<PAGE>

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                                 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, 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 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. [X] Yes [_] No

   The number of outstanding shares of the registrant's Common Stock, $0.001
par value, was 17,513,019 as of April 30, 2000.

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<PAGE>

                         CENTAUR PHARMACEUTICALS, INC.

                                     INDEX

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----


                         PART I:  FINANCIAL INFORMATION

<S>                                                                       <C>
ITEM 1 Financial Statements--Unaudited

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

    Condensed Statements of Operations--three month periods ended March
     31, 2000 and 1999...................................................   4

    Condensed Statements of Cash Flows--three month periods ended March
     31, 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...................................................   6

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


                           PART II: OTHER INFORMATION

ITEM 2 Changes in Securities and Use of Proceeds.........................  15

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

Signatures...............................................................  16

Exhibit Index............................................................  17
</TABLE>

                                       2
<PAGE>

PART I: FINANCIAL INFORMATION

ITEM 1  FINANCIAL STATEMENTS

                         CENTAUR PHARMACEUTICALS, INC.

                           CONDENSED BALANCE SHEETS
                                (in thousands)

<TABLE>
<CAPTION>
                                                         March 31,  December 31,
                                                           2000        1999*
                                                        ----------- ------------
                                                        (Unaudited)
                        ASSETS
                        ------
<S>                                                     <C>         <C>
Current assets:
  Cash and cash equivalents............................  $ 27,752     $  5,197
  Short-term investments...............................     2,920        7,379
  Prepaid expenses and other current assets............       919          977
                                                         --------     --------
    Total current assets...............................    31,591       13,553
  Property and equipment, net..........................     8,586        9,287
  Other assets.........................................       423          555
                                                         --------     --------
    Total assets.......................................  $ 40,600     $ 23,395
                                                         ========     ========
<CAPTION>
         LIABILITIES AND STOCKHOLDERS' EQUITY
         ------------------------------------
<S>                                                     <C>         <C>
Current liabilities:
  Accounts payable.....................................  $  1,084     $    888
  Accrued compensation.................................       383          305
  Other accrued liabilities............................     1,173        1,175
  Current portion long-term debt.......................     2,221        2,308
                                                         --------     --------
    Total current liabilities..........................     4,861        4,676
Deferred revenue.......................................     1,409        1,499
Long-term debt.........................................     3,011        3,470
                                                         --------     --------
    Total liabilities..................................     9,281        9,645
                                                         --------     --------
Stockholders' equity:
  Common stock.........................................        18           16
  Additional paid-in capital...........................    66,518       46,527
  Deferred compensation................................    (1,064)      (1,265)
  Accumulated other comprehensive income...............        12           (7)
  Accumulated deficit..................................   (34,165)     (31,521)
                                                         --------     --------
    Total stockholders' equity.........................    31,319       13,750
                                                         --------     --------
    Total liabilities and stockholders' equity.........  $ 40,600     $ 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
                                                             Ended March 31,
                                                             ----------------
                                                              2000     1999
                                                             -------  -------
                                                               (unaudited)
<S>                                                          <C>      <C>
Net revenues................................................ $ 2,638  $ 1,937
Expenses:
  Research and development..................................   4,184    4,299
  General and administrative................................     979    1,059
                                                             -------  -------
    Total operating expenses................................   5,163    5,358
                                                             -------  -------
Loss from operations........................................  (2,525)  (3,421)
Share of losses in affiliate................................    (132)     (59)
Interest and other (expense) income, net....................      13      (12)
                                                             -------  -------
Net loss.................................................... $(2,644) $(3,492)
                                                             =======  =======
Basic and diluted net loss per share........................ $ (0.16) $ (0.23)
                                                             =======  =======
Shares used in computing basic and diluted net loss per
 share......................................................  16,057   15,467
                                                             =======  =======
</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,
                                                              ----------------
                                                               2000     1999
                                                              -------  -------
                                                                (unaudited)
<S>                                                           <C>      <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
  Net loss................................................... $(2,644) $(3,492)
 Adjustments to reconcile net loss to net cash used by
  operating activities:
  Depreciation and amortization..............................     708      727
  Amortization of deferred compensation......................     175      244
  Share of losses in affiliate...............................     132       59
  Changes in operating assets and liabilities:
    Contract revenue receivable..............................     --      (183)
    Prepaid expenses and other current assets................      58      (94)
    Other assets.............................................     --       (79)
    Accounts payable.........................................     196       39
    Accrued compensation.....................................      78       59
    Other accrued liabilities................................      (2)     (25)
    Deferred revenue.........................................     (90)      18
                                                              -------  -------
      Net cash used in operating activities..................  (1,389)  (2,727)

CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
  Capital expenditures.......................................      (7)    (152)
  Purchases of investments...................................    (472)  (2,156)
  Sales and maturities of investments........................   4,950    4,000
                                                              -------  -------
      Net cash provided by investing activities..............   4,471    1,692

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
  Proceeds from issuance of common stock.....................  20,019       51
  Principal payments on capital lease obligations............     --       (89)
  Repayment of debt financing................................    (546)    (470)
                                                              -------  -------
      Net cash provided by (used in) financing activities....  19,473     (508)
                                                              -------  -------
Net increase (decrease) in cash and cash equivalents.........  22,555   (1,543)
Cash and cash equivalents at beginning of period.............   5,197    5,628
                                                              -------  -------
Cash and cash equivalents at end of period................... $27,752  $ 4,085
                                                              =======  =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest paid ............................................. $   208  $   283
                                                              =======  =======
</TABLE>

                             See accompanying notes

                                       5
<PAGE>

                         CENTAUR PHARMACEUTICALS, INC.

                NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

                                March 31, 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 three
month period ended March 31, 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 transactions with Cutanix, Inc., its skin-care affiliate,
have not been material through March 31, 2000. The Company's share of losses
in Cutanix for the three months ended March 31, 2000 was $132,000.

4. COMPREHENSIVE LOSS

   During the first quarter of 2000 and 1999, total comprehensive loss
amounted to $2.6 million and $3.5 million, respectively.

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, 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. 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

                                       6
<PAGE>

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, 1999. 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 the interruption and subsequent restoration of blood supply
and inflammation. From inception through March 31, 2000, the Company has
recognized cumulative revenues from collaborative research and development
agreements and grants of $47.0 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, 2000 of $34.2 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.
Additionally, AstraZeneca bears the costs of its development work under the
AstraZeneca agreement. The $6 million annual research reimbursement will
expire in June 2000, although it may be extended by AstraZeneca at its
discretion. AstraZeneca received exclusive worldwide marketing rights to any
pharmaceuticals resulting from the collaboration. The Company retains
worldwide manufacturing rights for the active pharmaceutical ingredients of
the product and an option to obtain certain co-promotion rights in the United
States for five years. Through March 31, 2000, the Company recognized $38.0
million of revenue under the AstraZeneca agreement.

   The Company has recently been informed by AstraZeneca that AstraZeneca
intends to commence additional Phase I and Phase IIa clinical trials of NXY-
059. The purpose of these additional trials is 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.

   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 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

                                       7
<PAGE>

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, 2000 and 1999

   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, 2000 and 1999 were $2.6 million and $1.9 million,
respectively. In each of the three month periods, revenue consisted primarily
of research support from AstraZeneca. The increase in revenues for the three
months ended March 31, 2000 compared to the same period in 1999 was primarily
due to increases in revenue related to manufacturing of NXY-059, the Company's
compound for stroke, in anticipation of additional stroke human clinical trial
requirements.

   Research and development expenses have remained relatively consistent at
$4.2 million for the three months ended March 31, 2000, compared to $4.3
million for the same period in 1999. 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 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 remained relatively consistent at
$979,000 for the three months ended March 31, 2000 compared to $1.1 million
for the same period in 1999. 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, as a result of the addition of personnel and
facilities required to support the expected future growth in research and
development activities.

   Interest and other income, net for the three months ended March 31, 2000
was $13,000, compared to approximately $12,000 of interest and other expense,
net for the same period in 1999. The Company expects to continue to incur
interest costs through the remainder of 2000 at approximately the same rate as
in the three months ended March 31, 2000, and expects that its interest income
will increase as a result of investing the $20.0 million net proceeds from an
underwritten offering, which closed on March 10, 2000.

Liquidity and Capital Resources

   From inception through March 31, 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, $8.9 million obtained from a debt
financing and $3.0 million from NIH grant funding. As of March 31, 2000, the
Company had approximately $30.7 million in cash, cash equivalents and
investment securities, compared to $12.6 million at December 31, 1999. 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's operations used $1.4 million and $2.7 million of cash in the
three months ended March 31, 2000 and 1999, 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 $4.5 million and $1.7 million
of cash in the three months ended March 31, 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 three months ended March 31, 2000 and 1999.

                                       8
<PAGE>

   Financing activities provided $19.5 million of cash in the three months
ended March 31, 2000 and utilized $508,000 of cash in the three months ended
March 31, 1999. The increase in cash provided by financing activities for the
three months ended March 31, 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
following 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, 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 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 offerings, or other future funding
transactions, we will be required to significantly curtail our operations and
non-core research and development programs, including reductions in our
staffing levels and related expenses. Additional funding may not be available
to us on reasonable terms. 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.

             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.

                                       9
<PAGE>

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

   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. 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.

                                      10
<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. Astra has recently completed a merger
with Zeneca Group PLC to form AstraZeneca PLC. It is possible that this merger
could affect AstraZeneca's product development priorities and its relationship
with us. Our revenues to date have consisted primarily of research and
development support from AstraZeneca.

   AstraZeneca has the right to terminate its agreement with us, upon twelve
months notice, and can terminate research funding and 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. In any event, AstraZeneca's obligation to provide us with research
funding terminates as of June 30, 2000. AstraZeneca's research funding to us
represented 89% of our revenue for 1998 and 79% of our revenue for the year
ended December 31, 1999. 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.
Additionally, there can be no assurance that AstraZeneca will proceed with
additional trials of NYX-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. For example,
in March 1998, Lundbeck terminated its agreement with us for the development
and marketing of drugs to treat Parkinson's disease.

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 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.

                                      11
<PAGE>

   Additional funding may not be available to us on reasonable terms. 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 March 31, 2000 had an
accumulated deficit of $34.2  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.

We need to hire additional officers, including a chief executive officer; 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

   Effective as of December 31, 1999, our previous chief executive officer,
Brian D. Frenzel, resigned. In the interim we have appointed Steinar J.
Engelsen, our chairman of the board, as acting chief executive officer, and
Charles R. Engles, one of our directors, as acting chief operating officer. We
have commenced a search for a permanent chief executive officer. We do not
know how long it will take to hire such person. If we are unable to hire such
person within a reasonable period of time, it could delay our plans for future
financing, product development and other activities.

   We are highly dependent on key members of our management and scientific
staff. 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.

                                      12
<PAGE>

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

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

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

   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

                                      13
<PAGE>

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. We are in the process of licensing the facility with the
California Department of Health Services. To date, only a small portion of the
facility has been licensed and is in production. As this portion of the
facility has been in production only a relatively short period of time, we may
still encounter problems with it. Additionally, the remainder of the facility
may not receive the necessary regulatory approvals or be satisfactorily put
into production in a timely manner. In any event, we do not expect that the
Santa Clara facility will be capable of producing the quantity of our products
that may be needed for later stage commercial sales. Accordingly, we expect to
need to develop substantial 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.

                                      14
<PAGE>

Part II. OTHER INFORMATION

ITEM 2. Changes in Securities and Use of Proceeds

   Between January 1, 2000 and March 31, 2000, the Company sold the following
equity securities that were not registered under the Securities Act of 1933
(the "Securities Act").

<TABLE>
<CAPTION>
                                                          Aggregate Purchase
      Class of         Date of    Title of     Number of   Price and Form of
     Purchasers         Sales    Securities    Securities    Consideration
     ----------        ------- --------------- ---------- -------------------
<S>                    <C>     <C>             <C>        <C>
Institutional and
 individual investors  3/10/00 Common Stock(1) 1,904,169  $21.9 million--Cash
</TABLE>
--------
(1) On March 10, 2000, the Company completed an offering of 1,904,169 shares
    of its Common Stock. These shares were primarily offered and sold outside
    the United States and, accordingly, such offers and sales were not
    registered under the Securities Act. In connection with this offering, the
    Company filed a registration statement on Form S-1 (Securities and
    Exchange Commission File No. 333-96053) for purposes of registering any
    offers or sales of such shares in the United States including any shares
    initially offered outside the United States that are thereafter sold or
    resold in the United States by underwriters or, for a period of 90 days
    after the offering, dealers (as such terms are defined in the Securities
    Act).

 Use of Proceeds

   The Company's registration statement (the "1998 S-1") 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 AstraZeneca, for capital expenditures, and for general corporate
purposes, including working capital. From the effective date of the 1998 S-1
to March 31, 2000, the Company estimates that it has used the net proceeds of
the offering as follows:

     (i) Temporary investment in marketable securities, $2.0 million; and

     (ii) Working capital, $11.6 million.

ITEM 6. Exhibits and Reports on Form 8-K

 (a) Exhibits

   The following exhibits are filed herewith:

<TABLE>
<CAPTION>
 Exhibit
 Number  Exhibit Title
 ------- -------------
 <C>     <S>
 27.01   Financial Data Schedule
</TABLE>

 (b) Reports on Form 8-K

   The Company did not file a report on Form 8-K during the period ended March
31, 2000.

                                      15
<PAGE>

   Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          CENTAUR PHARMACEUTICALS, INC.
                                          (Registrant)

   May 11, 2000.                                /s/ Steinar J. Engelsen
                                          By: _________________________________
                                                    Steinar J. Engelsen
                                               Acting Chief Executive Officer
                                                andChairman of the Board of
                                                         Directors

                                                    /s/ Lucy O. Day
                                          By: _________________________________
                                                        Lucy O. Day
                                                  Chief Financial Officer,
                                               Treasurerand Secretary (Chief
                                                    Accounting Officer)

                                       16
<PAGE>

                         CENTAUR PHARMACEUTICALS, INC.

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 No.   Exhibit
 ---   -------
 <C>   <S>
 27.01 Financial Data Schedule, March 31, 2000
</TABLE>

                                       17