<PAGE>

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


                                   FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended March 31, 2001

                                       or

[_]  TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the transition period from _____________ to ______________

                       Commission File Number: 000-24831

                              ___________________

                         CENTAUR PHARMACEUTICALS, INC.
            (Exact name of registrant as specified in its charter)

                  Delaware                                      77-0304313
      (State or other jurisdiction of                          (IRS Employer
       incorporation or organization)                       Identification No.)



                              1220 Memorex Drive
                         Santa Clara, California 95050
                   (Address of principal executive offices)

                                (408) 822-1600
             (Registrant's telephone number, including area code)

                              ___________________

     Indicate by check mark whether the registrant (1) has filed all reports
required 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. [X]Yes [_]No

     The number of outstanding shares of the registrant's Common Stock, $0.001
par value, was 17,816,470 as of April 30, 2001.
================================================================================
<PAGE>

                         CENTAUR PHARMACEUTICALS, INC.

                                     INDEX

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
                                           PART I: FINANCIAL INFORMATION


ITEM 1   Financial Statements--Unaudited

        Condensed Balance Sheets--March 31, 2001 and December 31, 2000..................................          3

        Condensed Statements of Operations--three month periods ended March 31, 2001
          and 2000......................................................................................          4

        Condensed Statements of Cash Flows--three month periods ended March 31, 2001
          and 2000......................................................................................          5

        Notes to Interim Condensed Financial Statements.................................................          6

ITEM 2   Management's Discussion and Analysis of Financial Condition and Results of Operations..........          7

ITEM 3   Quantitative and Qualitative Disclosures of Market Risk........................................         14

                                            PART II: OTHER INFORMATION

ITEM 6   Exhibits and Reports on Form 8-K...............................................................         15

        Signatures.....................................................................................          16
</TABLE>

                                       2
<PAGE>

PART I:   FINANCIAL INFORMATION

ITEM 1    FINANCIAL STATEMENTS

                         CENTAUR PHARMACEUTICALS, INC.
                           CONDENSED BALANCE SHEETS
                                (in thousands)

<TABLE>
<CAPTION>
                                                                                           March 31,     December 31,
                                                                                             2001           2000*
                                                                                             ----           -----
                                                                                          (Unaudited)
<S>                                                                                        <C>            <C>
                                    ASSETS
                  --------------------------------------------

Current assets:
     Cash and cash equivalents..................................................           $ 10,710       $  8,375
     Short-term investments.....................................................              1,001          8,989
     Contracts receivable.......................................................                 --            650
     Prepaid expenses and other current assets..................................              1,052          1,108
                                                                                           --------       --------
          Total current assets..................................................             12,763         19,122
     Property and equipment, net................................................              9,036          7,286
     Investment in affiliates...................................................                 --             63
     Other assets...............................................................                156            239
                                                                                           --------       --------
          Total assets..........................................................           $ 21,955       $ 26,710
                                                                                           ========       ========

                     LIABILITIES AND STOCKHOLDERS' EQUITY
               ------------------------------------------------

Current liabilities:
     Accounts payable...........................................................             $  684       $  1,314
     Accrued compensation.......................................................                428            325
     Other accrued liabilities..................................................                267            240
     Current portion long-term debt.............................................              2,775          2,675
                                                                                           --------       --------
        Total current liabilities...............................................              4,154          4,554
Long-term debt..................................................................                 62            795
Deferred rent...................................................................                254            158
                                                                                           --------       --------
        Total liabilities.......................................................              4,470          5,507
Stockholders' equity:
     Common stock...............................................................                 18             18
     Additional paid-in capital.................................................             67,049         67,059
     Deferred compensation......................................................               (278)          (417)
     Accumulated other comprehensive income.....................................                  1              5
     Accumulated deficit........................................................            (49,305)       (45,462)
                                                                                           --------       --------
        Total stockholders' equity..............................................             17,485         21,203
                                                                                           --------       --------
        Total liabilities and stockholders' equity..............................           $ 21,955       $ 26,710
                                                                                           ========       ========
</TABLE>

_____________
*    The balance sheet at December 31, 2000 has been derived from the audited
     financial statements at that date but does not include all of the
     information and footnotes required by generally accepted accounting
     principles for complete financial statements.

                            See accompanying notes

                                       3
<PAGE>

                         CENTAUR PHARMACEUTICALS, INC.
                      CONDENSED STATEMENTS OF OPERATIONS
                   (in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                                             Three Months
                                                                                            Ended March 31,
                                                                                            ---------------
                                                                                            2001       2000*
                                                                                            ----       -----
<S>                                                                                        <C>        <C>
Net revenues......................................................................         $ 1,304    $ 2,838
Expenses:
     Research and development.....................................................           3,875      4,184
     General and administrative...................................................           1,308        979
                                                                                           -------    -------
Total operating expenses..........................................................           5,183      5,163
                                                                                           -------    -------

Loss from operations..............................................................          (3,879)    (2,325)

Share of losses in affiliate......................................................             (63)      (132)
Interest and other income, net....................................................              99         13
                                                                                           -------    -------

Net loss before change in accounting principle....................................          (3,843)    (2,444)
Cumulative effective of change in accounting principle............................              --       (400)
                                                                                           -------    -------

Net loss..........................................................................         $(3,843)   $(2,844)
                                                                                           =======    =======

Net loss per share, basic and diluted before cumulative effect of change in
accounting principle..............................................................         $ (0.22)   $ (0.16)

Cumulative effective of change in accounting principle............................              --      (0.02)
                                                                                           -------    -------

Net loss per share, basic and diluted.............................................         $ (0.22)   $ (0.18)
                                                                                           =======    =======

Shares used in computing net loss per share, basic and diluted....................          17,786     16,057
                                                                                           =======    =======
</TABLE>

  *First quarter 2000 differs from Form 10Q filed with SEC for the respective
    period because of a cumulative accounting change related to implementation
    of SAB 101.

                            See accompanying notes

                                       4
<PAGE>

                         CENTAUR PHARMACEUTICALS, INC.
                      CONDENSED STATEMENTS OF CASH FLOWS
                                (in thousands)

<TABLE>
<CAPTION>
                                                                                                 For the Three
                                                                                                  Months Ended
                                                                                                    March 31,
                                                                                                    ---------
                                                                                                2001         2000
                                                                                                ----         ----
                                                                                                   (unaudited)
<S>                                                                                            <C>        <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
          Net loss........................................................................     $(3,843)   $ (2,844)
     Adjustments to reconcile net loss to net cash used by operating activities:
          Depreciation and amortization...................................................         637         708
          Amortization of deferred compensation...........................................         105         175
          Share of losses in affiliate....................................................          63         132
          Changes in operating assets and liabilities:
               Contracts receivable.......................................................         650          --
               Prepaid expenses and other current assets..................................          56          58
               Other assets...............................................................          83          --
               Accounts payable...........................................................        (630)        196
               Accrued compensation.......................................................         103          78
               Other accrued liabilities..................................................          27          (2)
               Deferred rent..............................................................          96          --
               Deferred revenue...........................................................          --         110
                                                                                               -------    --------
                    Net cash used in operating activities.................................      (2,653)     (1,389)

CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
     Capital expenditures.................................................................      (2,387)         (7)
     Purchases of investments.............................................................          --        (472)
     Sales and maturities of investments..................................................       7,984       4,950
                                                                                               -------    --------
                    Net cash provided by investing activities.............................       5,597       4,471

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
     Proceeds from issuance of common stock...............................................          24      20,019
     Repayment of debt financing..........................................................        (633)       (546)
                                                                                               -------    --------
                    Net cash (used in) provided by financing activities...................        (609)     19,473
                                                                                               -------    --------

Net increase in cash and cash equivalents.................................................       2,335      22,555
Cash and cash equivalents at beginning of period..........................................       8,375       5,197
                                                                                               -------    --------
Cash and cash equivalents at end of period................................................     $10,710    $ 27,752
                                                                                               =======    ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Interest paid........................................................................     $   121    $    208
                                                                                               =======    ========
</TABLE>

                            See accompanying notes

                                       5
<PAGE>

                         CENTAUR PHARMACEUTICALS, INC.

                NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

                                March 31, 2001
                                  (Unaudited)

1.  BASIS OF PRESENTATION

     The accompanying interim unaudited condensed financial statements of
Centaur Pharmaceuticals, Inc. (the "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial information
and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, the condensed interim financial statements include
all adjustments (consisting only of normal recurring adjustments) which the
Company considers necessary for a fair presentation. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the Securities and Exchange Commission's rules and
regulations. These condensed interim financial statements should be read in
conjunction with the Company's audited financial statements as of December 31,
2000 as included in the Company's annual report on Form 10-K. The results of
operations for the three month period ended March 31, 2001 are not necessarily
indicative of the results to be expected for any subsequent quarter or for the
entire fiscal year ending December 31, 2001.

2.  USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

3.  INVESTMENT IN AFFILIATE

     The Company's share of losses in Cutanix for the three months ended March
31, 2001 was $63,000.

4.  COMPREHENSIVE LOSS

     During the first quarter of 2001 and 2000, total comprehensive loss
amounted to $3.8 million and $2.8 million, respectively.

5.  RECENT ACCOUNTING PRONOUNCEMENTS

       In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Financial Instruments and for Hedging Activities" ("SFAS 133") which provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. In June 1999, FASB issued Statement of
Financial Accounting Standards No. 137, which defers the effective date of SFAS
133 to the first quarter in fiscal years beginning after June 15, 2000. The
adoption of SFAS 133 did not have an impact on the Company's results of
operations or financial condition as it presently does not engage in hedging
activities.

                                       6
<PAGE>

Item 2.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the unaudited
condensed financial statements and notes thereto set forth in Item 1 of this
report along with the Financial Statements and Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in the Company's annual report on Form 10-K for the year ended December
31, 2000. Except for the historical information contained herein, the matters
discussed in this Form 10-Q are forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Act of 1933, as amended. Words such as "believes,"
"anticipates," "expects," "future," "intends," "would," "may" and similar
expressions are intended to identify forward-looking statements. However, these
words are not the exclusive means of identifying such statements. These forward
looking statements include statements about the Company's expectations for its
clinical trial programs and activities to be undertaken by AstraZeneca.
Forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those anticipated. Such risks and
uncertainties include, but are not limited to, the Company's early stage of
development, technological uncertainties, uncertainty of preclinical and
clinical trials, the Company's novel therapeutic approach, dependence upon
collaborators, future capital needs, uncertainty of additional funding and
dependence on licenses, patents and proprietary technology. These and other
risks are described in the section labeled "Factors That May Affect Future
Results" below and in the Company's annual report on Form 10-K for the year
ended December 31, 2000. The Company undertakes no obligation to revise any of
these forward-looking statements to reflect events or circumstances after the
date hereof.

Overview

     The Company was incorporated in March 1992 and has devoted substantially
all of its resources since that time to the research and development of
proprietary, small molecule pharmaceutical compounds for the treatment of
diseases involving inflammation and the interruption and subsequent restoration
of blood supply. From inception through March 31, 2001, the Company has
recognized cumulative revenues from collaborative research and development
agreements and grants of $52.4 million. The Company does not anticipate revenues
from product sales or collaborative agreement royalties for at least several
years. The Company's sources of potential revenue for the next several years
will be payments under existing and possible future collaborative arrangements
and possible manufacturing revenue from collaborators for the manufacture of
bulk drug product for use in clinical testing. The Company has incurred
cumulative losses through March 31, 2001 of $49.3 million. The Company expects
to incur additional operating losses over at least the next several years as the
Company continues its research, preclinical development and clinical trial
programs.

     In June 1995, the Company entered into a collaborative agreement with
AstraZeneca PLC ("AstraZeneca) to research, develop and market drugs to treat
stroke, Alzheimer's disease, traumatic brain injury and multi-infarct dementia.
Under the terms of the AstraZeneca agreement, AstraZeneca agreed to make
payments to Centaur for certain development milestones and to pay up to $6.0
million per year for five years primarily as reimbursement for the Company's
project related research. The $6.0 million annual research reimbursement expired
in June 2000. Additionally, AstraZeneca bears the costs of its development work
under the AstraZeneca agreement. AstraZeneca received exclusive worldwide
marketing rights from Centaur for the diseases listed above, subject to certain
exceptions. (eg. CPI-1189 for dementia) The Company retains worldwide
manufacturing rights for the active pharmaceutical ingredients of the product
and an option to obtain certain co-promotion rights in the United States for
five years. Through March 31, 2001, the Company recognized $43.0 million of
revenue under the AstraZeneca agreement.

        The Company previously announced results of a Phase IIa safety study of
NXY-059, the stroke compound being developed by AstraZeneca under a license from
the Company. The study indicated that NXY-059 was safe in stroke patients at a
dose that exceeded the highest dose tested in the rat focal stroke model.
AstraZeneca has

                                       7
<PAGE>

commenced additional preclinical and Phase I and Phase IIa clinical trials of
NXY-059 to obtain further information on the safety and tolerability of NXY-059
to optimize the planned Phase IIb/III trials. As a result, it is currently
expected that Phase IIb/III trials of NXY-059 to obtain information about the
efficacy of NXY-059 would commence in early 2002. There can be no assurance as
to whether or when AstraZeneca will actually undertake such trials, or what the
results of such trials will be.

     The Company has completed two Phase IIa clinical trials for CPI-1189, the
Company's compound for dementia. These trials were for Parkinson's dementia and
AIDS dementia. In both these trials, the Company obtained preliminary evidence
of efficacy of CPI-1189 based on statistically significant improvements of
cognitive function in psychomotor tests. The trials for CPI-1189 have also
demonstrated safety, tolerability and compliance in both patient populations.
The data on CPI-1189 has encouraged the Company to evaluate this drug candidate
for use in treating Alzheimer's Disease, a dementia also characterized by
neuroinflammation. The Company is currently planning a Phase IIb trial for
CPI-1189 in the treatment of Alzheimer's Disease.

     The Company expects to continue to incur net operating losses through at
least the next several years, and there can be no assurance that the Company
will ever be able to achieve or sustain profitability in the future. The Company
also expects its results of operations to vary significantly from quarter to
quarter. Quarterly operating results will depend upon many factors, including
the timing and amount of expenses associated with potential future expansion of
the Company's operations, the timing of receipt of milestone payments from
existing and possible new collaborative partners, the conduct and results of
clinical trials and the timing of regulatory approvals, the timing of potential
product introductions both in the United States and internationally and the cost
to operate manufacturing facilities.


Results of Operations

Three Months Ended March 31, 2001 and 2000

     Substantially all of the Company's revenues have been derived from the
collaborative research and development agreement with AstraZeneca and National
Institutes of Health ("NIH") grants. Fees associated with substantive at risk
performance milestones are recognized as revenue upon the achievement of the
milestone, as defined in the respective agreements. The Company's revenues for
the three months ended March 31, 2001 and 2000 were $1.3 million and $2.8
million, respectively. In the three months ended March 31, 2001, revenue
consisted of income related to manufacturing of NXY-059, the Company's compound
for stroke. The decrease in revenue for the three months ended March 31, 2001
compared to the same period in 2000 was primarily due to expiration of the $6
million annual research reimbursement from AstraZeneca in June 2000. This
decrease in revenue was partially offset by the recognition of increased revenue
related to the manufacture of NXY-059 in anticipation of PhaseIIb/III human
clinical trial requirements.

     Research and development expenses decreased to $3.9 million from $4.2
million for the three months ended March 31, 2001 compared to the same period in
2000. The decrease in research and development expenses was primarily due to
decreases in clinical and external study costs as the in-patient phase of the
Parkinson's and ADC Phase IIa trials were completed by early first quarter 2001.
The Company expects research and development expenses to decrease moderately in
2001 compared to 2000 because of the conclusion of the Parkinson's and ADC
clinical trials.

     General and administrative expenses increased to $1.3 million from $979,000
for the three months ended March 31, 2001 compared to the same period in 2000.
The increase in general and administrative expenses was primarily due to
increased costs associated with the strengthening of the Company's management
team as well as increased business development and investor relations activities
since late 2000. The Company expects general and administrative expenses to
increase moderately in 2001 compared to 2000 because of increases in business
development and investor relations activities within the Company.

                                       8
<PAGE>

     Net interest and other income for the three months ended March 31, 2001 was
$37,000 compared to net interest and other expenses of $119,000 for the same
period in 2000. Interest expense is principally from our debt financing.
Interest income is principally from interest earned from the proceeds raised
from our equity financings, the latest of which was completed in March 2000.

Liquidity and Capital Resources

     From inception through March 31, 2001, the Company has financed its
operations primarily through $47.4 million generated from corporate
collaborations, $61.7 million received from private placements and underwritten
offerings of equity securities, $8.9 million obtained from a debt financing and
$3.6 million from NIH grant funding. As of March 31, 2001, the Company had
approximately $11.7 million in cash, cash equivalents and investment securities,
compared to $17.4 million at December 31, 2000.

     The Company's operations used $2.7 million and $1.4 million of cash in the
three months ended March 31, 2001 and 2000, respectively. These uses of cash
primarily reflect the Company's net loss and changes in the Company's operating
assets and liabilities over such periods.

     The Company's investing activities provided $5.6 million and $4.5 million
of cash in the three months ended March 31, 2001 and 2000, respectively. This
primarily reflected sales of securities in which the Company has invested its
cash prior to use, offset in part by purchases of property and equipment related
to the consolidation of the Company's facilities.

     Financing activities used $609,000 of cash in the three months ended March
31, 2001 and provided $19.5 million of cash in the three months ended March 31,
2000. The increase in cash used by financing activities for the three months
ended March 31, 2001, compared to the same period in 2000 is primarily due to
the completion of an underwritten offering of 1,904,169 shares of the Company's
Common Stock in the three months ended March 31, 2000. The cash used in
financing activities is primarily attributable to repayment of debt.

     We believe that our current resources will be sufficient to meet our
capital requirements for the remainder of 2001. We anticipate that during this
period we will need to raise substantial additional funds for research,
development, consolidation of our operations in Santa Clara and other expenses,
through equity or debt financings, research and development financings,
collaborative relationships or otherwise, prior to the commercialization of any
of our products. Our capital requirements depend on numerous factors, including:

 .    the progress of our research and development programs, including clinical
     trials;

 .    the status of our existing collaborative relationship;

 .    the establishment of additional collaborative relationships, if any;

 .    the cost of preparing, prosecuting, defending and enforcing patent claims
     and other intellectual property rights; and

 .    competing technological and market developments.

    If we are not able to complete future offerings, or other future funding
transactions, we will be required to significantly curtail our operations and
research and development programs, including reductions in our staffing levels
and related expenses. Additional funding may not be available to us on
reasonable terms, if at all. Any additional financing would likely result in
significant dilution to existing stockholders. Any transactions to raise
additional funds may require that we enter into arrangements that may require us
to relinquish material rights to our potential products on terms that we might
otherwise find unacceptable.

                                       9
<PAGE>

Recent Accounting Pronouncements

        In June 1998, the Financial Accounting Standards Board ("FASB") issued
statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Financial Instruments and for Hedging Activities" ("SFAS 133") which provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. In June 1999, FASB issued Financial
Accounting Standards No. 137 which deferred the effective date of SFAS 133 to
fiscal years beginning after June 15, 2000. The adoption of SFAS did not have an
impact on the Company's results of operations of financial condition as the
Company holds no derivative financial instruments and does not currently engage
in hedging activities.


             FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS

We are in the development stage and the viability of our products is subject to
significant uncertainties; if we are unable to produce any commercially viable
products, we are unlikely to generate significant revenues or be profitable

     We were incorporated in March 1992. All of our potential products are in
research or development, and no revenues have been generated from the sale of
our products. We do not expect any products resulting from our research and
development efforts to be commercially available for at least several years. Our
potential products will require substantial additional research and development,
preclinical and clinical testing and regulatory approval prior to
commercialization. Our product development efforts may not progress as expected,
if at all. In addition, an investor must consider the risks of failure inherent
in the development of pharmaceutical products based on new technologies. As a
result, we may not be able to produce any commercially viable products, and
therefore may be unable to generate revenues or achieve profitability.

Many of our disease targets do not have widely accepted models; the results of
our preclinical trials may not be indicative of the results from our clinical
trials; our clinical trials may not demonstrate the safety and efficacy of our
products

     Most of the diseases and disorders that we are targeting are highly
complex. Their causes are not fully known, and there are no widely accepted
models of such diseases and disorders. We test potential compounds in a number
of models that we believe provide useful information about the compound, but it
is possible that any or all of these models may not be valid predictors of the
activity of the compound in humans. Data received from tests conducted in these
models can be subject to different interpretations, and our interpretation may
not be correct. Some of our lead compounds have failed to demonstrate efficacy
in at least one of the numerous models in which they have been tested. We have
not obtained evidence of efficacy in our clinical trials to date, other than
some preliminary evidence of efficacy in psychomotor tests conducted in our
Phase IIa trials for Parkinson's dementia and AIDS dementia. We observed no
other statistically significant drug effects in any other parameters monitored
in these two Phase IIa studies. In any event, the results of preclinical and
early clinical studies may not be predictive of results that will be obtained in
later stage testing. Our ongoing clinical trials may not be completed, and
clinical trials of our products under development may not be permitted, or if
permitted, may not be completed. In addition, our clinical trials may not
demonstrate the safety and efficacy of any products to the extent necessary to
obtain regulatory approvals for marketing and may not result in marketable
products. Our potential products could prove to have undesirable side effects or
other characteristics that may prevent or limit their commercial use. The
failure to adequately demonstrate the safety and efficacy of a therapeutic
product under development would delay or prevent regulatory approval of the
product and could seriously harm us.

                                       10
<PAGE>

Our products are based on a novel therapeutic approach and if this approach is
not successful, we may be unable to develop commercially viable products

     Our product development efforts center around our drug compounds that we
believe protect against some of the damaging effects of blood supply
interruption/restoration and inflammation. Our novel approach has not been
widely studied, the mechanisms of action of our technology and compounds are not
well understood, and many of the diseases we are targeting do not have widely
accepted models. If our approach, technologies or product candidates are not
successful, we may be unable to develop commercially viable products.

We rely on third parties to develop, market, distribute and sell our potential
products and if these third parties do not perform, or do not perform in a
timely manner, we may be delayed or unable to introduce commercial products or
may incur additional costs in doing so

     Our strategy for the development and commercialization of our products
requires that we maintain and enter into collaborations with corporate partners,
licensors, licensees and others. We may not be able to enter into any new
collaborative arrangements, and our current and any future collaborative
arrangements may not be successful. To the extent that we are not able to
maintain or establish these arrangements, we would be required to undertake such
activities at our own expense, which would significantly increase our capital
requirements and limit the programs that we are able to pursue. In addition, we
may encounter significant delays in introducing our products into specific
markets or find that the development, manufacture or sale of our products in
these markets is adversely affected by the absence of such collaborative
agreements. We cannot control the amount and timing of resources that our
collaborative partners devote to our programs or potential products, which can
vary because of factors unrelated to the potential product. Collaborative
participation will depend on each collaborator's own financial, competitive,
marketing and strategic considerations, which are outside our control.

     We currently have a collaborative arrangement with AstraZeneca for the
research and development of certain compounds and the subsequent marketing of
drugs for the treatment of stroke, Alzheimer's disease, traumatic brain injury
and multi-infarct dementia. The interests and motivations of AstraZeneca may not
be, or may not remain, aligned with our interests and motivations. AstraZeneca
may not successfully perform its development, regulatory compliance or marketing
functions.

     Our revenues to date have consisted primarily of research and development
support from AstraZeneca. AstraZeneca's obligation to provide us with research
funding terminated as of June 30, 2000. AstraZeneca's research funding to us
represented 79% of our revenue for 1999, 52% for 2000 and none for the three
months ended March 31, 2001. AstraZeneca has no further obligation to provide us
with research funding.

     AstraZeneca has the right to terminate its agreement with us, upon twelve
months notice, and can terminate our manufacturing rights under the agreement if
more than 30% of our voting capital stock is acquired by a company engaged in
the manufacture and/or sale of pharmaceutical products. Furthermore, there can
be no assurance that AstraZeneca will proceed with additional trials of NXY-059,
our stroke compound. If AstraZeneca does not proceed with such trials, the
prospects for such compound, and for the Company, would be seriously harmed.

     If AstraZeneca or any future collaborative partner breaches or terminates
their agreements with us or otherwise fails to conduct their collaborative
activities in a timely manner, the preclinical or clinical development or
commercialization of product candidates or research programs will be delayed,
and we would likely be required to devote additional resources to product
development and commercialization or terminate certain development programs.

                                       11
<PAGE>

We will need to obtain additional financing to fund our operations by the end of
this year, and if we fail to obtain such financing our operations, including our
product development programs, may be significantly curtailed

     We have generated no product revenue, and none is expected for at least
several years. We believe that our current resources will be sufficient to meet
our capital requirements through the end of 2001. We anticipate that in the near
future we will need to raise substantial additional funds for research,
development and consolidation of our operations in Santa Clara, California,
through equity or debt financings, research and development financings,
collaborative relationships or otherwise.

         Our capital requirements depend on numerous factors, including:

     . the progress of our research and development programs, including clinical
          trials;
     . the status of our existing collaborative relationship;
     . the establishment of additional collaborative relationships, if any;
     . the cost and pace of our manufacturing operations;
     . the development of sales and marketing activities, if undertaken by us;
     . the cost of preparing, prosecuting, defending and enforcing any patent
          claims and other intellectual property rights and
     . competing technological and market developments.

     Additional funding may not be available to us on reasonable terms, if at
all. Any additional financing would likely result in significant dilution to
existing stockholders and may involve the issuance of preferred stock with
liquidation and/or other rights superior to our currently outstanding common
stock. If adequate funds are not available, we may be required to significantly
curtail our research and development programs, including clinical trials, or
enter into arrangements that may require us to relinquish certain material
rights to our potential products on terms that we might otherwise find
unacceptable.

We will need to enroll patients in our clinical trials that meet the required
criteria for these trials, and if we are unable or delayed in doing so, our
business would be seriously harmed

     The ability to undertake and complete clinical trials in a timely manner
depends on the enrollment of patients that meet the required criteria of the
clinical trial. Patient accrual is a function of many factors, including the
size of the patient population, the proximity of patients to clinical sites, the
eligibility criteria for the study and the existence of competitive clinical
studies. We have previously experienced delays in enrolling patients in some of
our clinical trials. Delays in planned patient enrollment in clinical trials may
result in increased costs, program delays or both, which could seriously harm
us.

We have a history of operating losses and may never be profitable

     We have incurred losses since our inception and as of March 31, 2001 had an
accumulated deficit of $49.3 million. We may never achieve significant revenues
or profitable operations. Substantially all of our revenues to date have been
derived from funding from AstraZeneca and, to a significantly lesser extent,
from U.S. government research grants. Revenues from product sales and
collaborative agreement royalties are not expected for at least several years,
if at all.

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<PAGE>

If we fail to retain key management and technical personnel or to attract
additional qualified officers and other employees, we may be delayed or unable
to conduct our clinical trials and other product development efforts

     We are highly dependent on key members of our management and scientific
staff, most notably Paul L. Wood, Ph.D., our President and Chief Executive
Officer. The loss of one or more of these key personnel could have a material
adverse effect on our research or development efforts. In addition, we believe
that our future success will depend upon our ability to attract and retain
highly skilled scientific and managerial personnel, particularly as we expand
our activities in clinical trials and the regulatory approval process. We face
significant competition for such personnel from other companies, research and
academic institutions, government entities and other organizations. We may not
be successful in hiring or retaining the personnel we need for continued growth.
If we are unable to hire and retain these personnel, we may be delayed or unable
to conduct our clinical trials and product development efforts.

We are very dependent on our patents and other intellectual property; if our
intellectual property protection proves inadequate, our business could be
materially harmed

     Our success will depend to a significant degree on our ability to obtain,
maintain and enforce patent protection for our products and manufacturing
processes or license rights to applicable patents, as well as to preserve our
trade secrets and operate without infringing the proprietary rights of third
parties both in the United States and other countries. The degree of patent
protection afforded to pharmaceutical and biomedical inventions is uncertain and
involves complex legal and factual questions. As a result, the breadth of claims
allowed in pharmaceutical and biomedical patents cannot be predicted. Patent
applications relating to our potential products or technology may not result in
patents being issued. Our current patents, as well as any that may be issued in
the future, may not afford adequate protection to us, and may not provide a
competitive advantage. In addition, any of our patents may be challenged,
invalidated or infringed. Furthermore, others may independently develop similar
products or processes, duplicate any of our products or, if patents are issued
to us, design around such patents. Litigation, which would result in substantial
cost to us, may be necessary to enforce any patents issued or licensed to us or
to determine the scope and validity of the proprietary rights of third parties.
In some cases, we depend on third parties to prosecute patents and patent
applications for technology that we license, such as the core technology related
to our compounds licensed from the University of Kentucky Research Foundation
and the Oklahoma Medical Research Foundation. Failure of these third parties to
effectively prosecute these patents could seriously harm us.

     We also seek to protect our proprietary technology by confidentiality
agreements and, if applicable, invention assignment agreements with our
collaborators, advisors, employees and consultants. These agreements may be
breached, we may not have adequate remedies for any breach, and our trade
secrets may otherwise be disclosed to, or discovered by, competitors.

We may be subject to claims for infringement of the intellectual property of
third parties or for breach of the technology licenses upon which our products
are based which, with or without merit, could be costly and time consuming to
defend or settle, and if adversely decided could materially harm us

     Our success will also depend on our not infringing patents issued to others
and not breaching the technology licenses upon which our products are based. Any
claims of infringement or breach of technology licenses, with or without merit,
could be time consuming to defend, result in costly litigation and divert
management attention and resources. If our product candidates are found to
infringe upon the patents of others, or otherwise impermissibly utilize the
intellectual property of others, our development, manufacture and sale of such
potential products could be severely restricted or prohibited. In such event, we
may be required to obtain licenses to patents or other proprietary rights of
third parties. Such licenses may not be available on terms acceptable to us, if
at all. If we do not obtain licenses, we could encounter significant delays in
product market introductions while we attempt to design around such patents or
other rights, or we may be unable to develop, manufacture or sell such products.
In addition, the breach of an existing or future license may seriously harm us.

                                       13
<PAGE>

     In 1998, we received correspondence from the lawyers for an individual who
has obtained certain patents related to the use of phenyl butyl nitrone or PBN,
and related compounds, and which include claims related to specified reactions
of these compounds with a type of stress agent known as free radicals. PBN is a
commercially available material that is known to react with free radicals in
certain environments. Our founders used PBN in their early research. The
correspondence alleges that certain of our compositions and methodologies may
fall within the scope of this individual's patents, and that the practice of
such by us would constitute willful infringement. Subsequent discussions and
correspondence between this individual and us in 1999 have not resulted in a
resolution of this matter. We do not believe that these patents seriously harm
our ability to develop and commercialize our products. If, however, we are
required to defend against charges of patent infringement, we may incur
substantial costs, and if we are found to have infringed a third party patent,
we could lose the right to develop or market certain products and/or enforce
certain patents.

We have no sales and marketing experience and expect to rely on third parties to
provide significant sales and marketing support; if we are unable to obtain
third party support or provide sales and marketing support directly, we may be
unable to successfully sell the products we may develop

     We have no experience in product sales, marketing or distribution. We have
entered into a marketing agreement with AstraZeneca for stroke, Alzheimer's
disease, traumatic brain injury and multi-infarct dementia indications and
intend to establish marketing arrangements with other pharmaceutical companies
with effective distribution capabilities in order to market other product
candidates. We may not be successful in entering into such arrangements. Sales
of our products will depend heavily upon the efforts of AstraZeneca and possibly
other third parties, and their efforts may not be successful. We also may need
to acquire our own direct sales force for some products, and we may not be able
to recruit and retain adequate sales, marketing and distribution personnel. In
addition, our direct marketing efforts may not be able to compete successfully
in the pharmaceutical market.

We have limited manufacturing capabilities and experience, and if we are unable
to achieve or maintain sufficient manufacturing capacity, our competitive
position and our ability to achieve regulatory approval and/or profitability
would be seriously harmed

     The manufacturing of sufficient quantities of new drugs is a time
consuming, complex and difficult process. If we are unable to fully develop our
own manufacturing capabilities or obtain and maintain third-party manufacturing
arrangements on acceptable terms, our competitive position and our ability to
achieve regulatory approval and/or profitability would be seriously harmed. In
1998, we completed construction of a 30,000 square foot manufacturing facility
in Santa Clara, California. The facility is licensed with the California
Department of Health Services for GMP manufacturing of active pharmaceutical
ingredients and is capable of manufacturing drug compound in lot sizes of up to
50kg. As we have only been manufacturing our compound in very limited quantities
to date, there can be no assurance that we will be able to successfully
manufacture our compound at the levels at which we believe our facility is
capable. In any event, we do not expect that the Santa Clara facility will be
capable of producing the quantity of our products that may be needed for later
stage commercial sales.

 We plan to consolidate our facilities in the second quarter of 2001, which
could result in disruption to our operations during that period

     We plan to consolidate our facilities in the second quarter of 2001 by
moving the activities and personnel at our 31,000 square foot Sunnyvale,
California facility to our 123,000 square foot Santa Clara, California facility,
which is approximately four miles away. This relocation will involve the
movement of laboratory, animal and office facilities, and needs to be
coordinated with ongoing activities at our Santa Clara facility. This move will
involve significant time and expense, and could result in disruption to our
operations during that period if problems arise.

Item 3.
            QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK.

     There have been no material changes in the reported market risks since
December 31, 2000.

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<PAGE>

Part II.   OTHER INFORMATION

ITEM 6.   Exhibits and Reports on Form 8-K

     (a) Exhibits
          The following exhibits are filed herewith:

          None

     (b) Reports on Form 8-K

        The Company did not file a report on Form 8-K during the quarter ended
March 31, 2001.

                                       15
<PAGE>

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.



                                       CENTAUR PHARMACEUTICALS, INC.
                                       (Registrant)



May 14, 2001.                          By:         /s/ PAUL L. WOOD
                                             ----------------------------------
                                                         Paul L. Wood
                                           President and Chief Executive Officer



                                       By:          /s/ Lucy O. Day
                                             ----------------------------------
                                                        Lucy O. Day
                                           Chief Financial Officer, Treasurer
                                       and Secretary (Chief Accounting Officer)

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