<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, 1999

                                       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: 333-57165

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

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

                              484 Oakmead Parkway
                          Sunnyvale, California  94086
                    (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.

[  ] Yes    [ X ] No

     The number of outstanding shares of the registrant's Common Stock, $0.001
par value, was 15,606,404 as of April 30, 1999.

                                       1
<PAGE>
 
                         Centaur Pharmaceuticals, Inc.
                                     INDEX


PART I: FINANCIAL INFORMATION                                            PAGE
--------------------------------------------------------------------------------
ITEM 1  Financial Statements - Unaudited

     Condensed Balance Sheets - March 31, 1999 and December 31, 1998.....  3

     Condensed Statements of Operations - three month periods 
     ended March 31, 1999 and 1998.......................................  4

     Condensed Statements of Cash Flows - three month periods ended 
     March 31, 1999 and 1998.............................................  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.......... 17


PART II: OTHER INFORMATION
--------------------------------------------------------------------------------

ITEM 2. Changes in Securities and Use of Proceeds........................ 18

ITEM 4  Submission of Matters to a Vote of Security Holders.............. 18

ITEM 6  Exhibits and Reports on Form 8-K................................. 18

        Signatures....................................................... 20

        Exhibit Index.................................................... 21

                                       2
<PAGE>
 
PART I:    FINANCIAL  INFORMATION
ITEM 1      FINANCIAL  STATEMENTS

                         CENTAUR PHARMACEUTICALS, INC.
                            CONDENSED BALANCE SHEETS
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                  MARCH 31,            DECEMBER 31,
                                                                                     1999                  1998*
                                                                                     ----                  ----
ASSETS                                                                                      (unaudited)
<S>                                                                            <C>                     <C>
Current assets:
   Cash and cash equivalents.................................................       $  4,085               $  5,628
   Short-term investments....................................................         14,963                 12,906
   Contract revenue receivable...............................................            190                      7
   Prepaid expenses..........................................................            222                    128
   Other current assets......................................................            523                    444
                                                                                    --------               --------
       Total current assets..................................................         19,983                 19,113
   Long-term investments.....................................................          1,712                  5,579
   Property and equipment, net...............................................         11,090                 11,665
   Other assets..............................................................            816                    876
                                                                                    --------               --------
       Total assets..........................................................       $ 33,601               $ 37,233
                                                                                    ========               ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable..........................................................       $    607                    568
   Accrued compensation......................................................            262                    203
   Other accrued liabilities.................................................          1,101                  1,126
   Short-term obligations under capital lease................................             --                     89
   Current portion of long-term debt.........................................          2,066                  1,967
                                                                                    --------               --------
       Total current liabilities.............................................          4,036                  3,953
Deferred revenue.............................................................          1,518                  1,500
Long-term debt...............................................................          5,232                  5,802
                                                                                    --------               --------
       Total liabilities.....................................................         10,786                 11,255
                                                                                    --------               --------
Stockholders' equity:........................................................
   Common stock..............................................................             15                     15
   Additional paid-in capital................................................         46,831                 47,221
   Deferred compensation.....................................................         (2,285)                (2,970)
   Accumulated other comprehensive income....................................            (18)                   (52)
   Accumulated deficit.......................................................        (21,728)               (18,236)
                                                                                    --------               --------
       Total stockholders' equity............................................         22,815                 25,978
                                                                                    --------               --------
       Total liabilities and stockholders' equity............................       $ 33,601               $ 37,233
                                                                                    ========               ========
</TABLE>
                                                                                
*  The balance sheet at December 31, 1998 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,   
                                                           -------------------------
                                                             1999             1998
                                                             ----             ----
                                                                  (unaudited)
<S>                                                        <C>               <C> 
Total revenues........................................     $ 1,937           $ 2,178
Expenses:                                             
  Research and development............................       4,358             3,535
  General and administrative..........................       1,059               712
                                                           -------           -------
Total operating expenses..............................       5,417             4,247
                                                           -------           -------
Loss from operations..................................      (3,480)           (2,069)
Interest and other (expense)income, net...............         (12)              174
                                                           -------           -------
Net loss..............................................     $(3,492)          $(1,895)
                                                           =======           =======
Basic and diluted net loss per share..................      $(0.23)           $(0.65)
                                                           =======           =======
Shares used in computing basic and diluted net loss   
per share.............................................      15,467             2,902
                                                           =======           =======
</TABLE>

                             See accompanying notes

                                       4
<PAGE>
 
                         CENTAUR PHARMACEUTICALS, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                 (in thousands)



<TABLE>
<CAPTION>
                                                                                      FOR THE THREE MONTHS ENDED
                                                                                                MARCH 31,
                                                                                           1999              1998
                                                                                           ----              ----
                                                                                                (unaudited)
<S>                                                                                    <C>                  <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net loss.......................................................................           $(3,492)          $(1,895)
  Adjustments to reconcile net loss to net cash used by operating activities:
     Depreciation and amortization.............................................               727               301
     Amortization of deferred compensation.....................................               244               251
     Share of loss in affiliate................................................                59                --
     Changes in operating assets and liabilities:
       Contract revenue receivable.............................................              (183)             (332)
       Prepaid expenses........................................................               (94)             (109)
       Other current assets....................................................               (79)              184
       Other assets............................................................                --               (75)
       Accounts payable........................................................                39            (1,114)
       Accrued compensation....................................................                59                35
       Other accrued liabilities...............................................               (25)              101
       Deferred revenue........................................................                18             1,322
                                                                                          -------           -------
Net cash used in operating activities..........................................            (2,727)           (1,331)

CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
     Capital expenditures......................................................              (152)           (1,451)
     Purchases of investments..................................................            (2,156)               --
     Sales and maturities of investments.......................................             4,000             5,591
     Cash contribution to affiliate............................................                --              (150)
                                                                                          -------           -------
Net cash provided by investing activities......................................             1,692             3,990

CASH FLOWS USED IN FINANCING ACTIVITIES:
     Proceeds from issuance of common stock....................................                51                 2
     Principal payments on capital lease obligations...........................               (89)              (35)
     Repayment of debt financing...............................................              (470)               --
                                                                                          -------           -------
Net cash used in financing activities..........................................              (508)              (33)
                                                                                          -------           -------
Net (decrease) increase in cash and cash equivalents...........................            (1,543)            2,626
Cash and cash equivalents at beginning of period...............................             5,628             1,469
                                                                                          -------           -------
Cash and cash equivalents at end of period.....................................           $ 4,085           $ 4,095
                                                                                          =======           =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid..................................................................           $   283           $     7
                                                                                          =======           =======
</TABLE>

                             See accompanying notes

                                       5
<PAGE>
 
                         CENTAUR PHARMACEUTICALS, INC.
                NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
                                 MARCH 31, 1999
                                  (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,
1998 as included in the Company's annual report on Form 10-K.  The results of
operations for the three month period ended March 31, 1999 are not necessarily
indicative of the results to be expected for any subsequent quarter or for the
entire fiscal year ending December 31, 1999.

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 transactions with Cutanix, Inc., its skin-care affiliate,
have not been material through March 31, 1999.  The Company's share of losses in
Cutanix for the three months ended March 31, 1999 was $59,000.  As this is not
material to the operations of the Company, it has been included within research
and development costs.
 
4.  COMPREHENSIVE LOSS

    During the first quarter of 1999 and 1998, total Comprehensive loss 
amounted to $3.5 million and $1.9 million, respectively.

                                       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 and 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, 1998. 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.  These 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," and in the Company's annual report on Form 10-K for the year ended
December 31, 1998.  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.  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 oxidative stress and inflammation.  From inception through
March 31, 1999, the Company has recognized cumulative revenues from
collaborative research and development agreements and grants of $38.9 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 March 31, 1999 of $21.7 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 Astra
AB ("Astra"), a multinational pharmaceutical company based in Sweden for the
research, development and marketing of NRT-related drugs to treat stroke,
Alzheimer's disease, traumatic brain injury and multi-infarct dementia.  Under
the terms of the Astra agreement, Astra has 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.  Additionally, Astra bears the costs
of its development work under the Astra agreement.  The $6 million annual
research reimbursement will expire and is renewable at Astra's discretion in
June 2000.  Astra received exclusive worldwide marketing rights to any
pharmaceuticals resulting from the collaboration.  The Company retains worldwide
manufacturing rights for the active ingredients of the product and an option to
obtain certain co-promotion rights in the United States for five years.  Through
March 31, 1999, the Company recognized $31.1 million of revenue under the Astra
agreement.

                                       7
<PAGE>
 
     The Company expects to continue to incur net operating losses through at
least the next several years as it continues to expand its research and
development programs, including preclinical and clinical studies, 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.

Results of Operations

     Three Months Ended March 31, 1999 and 1998

     Substantially all of the Company's revenues have been derived from
collaborative research and development agreements 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
months ended March 31, 1999 and 1998 were $1.9 million and $2.2 million,
respectively.  In each of the three month periods, revenue consisted primarily
of research support from Astra.  The decrease in revenues for the three months
ended March 31, 1999 compared to the same period in 1998 was primarily due to
decreased manufacturing revenue earned in 1999 from Astra due to the timing of
clinical trials for which the Company was manufacturing compound.  In 1998, the
Company manufactured compound for the stroke Phase IIa studies, and it plans to
manufacture additional compound for later-stage stroke clinical trials in the
future.

     Research and development expenses increased to $4.4 million in the three
months ended March 31, 1999 from $3.5 million for the same period in 1998.  The
increase in expenses for the three months ended March 31, 1999, compared to the
same period in 1998, is primarily due to increased clinical study costs in 1999
because of the increased activity in clinical studies in AIDS dementia, and to
increased depreciation and amortization related to the newly constructed Santa
Clara, California manufacturing facility.  The Company expects its research and
development expenses to increase as it undertakes new clinical programs and
commences more advanced phases of its Parkinson's disease and AIDS dementia
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 increased to $1.1 million in the three
months ended March 31, 1999 from $712,000 for the same period in 1998 primarily
due to higher costs in 1999 related to public relations, patent costs and
increased administrative personnel.  The Company expects that general and
administrative expenses will increase in the future as a result of increased
activity by the Company in corporate development and the addition of personnel
and facilities required to support the expected future growth in research and
development activities.

     Interest and other expense, net for the three months ended March 31, 1999
was $12,000, compared to approximately $174,000 of net interest and other income
for the same period in 1998.  This change was due to increased interest costs as
a result of the Company's April 1998 $8.9 million debt financing, which was
partially offset by increased interest earned on the larger cash balance
resulting 

                                       8
<PAGE>
 
from the Company's stock offering in October 1998. The Company expects to
continue to incur interest costs through the remainder of 1999 at
approximately the same rate as in the three months ended March 31, 1999, and
expects that its interest income will decrease as a result of decreased cash
balances.

Liquidity and Capital Resources

     From inception through March 31, 1999, the Company has financed its
operations primarily through $37.0 million generated from corporate
collaborations, $41.7 million received from private placements and underwritten
offerings of equity securities, $8.9 million obtained from a debt financing and
$1.9 million from NIH grant funding.  As of March 31, 1999, the Company had
approximately $20.8 million in cash, cash equivalents and investment securities,
compared to $24.1 million at December 31, 1998.

     The Company's operations used $2.7 million and $1.3 million of cash in the
three months ended March 31, 1999 and 1998, respectively.  These uses of cash
primarily reflect the Company's net loss for such periods and changes in the
Company's operating assets and liabilities, including deferred compensation,
over such periods.

     The Company's investing activities provided $1.7 million and $4.0 million
of cash in the three months ended March 31, 1999 and 1998, 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
three months ended March 31, 1999 and purchases of property and equipment in the
three months ended March 31, 1998.  Additions to property and equipment were
$152,000 for the three months ended March 31, 1999 compared with $1.5 million
for the same period in 1998.  The decreased spending in 1999 was primarily due
to the completion of construction in 1998 of the Company's Santa Clara,
California manufacturing facility.

     Financing activities used $508,000 of cash in the three months ended March
31, 1999 and $33,000 of cash in the three months ended March 31, 1999. The
cash used in financing activities is primarily attributable to repayment of
debt and payments of capital lease obligations. The increase for the three
months ended March 31, 1999, compared to the same period in 1998, is due
primarily to the use of cash in 1999 to make payments due under the $8.9
million debt financing completed in April 1998.

     The Company believes that its current resources will be sufficient to meet
its capital requirements for at least the next twelve months.  However, there
can be no assurance that the Company will not require additional funds during
this period to continue its research and development programs and to enter into
and sustain preclinical and clinical testing.  The Company's capital
requirements depend on numerous factors, including the progress of the Company's
research and development programs, manufacturing activities, revenues or
investments from collaborators, the scope and results of preclinical and
clinical testing, the time and costs involved in obtaining regulatory approval,
competing technological and market developments, changes in the Company's
existing research relationships and the ability of the Company to establish
additional collaborative and other arrangements.  The Company anticipates that
in the future it 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, prior to the
commercialization of any of its products.  There can be no assurance that any
additional funding will be available to the Company or, if available, that it
will be on reasonable terms.  Any additional financing may result in dilution to
existing stockholders.  If adequate funds are not available, the Company may be
required to significantly curtail its research and development programs,
including clinical trials, or enter into arrangements that may require the
Company to relinquish certain material rights to its potential products on terms
that it might otherwise find unacceptable.

                                       9
<PAGE>
 
Year 2000 Compliance

     The Company recognizes the need to ensure its operations will not be
adversely impacted by Year 2000 software failures.  Software failures due to
processing errors potentially arising from calculations using dates beginning
with the Year 2000 are a known risk.  The Company has established procedures for
evaluating and managing the internal risks and costs associated with this
problem and is in the process of upgrading or replacing software that is not
Year 2000 compliant.  The Company anticipates that this process will be
completed by the end of the third quarter of 1999.  Although the Company's
assessment is continuing, it believes that resolving these matters will not have
a material adverse effect on its financial condition or results of operations.

     The Company is also assessing the possible effect on its operations of the
Year 2000 readiness of critical third-parties, such as collaborative partners
and suppliers of products and services.  For instance, the Company has contacted
its collaborative partner and they have confirmed that they have an active Year
2000 compliance program.  The Company expects that by the end of the third
quarter of 1999, it will contact the contract research organizations ("CROs")
that conduct its clinical studies and assess their state of readiness with Year
2000 compliance.  Should these CROs not be ready for the Year 2000, there could
be delays in clinical trials and issues with the validity of trial results,
which could have a material adverse effect on the Company's business, financial
condition or results of operations.  The Company is developing contingency plans
to identify alternative vendors should significant third parties fail to
adequately address Year 2000 issues.  This plan is expected to be completed by
the end by the third quarter of 1999.  There can be no assurance that such plans
will fully mitigate any such failures or problems.  Furthermore, there may be
certain critical third parties, such as collaborative partners, CROs, utilities,
telecommunication companies, or material vendors where alternative arrangements
or sources are limited or unavailable.

     Although it is difficult to estimate the total costs of implementing a Year
2000 compliance plan, the Company's preliminary estimate is that such costs will
total less than $100,000.  However, although management believes its estimates
are reasonable, there can be no assurance that the actual costs of implementing
the Year 2000 compliance plan will not differ materially from the estimated
costs.  The Company has incurred approximately $60,000 through March 31, 1999 on
this project.  A significant portion of total Year 2000 project expenses is
represented by existing staff that has been redeployed onto this project.  The
Company does not believe that the redeployment of existing staff will have a
material adverse effect on its business, results of operations or financial
position.  Incremental expenses related to the year 2000 project are not
expected to materially impact operating results in any one period.

     The Company has not yet fully developed a comprehensive contingency plan to
address situations that may result if the Company is unable to achieve Year 2000
readiness of its critical operations.  Development of contingency plans is in
progress and will be developed in detail and expanded through the end of the
third quarter of 1999.  A substantial portion of the Company's Year 2000
compliance issues are software or information technology ("IT") issues, which
appear to be resolvable either by upgrading or replacing non-Year 2000 compliant
software.  The Company is currently evaluating the non-IT issues, which are not
anticipated to be material.  The Company believes Year 2000 noncompliance by its
critical third party relationships, such as collaborative partners, CROs,
utilities, and others may be the most reasonably likely worst case scenario.
Management is currently assessing the nature and level of this risk to the
Company.

     Although the Company is not aware of any material operational issues
associated with preparing its internal systems for the Year 2000, or material
issues with respect to the adequacy of critical third 

                                       10
<PAGE>
 
party systems, there can be no assurance that the Company will not experience
material unanticipated negative consequences and/or material costs caused by
undetected errors or defects in such systems or by the Company's failure to
adequately prepare for the results of such errors or defects, including costs
of related litigation, if any. The impact of such consequences could have a
material adverse effect on the Company's business, financial condition or
results of operations.

              FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS

     Early Stage of Development; Technological Uncertainties.

     Centaur was incorporated in March 1992 and is in an early stage of
development.  All of the Company's potential products are in early stages of
research, development or testing, and no revenues have been generated from the
sale of products.  Products resulting from the Company's research and
development efforts, if any, are not expected to be commercially available for
at least several years.  The Company's potential products will require
substantial additional research and development, preclinical and clinical
testing and regulatory approval prior to commercialization.  The Company's
product development efforts may not progress as expected, if at all.  In
addition, the Company's products are subject to the risks of failure inherent in
the development of pharmaceutical products based on new technologies.  These
risks include the possibilities that:

     .  the Company's product candidates will not receive FDA approval (or
        equivalent approvals outside the United States) or market acceptance;

     .  any or all of the Company's product candidates will be found to be
        unsafe or ineffective;

     .  the products, if safe and effective, will be difficult to manufacture on
        a large scale or uneconomical to market; proprietary rights of third
        parties will preclude the Company from marketing such products; and

     .  third parties will market superior or more cost-effective products.

     As a result, the Company may not be able to produce any commercially viable
products, and this would seriously harm the Company.

     Uncertainty of Preclinical and Clinical Trials.

     The Company's potential products are subject to the risks of failure
inherent in the development of pharmaceutical products and will require
additional development, preclinical studies, clinical trials and regulatory
approval prior to commercialization.  Most of the diseases and disorders being
targeted by the Company are highly complex.  Their causes are not fully known,
and there are no widely accepted in vitro or in vivo models of these diseases
and disorders.  The Company tests potential compounds in a number of models that
are believed to provide useful information about the compound, but 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 the Company's interpretation may not be correct.  Some of
the Company's lead compounds have failed to demonstrate efficacy in at least one
of the numerous models in which they have been tested.  Currently, the Company's
Parkinson's disease, AIDS dementia and stroke product candidates are in Phase
IIa clinical trials.  All other product candidates are in various stages of
preclinical testing or research.  The results of preclinical and early clinical
studies may not be predictive of results that will be obtained in later stage
testing.  The Company's ongoing clinical trials may not be completed, clinical
trials of the Company's other products under development may not be permitted,
or if permitted, may not be completed, and clinical trials may not demonstrate
the safety and efficacy of any products to the extent necessary to obtain
regulatory 

                                       11
<PAGE>
 
approvals for marketing and may not result in marketable products. The
Company's potential products could prove to have undesirable side effects or
other characteristics that may prevent or limit their commercial use. In
addition, the Company's products may not ultimately obtain approval to be
marketed from the FDA or similar foreign marketing approvals for any
indication. Any compound that is approved may not be capable of being produced
in commercial quantities at a reasonable cost or of being successfully
marketed. 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 the Company.

     The ability to undertake and complete clinical trials in a timely manner
depends upon, among other factors, the enrollment of patients to meet inclusion
criteria of the investigational protocol.  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.  Delays in planned patient enrollment in future
clinical trials may result in increased costs, program delays or both, which
could seriously harm the Company.

     Novel Therapeutic Approach.

     The Company's product development efforts center around its family of NRTs
that the Company believes protect against the damaging effects of oxidation and
inflammation caused by oxidative stress.  Initially, the Company has targeted
neurodegenerative diseases and disorders where it believes that oxidative stress
is a major cause of neuronal damage, and it has recently expanded its research
and development efforts into other areas, including arthritis, myocardial
infarction, inflammatory bowel disease and ophthalmic disorders.  The Company's
novel approach has not been widely studied, the mechanisms of action of its
technology and compounds are not well understood, and many of the diseases and
disorders being targeted by the Company do not have widely accepted in vitro or
in vivo models.  In addition, the role of oxidative stress in these diseases and
disorders is not fully known.  Accordingly, the Company's approach, technologies
or product candidates may not prove to be successful.  Moreover, the Company is
focusing on new treatments for conditions that are also the subject of research
and development by other companies.  The Company's competitors may succeed in
developing products that are more efficacious, more cost-effective or safer than
the Company's product candidates.  Rapid technological change or developments by
others may result in the Company's technology or proposed products becoming
obsolete or noncompetitive.

     Dependence Upon Collaborators.

     The Company's strategy for the development and commercialization of its
products includes maintaining and entering into various collaborations with
corporate partners, licensors, licensees and others.  The Company currently has
a collaborative arrangement with Astra (the "Astra Agreement") 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 Astra may not be, or may not remain, aligned with those of the
Company.  Astra may not successfully perform its development, regulatory
compliance or marketing functions, and this collaboration may not continue.
Astra has recently completed a merger with Zeneca Group PLC to form Astra Zeneca
PLC.  It is possible that this merger could affect Astra's product development
priorities and its relationship with the Company.  The Company's revenues to
date have consisted primarily of research and development support from Astra
under the Astra Agreement, and to a significantly lesser extent from Lundbeck
under the now terminated Lundbeck agreement and from U.S. government research
grants.  The Company may not be able to negotiate additional collaborative
arrangements in the future on acceptable terms, if at all,

                                       12
<PAGE>
 
and any such collaborative arrangements may not be successful. To the extent
that the Company is not able to maintain or establish such arrangements, the
Company would be required to undertake research and development activities at
its own expense, which would significantly increase its capital requirements
and limit the programs that it is able to pursue. In addition, the Company may
encounter significant delays in introducing its products into some markets or
find that the development, manufacture or sale of its products in such markets
is adversely affected by the absence of such collaborative agreements.

     The Company cannot control the amount and timing of resources that its
collaborative partners devote to the Company's programs or potential products,
which can vary because of factors unrelated to the potential product.
Collaborative participation will depend not only on the achievement of research
and development objectives by the Company and its collaborators, which cannot be
assured, but also on each collaborator's own financial, competitive, marketing
and strategic considerations, which are outside the Company's control.  These
strategic considerations may include the relative advantages of alternative
products being marketed or developed by others, including relevant patent and
proprietary positions.  The Company's collaborative partners may develop, either
alone or with others, products that compete with the development and marketing
of the Company's products.  Competing products, either developed by the
collaborative partners or to which the collaborative partners have rights, may
result in their withdrawal of support with respect to all or a portion of the
Company's technology, which would seriously harm the Company.  Astra has the
ability under the Astra Agreement to terminate the Astra Agreement, in whole or
in part, upon twelve months notice, and can terminate research funding and the
Company's manufacturing rights under the Astra Agreement if more than 30% of the
Company's voting capital stock is acquired by a company engaged in the
manufacture and/or sale of pharmaceutical products.  Future agreements with
collaborative partners, if any, may provide such partners with similar
termination rights that are disadvantageous to the Company.  If Astra or any
future collaborative partner breaches or terminates their agreements with the
Company 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 the Company will be
required to devote additional resources to product development and
commercialization or terminate certain development programs.  For example, in
March 1998, Lundbeck terminated its agreement (the "Lundbeck Agreement") with
the Company for the development and marketing of drugs to treat Parkinson's
disease.  Disputes may arise in the future with respect to the ownership of
rights to any technology developed with third parties.  These and other possible
disagreements between collaborators and the Company could lead to delays in the
research, development and commercialization of certain product candidates or
could require or result in litigation or arbitration.  This would be time
consuming and expensive, and would seriously harm the Company.

     Future Capital Needs; Uncertainty of Additional Funding.

     Since inception, the Company has funded its operations primarily through
the sale of equity and research and development support under the Astra
Agreement and, to a significantly lesser extent, payments under the now
terminated Lundbeck Agreement and U.S. government research grants.  The Company
has generated no product revenue, and none is expected for at least several
years.  The Company believes that its current resources will be sufficient to
meet its capital requirements for at least the next twelve months.  The Company
could require additional funds during this period in order to continue its
research and development programs and to enter into and sustain preclinical and
clinical testing.  The Company anticipates that in the future, it 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 

                                       13
<PAGE>
 
otherwise, prior to the commercialization of any of its products.  The
Company's capital requirements depend on numerous factors, including:

     .  the progress of its research and development programs and manufacturing
        activities;

     .  revenues or investments from collaborators;

     .  the scope and results of preclinical and clinical testing, the time and
        costs involved in obtaining regulatory approval;

     .  the cost of filing, prosecuting, defending and enforcing any patent
        claims and other intellectual property rights; competing technological
        and market developments;

     .  changes in the Company's existing research relationships; and

     .  the ability of the Company to establish additional collaborative and
        other arrangements.

     Additional funding may not be available to the Company on reasonable terms,
if at all.  Any additional financing may result in dilution to existing
stockholders.  If adequate funds are not available, the Company may be required
to significantly curtail its research and development programs, including
clinical trials, or enter into arrangements that may require the Company to
relinquish material rights to its potential products on terms that it might
otherwise find unacceptable.

     Dependence on Licenses, Patents and Proprietary Technology.

     The Company exclusively licenses certain core technology related to its
NRTs from the University of Kentucky Research Foundation ("UKRF") and the
Oklahoma Medical Research Foundation ("OMRF"), subject to very limited
exceptions.  The Company will be obligated to pay royalties on products, if any,
incorporating this or other licensed technology.  The Company may be required to
obtain additional licenses to patents or other proprietary rights from third
parties.  Any licenses required under any patents or proprietary rights may not
be available on terms acceptable to the Company, if at all.  If the Company does
not obtain required licenses, it could encounter delays in product development
while it attempts to redesign products or methods, or it could find that the
development, manufacture or sale of products requiring such licenses is
foreclosed.

     The Company's success will depend to a significant degree on its ability to
obtain, maintain and enforce patent protection for its products and
manufacturing processes or license rights to applicable patents, preserve its
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.
The product candidates important to Centaur are subject to these uncertainties.
The Company has ongoing research efforts and expects to seek additional patents
covering this research in the future.  Patent applications relating to the
Company's potential products or technology may not result in patents being
issued.  The Company's current patents, as well as any that may be issued in the
future, may not afford adequate protection to the Company, and may not provide a
competitive advantage.  In addition, any of the Company's patents may be
challenged, invalidated or infringed.  In the past, in order to increase the
value of the protection afforded by certain patents it had licensed, the Company
has initiated actions in the United States Patent and Trademark Office ("PTO")
to amend these already issued patents.  The Company is engaged in one such
action now, and this action or any future action may not be successful.
Furthermore, others may independently develop similar products or processes,
duplicate any of the Company's products or, if patents are issued to the
Company, design around these patents.  In addition, litigation, which would
result in substantial cost to the Company, may be necessary to enforce any
patents issued to the Company or to determine the scope and validity of the
proprietary rights of third parties.  In some cases, the Company is dependent
upon third parties for the prosecution of patents and 

                                       14
<PAGE>
 
patent applications for technology that the Company licenses, such as the core
technology related to its NRTs licensed from UKRF and OMRF. Failure of these
third parties to effectively prosecute these patents could seriously harm the
Company.

     Competitors of the Company may have filed patent applications, may have
been issued patents or may obtain additional patents and proprietary rights
relating to products or processes competitive with those of the Company.  There
is a substantial backlog of pharmaceutical and biomedical patent applications at
the PTO.  Accordingly, the time at which the Company's or its competitors'
patent applications may issue as patents cannot be predicted.  Patent
applications in the United States are maintained in secrecy until patents issue,
and publication of discoveries in scientific or patent literature often lag
behind the actual discoveries.  Thus, the Company cannot be sure that it has
been or will be the first to discover the subject matter covered by its patent
applications or patents or that it was the first to file patent applications for
its inventions.  The Company may, therefore, have to participate in interference
proceedings declared by the PTO or litigation to determine priority of
inventions, either of which could result in substantial cost to the Company.

     The Company's success will also depend, in part, on its not infringing
patents issued to others and not breaching the technology licenses upon which
the Company's products are based.  If the Company's product candidates are found
to infringe upon the patents of others, or otherwise impermissibly utilize the
intellectual property of others, the Company's development, manufacture and sale
of its potential products could be severely restricted or prohibited.  In this
event, the Company 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 the Company, if at all.  If the Company does not obtain such
licenses, it could encounter delays in product market introductions while it
attempts to design around such patents or other rights, or it may be unable to
develop, manufacture or sell such products.  In addition, the breach of an
existing or future license may seriously harm the Company.

     The Company has received correspondence from the lawyers for an individual
who has obtained certain patents related to the use of phenyl butyl nitrone
("PBN") and related compounds and which include claims related to specified
reactions of these compounds with certain free radicals.  PBN is a commercially
available material that is known to react with free radicals in certain
environments.  The Company's founders used PBN in their early research.  The
correspondence alleges that certain of the Company's compositions and
methodologies may fall within the scope of this individual's patents, and that
the practice of such by the Company would constitute infringement.  Subsequent
discussions and correspondence between the Company and this individual have not
resulted in a resolution of this matter.  The Company does not believe that
these patents seriously harm its ability to develop and commercialize its
products.  If, however, the Company is required to defend against charges of
patent infringement or breach of a license or to protect its own proprietary
rights against this individual or other third parties, the Company may incur
substantial costs and could lose rights to develop or market certain products
and/or enforce certain patents.

     The Company also seeks to protect its proprietary technology, including
technology which may not be patented or patentable, by confidentiality
agreements and, if applicable, invention assignment agreements with its
collaborators, advisors, employees and consultants. These agreements may be
breached, the Company may not have adequate remedies for any breach and the
Company's trade secrets may otherwise be disclosed to, or discovered by,
competitors.  In addition, these collaborators, advisors, employees and
consultants may assert rights to intellectual property arising out of their
research.

                                       15
<PAGE>
 
     The Company has received grants from the U.S. National Institutes of Health
to fund various of its projects.  These grants give the U.S. government certain
rights to license for its own use inventions resulting from funded work, and
rights in very limited circumstances to grant others the right to use these
inventions.  The Company's proprietary position may be seriously harmed should
the government exercise these rights.

                                       16
<PAGE>
 
Item 3.

            QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK.

     There have been no material changes in the reported market risks since
December 31, 1998.

                                       17
<PAGE>
 
Part II.  OTHER INFORMATION

ITEM 1.  Legal Proceedings

  Not applicable.


ITEM 2:  Changes in Securities

     Use of Proceeds The Company's registration statement (the "Registration
Statement") on Form S-1, registering the offer and sale of an aggregate of up to
1,500,000 shares of the Company's Common Stock in connection with the Company's
underwritten offering (Securities and Exchange Commission File No. 333-57165)
was declared effective by the Securities and Exchange Commission on October 13,
1998, the offering date for the underwritten offering.  The aggregate net
offering proceeds to the Company from the underwritten offering after deducting
expenses were approximately $13.6 million. The Company expects to use the net
proceeds of the offering to fund its research and development programs not
covered by Astra, for capital expenditures, and for general corporate purposes,
including working capital.  From the effective date of the Registration
Statement to March 31, 1999, the Company estimates that it has used a portion of
the net proceeds of the offering as follows:

     (i)   Temporary investment in marketable securities, $11.1 million; and
     (ii)  Working capital, $2.5 million.

ITEM 3.  Defaults Upon Senior Securities

     Not applicable.


ITEM 4.  Submission of Matters To A Vote Of Security Holders

     Not applicable.


ITEM 5.  Other Information.

     Not applicable.


ITEM 6.  Exhibits and Reports on Form 8-K

          (a)  Exhibits

               The following exhibits are filed herewith:

                                       18
<PAGE>
 
               Exhibit
               Number      Exhibit Title
               ------      -------------

               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 March
31, 1999.

                                       19
<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)


                                 /s/ Brian D. Frenzel
     May 14, 1999.            By:__________________________________________
                                 Brian D. Frenzel
                                 President and CEO

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

                                       20
<PAGE>
 
                         Centaur Pharmaceuticals, Inc.
                                 EXHIBIT INDEX

NO.                 EXHIBIT                       
---                 -------                       

27.1                FINANCIAL DATA SCHEDULE, MARCH 31, 1999