontrolling equity investments when a subsidiary is
deconsolidated. SFAS No. 160 also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160
is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company does not expect that the adoption of SFAS No. 160 will have a significant impact on the consolidated results
of operations or financial position of the Company.



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

Our exposure to market risk for changes in interest rates relates to our cash equivalents on deposit in highly liquid money market accounts. The primary
objective of our cash investment activities is to preserve principal while at the same time maximizing the income we receive from our invested cash without significantly increasing risk of loss. We invest only in U.S. government and
government-agency securities with remaining maturities of one year or less at the time of acquisition. We do not use derivative financial instruments in our investment portfolio. Our cash and investments policy emphasizes liquidity and preservation
of principal over other portfolio considerations. Our investment portfolio is subject to interest rate risk and will fall in value if market interest rates rise. However, due to the short duration of our investment portfolio we believe an increase
in the interest rates of one percentage point would not be material to our financial condition or results of operations. At June 30, 2008, all of our invested cash was in highly liquid money market accounts.

We do not have any material exposure to foreign currency rate fluctuations as we operate primarily in the U.S. Although we conduct some research and
development work with vendors outside the U.S., most of our transactions are denominated in U.S. dollars. However, we expect our exposure to foreign currency exchange rate fluctuations to increase beginning in the third quarter of 2008 due primarily
to the conduct of our confirmatory Phase 3 clinical trial of Dimebon in Alzheimers disease. This trial will include clinical sites in Europe and South America, and certain of our payment obligations with respect to those sites will be
denominated in foreign currencies During the three months ended June 30, 2008, 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-KSB for the year ended December 31, 2007.



|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 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 Commission Rule 13a-15(b), 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 June 30, 2008 at the
reasonable assurance level.

Changes in internal controls.

There were no changes in our internal control over financial reporting during the six months ended June 30, 2008 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



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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.



|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-KSB, filed with the SEC on
February 19, 2008.

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 revenues or profitability. We are a development stage company and have never recognized any revenue from the sale of products or any other source. 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
revenue or become profitable because of the significant uncertainties with respect to our ability to generate revenue from 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 all of our operations through the sale of our debt and equity securities. We will require significant additional capital to develop our existing product candidates and to
acquire and develop additional product candidates. 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 third party collaborative partnerships to develop and/or commercialize any of our product candidates and the terms of any such
collaboration;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 availability and cost of raw materials required to manufacture our product candidates for testing in our preclinical and clinical studies; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



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

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



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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 managers 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 developing a manufacturing process at an appropriate scale to manufacture our
product candidates to be tested in those studies. 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.

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 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 potential partners of their safety or efficacy, we will not be able to attract partners or obtain marketing
approval for any products. Furthermore, even if we or our potential 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 U.S., 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 early results from
any of our ongoing clinical trials, including the early 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.

*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 or our potential 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 U.S., 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 U.S. 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 or any potential 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 U.S.

*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. In particular, our Phase 3 confirmatory pivotal Phase 3 trial of Dimebon in Alzheimers disease is evaluating Dimebon as a monotherapy in Alzheimers disease patientsmeaning that patients in the placebo group
do not receive treatment with any approved Alzheimers disease drugs. Because approved Alzheimers disease drugs are widely available in the U.S. and Europe, we believe that patient accrual in Dimebon monotherapy studies, including our
confirmatory pivotal Phase 3 trial of Dimebon in Alzheimers disease, may be particularly time-consuming. 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.

*We have not yet partnered any of our 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. For example, because Alzheimers disease is a large market requiring a large primary care sales force, we are currently seeking a commercial partner for Dimebon in
that indication. We also expect to seek ex-US commercial partners for our product candidates, including both Dimebon and MDV3100. 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. We have not entered into any such collaborations to date. 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 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.

If we enter into collaboration transactions, we will be dependent upon our partners, and we may be unable to prevent them from taking
actions that may be harmful to our business or inconsistent with our business strategy. Any collaboration agreements we may enter into with respect to our product development candidates are likely to provide us with little or no control over the
activities of our partners. For example, future partners, if any, are likely to have the right to terminate the collaboration at their option. Our partners may decide to terminate a development program under circumstances where we might have
continued such a program, or may be unable or unwilling to pursue ongoing development and commercialization activities as quickly as we would prefer. Any partner may be unwilling or unable to fulfill its obligations to us, including its development
and commercialization responsibilities in respect of our product candidates. Our partners will likely have significant discretion in determining the efforts and level of resources that they dedicate to the development and commercialization of our
product candidates relative to their other products and product candidates. In addition, our collaborators may develop and commercialize, either alone or with others, products and services that are similar to or directly competitive with the
products that are the subject of the collaboration with us.



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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 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 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 U.S., 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 are currently scaling up our Dimebon
manufacturing process to the scale required to seek regulatory approval to market Dimebon in the U.S. and foreign countries. We cannot guarantee that we will be able to complete this scale up work 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 drugs 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 also is being dosed three times per day in our confirmatory Phase 3 pivotal clinical trial. 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, all four currently approved Alzheimers disease drugs
are expected to lose patent protection prior to, or shortly after, Dimebons potential launch. Such loss of patent protection would likely result in the entry of generic competition for, and significant reductions in the commercial pricing of,
those approved drugs. 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 Pfizer Inc., Novartis AG and Johnson & Johnson. 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 castration-resistant prostate cancer, including compounds already in Phase 3 clinical trials. One or more such compounds may
be approved in each of our target indications before any of our product candidates could potentially be approved. Most, if not all, of these competing drug development programs are being conducted by pharmaceutical and biotechnology companies with
considerably greater financial resources, human resources and experience than ours. Any of our product candidates that receives regulatory approval will face significant competition from both approved drugs, as well as from any of the drugs
currently under development that may subsequently be approved. Bases upon which our product candidates would have to compete successfully include efficacy, safety, price and cost-effectiveness. 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 or any of our potential 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 potential 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 U.S. 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, 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



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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. 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, potential 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.

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 potential future 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 U.S. 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 commercially viable products, may not provide us with any
competitive advantages, or may be challenged by third parties and invalidated; 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 U.S. and elsewhere involving pharmaceutical patents and other intellectual property rights. In particular, generic pharmaceutical manufacturers have been very aggressive in challenging the validity of patents
held by proprietary pharmaceutical companies, especially if these patents are commercially significant. If any of our present or future product candidates succeed, we may face similar challenges to our existing or future patents. For example, in the
prosecution of our issued U.S. patents claiming the use of Dimebon and certain related compounds to treat neurodegenerative diseases, including Alzheimers disease, the prior owners missed a filing deadline with the U.S. Patent &
Trademark Office, or PTO, which resulted in the patent application being deemed abandoned. The prior owners petitioned the PTO to revive the patent application alleging that missing the deadline was unintentional, and the PTO approved the petition
and issued the patent. However, as with any other decision the PTO makes, this decision could be challenged in subsequent litigation in an attempt to invalidate this issued U.S. patent and any other U.S. patent that may issue based on the same
patent application. If a generic pharmaceutical company or other third party were able to successfully invalidate any of our present or future patents, any of our product candidates that may ultimately receive marketing approval could face
additional competition from lower priced generic products that would result in significant price and revenue erosion and have a significantly negative impact on the commercial viability of the affected product candidate(s).

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



| |  |  | discontinue our products that use 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 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
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 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.



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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 U.S. 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 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 any future collaborations;
| | - |  | --------------------------------------------------



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



| |  |  | regulatory developments in the U.S. 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. Please refer to Item 11: Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder Matters in our Annual Report on Form 10-KSB for the year ended December 31, 2007 for more information. 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.



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##### Table of Contents

|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.
|------- | ----------------------------------------------------

We held our Annual Meeting of Stockholders on June 5, 2008. The stockholders elected all of managements nominees for the board of directors to hold office until the next Annual Meeting of Stockholders or
until their successors are duly elected and qualified. The stockholders ratified the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2008. The voting results
are as follows:

Election of Directors



|                    |  |            |  |          
|------------------- |  | ---------- |  | ---------
|Director            |  | For        |  | Withheld 
|Daniel D. Adams     |  | 20,307,068 |  | 3,490,824
|Gregory H. Bailey   |  | 23,838,038 |  | 414,854  
|Kim D. Blickenstaff |  | 23,381,538 |  | 416,354  
|David T. Hung       |  | 23,578,141 |  | 219,751  
|W. Anthony Vernon   |  | 23,372,788 |  | 425,104  

Ratification of Independent Registered Public Accounting Firm for 2008 Fiscal Year



|           |  |         |  |             |  |                 
|---------- |  | ------- |  | ----------- |  | ----------------
|For        |  | Against |  | Abstentions |  | Broker Non-Votes
|23,749,143 |  | 15,150  |  | 33,599      |  | 0               



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

None.



|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         |  | Bylaws of Medivation, Inc. (formerly Orion Acquisition Corp. II), together with all amendments and restatements thereto (incorporated by reference to Exhibit 3.2 to the Registration Statement
on Form SB-2 of Medivation, Inc. (formerly Orion Acquisition Corp. II) (No. 333-03252)).                                                                                                                                                                                                                   
|            | 
|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).



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##### Table of Contents

|     |  |                                                                                                                                                                                                                            
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.7 |  | Form of Purchase Agreement, dated as of June 22, 2008, between Medivation, Inc. and the purchasers of its common stock (incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K filed on June 23, 2008.
|     | 
|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.                                                                                        



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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: August 11, 2008 |  |  |  | By:              |  | /s/ C. PATRICK MACHADO                                   
|                      |  |  |  | Name:            |  | C. Patrick Machado                                       
|                      |  |  |  | Title:           |  | Senior Vice President and Chief Financial Officer        
|                      |  |  |  |                  |  | (Duly Authorized Officer and Principal Financial Officer)



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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         |  | Bylaws of Medivation, Inc. (formerly Orion Acquisition Corp. II), together with all amendments and restatements thereto (incorporated by reference to Exhibit 3.2 to the Registration Statement
on Form SB-2 of Medivation, Inc. (formerly Orion Acquisition Corp. II) (No. 333-03252)).                                                                                                                                                                                                                   
|            | 
|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).
|            | 
|10.7        |  | Form of Purchase Agreement, dated as of June 22, 2008, between Medivation, Inc. and the purchasers of its common stock (incorporated by reference to Exhibit 10.1 to the Current Report on Form
8-K filed on June 23, 2008.                                                                                                                                                                                                                                                                                
|            | 
|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.                                                                                                                                                                                                                                                                                                                                                                        



26