<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 September 30, 2000

                                      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.)



                              484 Oakmead Parkway
                          Sunnyvale, California 94085
                    (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 17,729,134 as of October 31, 2000.

================================================================================
<PAGE>

                         CENTAUR PHARMACEUTICALS, INC.

                                     INDEX

                                                                            Page
                        PART I:   FINANCIAL INFORMATION

ITEM 1   Financial Statements--Unaudited

    Condensed Balance Sheets--September 30, 2000 and December 31, 1999.....    3

    Condensed Statements of Operations--three and nine month periods ended
     September 30, 2000 and 1999...........................................    4

    Condensed Statements of Cash Flows--nine month periods ended September
     30, 2000 and 1999.....................................................    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...........   16

                          PART II:   OTHER INFORMATION

ITEM 2   Changes in Securities and Use of Proceeds.........................   17

ITEM 6   Exhibits and Reports on Form 8-K..................................   17

    Signatures.............................................................   18

    Exhibit Index..........................................................   19

                                       2
<PAGE>

PART I:   FINANCIAL INFORMATION

ITEM 1    FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
                                                    September 30,  December 31,
                                                        2000          1999*
                                                        ----          -----
                                                    (Unaudited)
<S>                                                 <C>            <C>
                      ASSETS
-------------------------------------------------

Current assets:
  Cash and cash equivalents......................    $ 13,468      $  5,197
  Short-term investments.........................       6,946         7,379
  Accounts receivable............................       1,769            --
  Prepaid expenses and other current assets......         842           977
                                                     --------      --------
    Total current assets.........................      23,025        13,553
  Property and equipment, net....................       7,470         9,287
  Other assets...................................         405           555
                                                     --------      --------
    Total assets.................................    $ 30,900      $ 23,395
                                                     ========      ========

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

Current liabilities:
  Accounts payable...............................    $    473      $    888
  Accrued compensation...........................         390           305
  Other accrued liabilities......................       1,063         1,175
  Current portion long-term debt.................       2,578         2,308
                                                     --------      --------
    Total current liabilities....................       4,504         4,676
Deferred revenue.................................          --         1,499
Long-term debt...................................       1,501         3,470
                                                     --------      --------
    Total liabilities............................       6,005         9,645
Stockholders' equity:
  Common stock...................................          18            16
  Additional paid-in capital.....................      66,466        46,527
  Deferred compensation..........................        (599)       (1,265)
  Accumulated other comprehensive income.........          10            (7)
  Accumulated deficit............................     (41,000)      (31,521)
                                                     --------      --------
    Total stockholders' equity...................      24,895        13,750
                                                     --------      --------
    Total liabilities and stockholders' equity...    $ 30,900      $ 23,395
                                                     ========      ========
</TABLE>
_________
* The balance sheet at December 31, 1999 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            Nine Months
                                             Ended September 30,     Ended September 30,
                                            ---------------------    --------------------
                                               2000        1999       2000         1999
                                             -------     -------    -------       -------
<S>                                         <C>          <C>        <C>           <C>
Net revenues.............................    $ 1,403     $ 1,729    $ 6,118       $ 5,609
Expenses:
  Research and development...............      3,945       4,128     12,439        12,101
  General and administrative.............        981         982      3,405         3,097
                                             -------     -------    -------       -------
Total operating expenses.................      4,926       5,110     15,844        15,198
                                             -------     -------    -------       -------

Loss from operations.....................     (3,523)     (3,381)    (9,726)       (9,589)

Share of losses in affiliate.............        (40)        (73)      (215)         (191)
Interest and other (expense) income, net.        192         (34)       462           (85)
                                             -------     -------    -------       -------

Net loss.................................    $(3,371)    $(3,488)   $(9,479)      $(9,865)
                                             =======     =======    =======       =======

Basic and diluted net loss per share.....     $(0.19)     $(0.22)    $(0.56)       $(0.64)
                                             =======     =======    =======       =======

Shares used in computing basic and
 diluted net loss per share..............     17,625      15,574     17,065        15,535
                                             =======     =======    =======       =======
</TABLE>

                             See accompanying notes

                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                    For the Nine
                                                                    Months Ended
                                                                   September 30,
                                                            ----------------------------
                                                                   2000           1999
                                                                   ----           ----
                                                                       (unaudited)
<S>                                                             <C>             <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
     Net loss.............................................      $ (9,479)       $(9,865)
  Adjustments to reconcile net loss to net cash
   used by operating activities:
     Depreciation and amortization........................         2,034          2,209
     Amortization of deferred compensation................           474            652
     Share of losses in affiliate.........................           215            191
     Changes in operating assets and liabilities:
        Accounts receivable...............................        (1,769)           (18)
        Prepaid expenses and other current assets.........           135           (314)
        Other assets......................................           (65)             1
        Accounts payable..................................          (415)             1
        Accrued compensation..............................            85             94
        Other accrued liabilities.........................          (112)            29
        Deferred revenue..................................        (1,499)           125
                                                                --------        -------
           Net cash used in operating activities..........       (10,396)        (6,895)

CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
  Capital expenditures....................................          (217)          (529)
  Purchases of investments................................       (10,924)        (2,055)
  Sales and maturities of investments.....................        11,374          9,900
                                                                --------        -------
           Net cash provided by investing activities......           233          7,316

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
  Proceeds from issuance of common stock..................        20,133            166
  Principal payments on capital lease obligations.........            --            (89)
  Repayment of debt financing.............................        (1,699)        (1,466)
                                                                --------        -------
           Net cash provided by (used in) financing
            activities....................................        18,434         (1,389)
                                                                --------        -------

Net increase (decrease) in cash and cash equivalents......         8,271           (968)
Cash and cash equivalents at beginning of period..........         5,197          5,628
                                                                --------        -------
Cash and cash equivalents at end of period................      $ 13,468        $ 4,660
                                                                ========        =======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest paid...........................................      $    561        $   797
                                                                ========        =======
</TABLE>

                             See accompanying notes

                                       5
<PAGE>

                         CENTAUR PHARMACEUTICALS, INC.

                NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

                               September 30, 2000
                                  (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,
1999 as included in the Company's annual report on Form 10-K. The results of
operations for the nine month period ended September 30, 2000 are not
necessarily indicative of the results to be expected for any subsequent quarter
or for the entire fiscal year ending December 31, 2000.

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 nine months ended September
30, 2000 was $215,000.

4.   COMPREHENSIVE LOSS

  During the three months ended September 30, 2000 and 1999, total comprehensive
loss amounted to $3.4 million and $3.5 million, respectively.  For the nine
months ended September 30, 2000 and 1999, total comprehensive loss amounted to
$9.5 and $9.9 million, respectively.

5.   RECENT ACCOUNTING PRONOUNCEMENTS

  In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
In September 2000, the SEC issued Staff Accounting Bulletin No. 101B which
defers the effective date of SAB 101 until no later than the fourth quarter of
2000.  The Company is currently evaluating the effect of SAB 101 on its
operations and financial position.

  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")

                                       6
<PAGE>

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 133 is
not anticipated to have an impact on the Company's results of operations of
financial condition when adopted as the Company holds no derivative financial
instruments and does not currently engage in hedging activities.

  In March 2000, the FASB issued No. 44 ("FIN 44"), "Accounting for Certain
Transactions Involving Stock compensation-an Interpretation of APB 25."  This
Interpretation clarifies (a) the definition of employee for purposes of applying
Opinion 25, (b) the criteria for determining whether a plan qualifies as a
noncompensatory plan, (c) the accounting consequence of various modifications to
the terms of a previously fixed stock option or award, and (d) the accounting
for an exchange of stock compensation awards in a business combination.  This
Interpretation is effective July 1, 2000, but certain conclusions in this
Interpretation cover specific events that occur after either December 15, 1998,
or January 12, 2000.  To the extent that this interpretation covers events
occurring during the period after December 15, 1998, or January 12, 2000, but
before the effective date of July 1, 2000, the effects of applying this
Interpretation are recognized on a prospective basis from July 1, 2000.  The
adoption of FIN 44 does not have a material impact on the Company's financial
statements.

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, 1999.
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, 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, 1999. 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
the interruption and subsequent restoration of blood supply and inflammation.
From inception through September 30, 2000, the Company has recognized cumulative
revenues from collaborative research and development agreements and grants of
$50.5 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, U.S. government
research grants and possible manufacturing revenue from existing and possible
future collaborators for the manufacture of bulk drug product for use in
clinical testing. The Company has incurred cumulative losses through

                                       7
<PAGE>

September 30, 2000 of $41.0 million. The Company expects to incur additional
operating losses over at least the next several years as the Company continues
its clinical trial programs and expands its research and preclinical
development.

  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, subject to certain limitations. The $6 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. 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 September 30, 2000, the Company recognized $41.1 million of
revenue under the AstraZeneca agreement.

  On March 10, 2000, the Company closed an underwritten offering of 1,904,169
shares of its Common Stock at a price of $11.50 per share. The net proceeds to
the Company after deduction of underwriting discounts, commissions and offering
expenses was approximately $20.0 million.

  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 commenced additional 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 2001. 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 previously announced completion of enrollment in its U.S. Phase
IIa clinical trials in AIDS dementia complex (ADC) and Parkinson's disease.
Interim results for the ADC Phase IIa clinical study of Centaur's compound,
called CPI-1189, indicate that CPI-1189 was well tolerated with more than 90% of
CPI-1189 treated patients completing the initial 10 week dosing period, compared
to 76% in the placebo group. All patients in this study also received maximally
effective antiretroviral therapy.  Neither the placebo nor CPI-1189 treated
groups showed progression of disability on cognitive or motor functions during
the 10 week treatment period. Thus, there was no opportunity to demonstrate the
ability of CPI-1189 to arrest cognitive decline in this study.  Additional data
on the safety and efficacy trends of CPI-1189 in both ADC and Parkinson's trials
are expected in early 2001.   The objective of both these trials is to test the
safety and evaluate preliminary efficacy information of Centaur's drug
candidate, CPI-1189.

  In September 2000, Paul L. Wood, Ph.D., was appointed President and Chief
Executive Office, and a member of the Board of Directors of Centaur.  In August
2000, John M. Carney, Ph.D. stepped down as the Company's Chief Technology
Officer and is currently acting as an advisor to Centaur.

  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 expanding the Company's operations, the
timing of receipt of milestone payments from new and existing collaborative
partners, if any, 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 validate and operate
manufacturing facilities.

                                       8
<PAGE>

Results of Operations

Three and Nine Months Ended September 30, 2000 and 1999

  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. The Company records milestone payments
received under collaborative agreements as revenue when the funding party
acknowledges that the milestone requirements have been met. The Company's
revenues for the three and nine months ended September 30, 2000 were $1.4
million and $6.1 million, respectively, compared to revenues of $1.7 million and
$5.6 million for the corresponding periods in 1999.  Revenues in all periods
consisted primarily of research support from AstraZeneca. The decrease in
revenue for the three months ended September 30, 2000 was primarily due to
expiration, in June 2000 of the annual research reimbursement from AstraZeneca
of $6 million.  The decrease was partially offset by the achievement of a
milestone for the filing of the first U.S. Investigational New Drug Application
(IND) with NXY-059, the Company's compound for stroke. The increase in revenue
for the nine months ended September 30, 2000 was primarily due to higher revenue
in the earlier months related to the manufacture and sale of NXY-059, in
anticipation of stroke Phase IIb/III human clinical trial requirements,
partially offset by reduced research reimbursement.  AstraZeneca's obligation to
provide research support expired on June 30, 2000 and accordingly the Company
expects its revenues to decline in at least the near term unless AstraZeneca and
the Company agree on a continuation of research support, or milestone revenue or
revenue from other sources is earned.

  Research and development expenses decreased to $3.9 million from $4.1 million
for the three months ended September 30, 2000 compared to the same period in
1999.  For the nine month periods ended September 30, 2000 research and
development expenses increased to $12.4 million from $12.1 million for the same
period in 1999. The decrease in research and development expenses for the three
month periods was primarily due to reduced external preclinical expenses.  The
increase in research and development expenses for the nine month periods was
primarily due to higher costs related to the production of higher volumes of
NXY-059 and higher personnel related expenses. If the results of the Company's
Phase IIa clinical trials for AIDS dementia complex and/or Parkinson's disease
are favorable, then the Company expects its research and development expenses to
increase as it undertakes new clinical programs and commences more advanced
phases of its AIDS dementia and/or Parkinson's disease clinical trials. The
Company is seeking to enter into additional collaborative research and
development agreements to help fund these additional expenses. However, there
can be no assurance that new collaborators will be found or that total
collaborative research revenue will be sufficient to offset the anticipated
increase in expenses.

  General and administrative expenses was relatively stable at $981,000 for the
three months ended September 30, 2000 compared to $982,000 in the same period in
1999 and increased to $3.4 million from $3.1 million for the nine months ended
September 30, 2000 compared to the same period in 1999. The increase in general
and administrative expenses in the nine month period was primarily due to
increased personnel related expenses. If the results of the Company's Phase IIa
clinical trials for AIDS dementia complex and/or Parkinson's disease are
favorable, then the Company expects that general and administrative expenses
will increase in the future due to the addition of personnel and increased
facilities required to support the expected future growth in research and
development activities.

  Interest and other income, net for the three and nine months ended September
30, 2000 was $192,000 and $462,000, respectively, compared to net interest and
other expenses of approximately $34,000 and $85,000 for the same periods in
1999. The increase in interest income was due to the Company's higher cash
balance as a result of its March 2000 financing.  The Company expects to
continue to incur interest costs through the remainder of 2000 at approximately
the same rate as the nine months ended September 30, 2000, and expects that its
interest income will be higher than in 1999 as a result of investing the net
proceeds from its underwritten offering, which closed on March 10, 2000.

                                       9
<PAGE>

Liquidity and Capital Resources

  From inception through September 30, 2000, the Company has financed its
operations primarily through $43.8 million generated from corporate
collaborations, $61.7 million received from private placements and underwritten
offerings of equity securities, including $20.0 million from an underwritten
offering of 1,904,169 shares of the Company's common stock in March 2000, $8.9
million obtained from a debt financing and $3.4 million from NIH grant funding.
As of September 30, 2000, the Company had approximately $20.4 million in cash,
cash equivalents and investment securities, compared to $12.6 million at
December 31, 1999.

  The Company's operations used $10.4 million and $6.9 million of cash in the
nine months ended September 30, 2000 and 1999, 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 $233,000 and $7.4 million of cash
in the nine months ended September 30, 2000 and 1999, respectively. This
primarily reflected sales and maturities of securities in which the Company has
invested its cash prior to use, offset in part by purchases of securities in the
nine months ended September 30, 2000 and 1999.

  Financing activities provided $18.4 million of cash in the nine months ended
September 30, 2000 and utilized $1.4 million of cash in the nine months ended
September 30, 1999. The increase in cash provided by financing activities for
the nine months ended September 30, 2000, compared to the same period in 1999 is
primarily due to the completion of an underwritten offering of 1,904,169 shares
of its Common Stock at a price of $11.50 per share on March 10, 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 at least the next twelve months. We anticipate that during this
period we will need to raise substantial additional funds for research,
development, expansion of manufacturing and administrative facilities and other
expenses, 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 establishing, expanding (or reducing) our manufacturing
  capabilities;

 . the development of sales and marketing activities, if undertaken by us;

 . 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 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 may result in 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.

                                       10
<PAGE>

Recent Accounting Pronouncements

  In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
In September 2000, the SEC issued Staff Accounting Bulletin No. 101B which
defers the effective date of SAB 101 until no later than the fourth quarter of
2000.  The Company is currently evaluating the effect of SAB 101 on its
operations and financial position.

  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 133 is not
anticipated to have an impact on the Company's results of operations of
financial condition when adopted as the Company holds no derivative financial
instruments and does not currently engage in hedging activities.

  In March 2000, the FASB issued No. 44 ("FIN 44"), "Accounting for Certain
Transactions Involving Stock compensation-an Interpretation of APB 25."  This
Interpretation clarifies (a) the definition of employee for purposes of applying
Opinion 25, (b) the criteria for determining whether a plan qualifies as a
noncompensatory plan, (c) the accounting consequence of various modifications to
the terms of a previously fixed stock option or award, and (d) the accounting
for an exchange of stock compensation awards in a business combination.  This
Interpretation is effective July 1, 2000, but certain conclusions in this
Interpretation cover specific events that occur after either December 15, 1998,
or January 12, 2000.  To the extent that this interpretation covers events
occurring during the period after December 15, 1998, or January 12, 2000, but
before the effective date of July 1, 2000, the effects of applying this
Interpretation are recognized on a prospective basis from July 1, 2000.  The
adoption of FIN 44 does not have a material impact on the Company's financial
statements.

              FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS

Centaur is 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 adequately demonstrate the safety and
efficacy of our products; we do not have any evidence of the efficacy of our
potential products in human clinical trials.

                                       11
<PAGE>

  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. The
results of preclinical and early clinical studies may not be predictive of
results that will be obtained in later stage testing. For example, to date we
have not been able to identify any efficacy from our stroke Phase IIa study or
the interim 10-week data from the ADC Phase IIa study.  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, 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. No evidence of the efficacy of our potential products in
human clinical trials has been attained to date. 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.

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 family of NRTs 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 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 some delays in enrolling patients in
some of our clinical trials. Further delays in planned patient enrollment in
clinical trials may result in increased costs, program delays or both, which
could seriously harm us.

We rely on third parties to develop, market, distribute and sell our potential
products and if these third parties do not perform, 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.

                                       12
<PAGE>

  We currently have a collaborative arrangement with AstraZeneca for the
research, development and 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, and this
collaboration may not continue.

  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 will be required to devote additional resources to product development
and commercialization or terminate certain development programs.

AstraZeneca's obligation to provide us with research funding has recently
expired, which could require us to take actions to reduce expenses

  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 89% of our revenue for 1998, 79% for the year ended December 31,
1999 and 61% for the nine months ended September 30, 2000. We are currently in
discussions with AstraZeneca regarding an extension of this funding, but there
can be no assurance that the funding will be extended in whole or in part.  If
the funding is not extended, or is extended at a lower rate, the Company may
take action to reduce expenses, which actions may include reducing staff and or
certain projects.

We will need to obtain additional financing to fund our operations, and if we
fail to obtain such financing our product development programs may be
significantly curtailed or ended

  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 for at least the next twelve months. We anticipate that
in the future, we will need to raise substantial additional funds for research,
development, expansion of manufacturing and administrative facilities and other
expenses, through equity or debt financings, research and development grants,
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 and pace of establishing and expanding (or reducing) our
  manufacturing capabilities;

 . 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.

                                       13
<PAGE>

  Additional funding may not be available to us on reasonable terms, if at all.
Any additional financing may result in dilution to existing stockholders. 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 have a history of operating losses and may never be profitable

  We have incurred losses since our inception and as of September 30, 2000 had
an accumulated deficit of $41.0 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 and our now terminated agreement
with Lundbeck. Revenues from product sales and collaborative agreement royalties
are not expected for at least several years, if at all.

If we fail to attract additional qualified officers and other employees, or to
retain key management and technical personnel, 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 newly appointed President and Chief
Executive Officer.  In addition, we rely on key consultants and advisors. The
loss of one or more of these key personnel could have a material adverse effect
on our research, development and product marketing 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 NRTs 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.

                                       14
<PAGE>

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.

  We have 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 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. 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. Accordingly, we expect to need to develop substantial

                                       15
<PAGE>

additional capacity by expanding our current facilities or building new
facilities. To meet projected time schedules, we may commence construction
and/or otherwise commit ourselves to additional capacity prior to FDA or other
regulatory approval of the products to be manufactured at the new facility. The
cost of any new facility would be substantial, and such facility could
ultimately prove to be unnecessary if the required approvals are not obtained or
market demand is insufficient. Additionally, we may not be able to construct a
large scale manufacturing facility, and we may not be able to operate it in an
efficient and cost-effective manner and in compliance with applicable regulatory
requirements. If we are unable to manufacture our own products, we will need to
seek third-party manufacturers. We may not be able to enter into such
arrangements on favorable terms. Additionally, if we are unable to
satisfactorily manufacture and deliver the compounds required under our
agreement with AstraZeneca, we could lose some or all of our manufacturing
rights under that agreement.


Item 3.

            QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK.

  There have been no material changes in the reported market risks since
December 31, 1999.

                                       16
<PAGE>

Part II.  OTHER INFORMATION

ITEM 2.   Changes in Securities and Use of Proceeds

  None

ITEM 6.   Exhibits and Reports on Form 8-K

  (a) Exhibits
     The following exhibits are filed herewith:

        Exhibit
        Number       Exhibit Title
        -------      -------------
         10.01       Employment and consulting agreement effective September 22,
                     2000 between the Registrant and John M. Carney.
         27.01       Financial Data Schedule

  (b) Reports on Form 8-K

    The Company did not file a report on Form 8-K during the period ended
September 30, 2000.


                                       17
<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)



November 14, 2000.                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)

                                       18
<PAGE>

                         CENTAUR PHARMACEUTICALS, INC.

                                 EXHIBIT INDEX

  No.                                             Exhibit
--------                                          -------
10.01     Employment and consulting agreement effective September 22, 2000
          between the Registrant and John M. Carney.
27.01     Financial Data Schedule, September 30, 2000