<PAGE>

================================================================================

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

                                    FORM 10-Q

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

      For the quarterly period ended September 30, 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
     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 15,589,958 as of November 12, 1999.

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<PAGE>

                          CENTAUR PHARMACEUTICALS, INC.

                                      INDEX

                                                                            Page
                                                                            ----
PART I:  FINANCIAL INFORMATION

ITEM 1   Financial Statements--Unaudited

     Condensed Balance Sheets--September 30, 1999 and December 31, 1998 ..   3

     Condensed Statements of Operations--three and nine month
      periods ended September 30, 1999 and 1998...........................   4

     Condensed Statements of Cash Flows--nine month periods
      ended September 30, 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..........  15

                           PART II: OTHER INFORMATION

ITEM 2   Changes in Securities and Use of Proceeds........................  16

ITEM 4   Submission of Matters to a Vote of Security Holders..............  16

ITEM 6   Exhibits and Reports on Form 8-K.................................  16

     Signatures...........................................................  17

     Exhibit Index........................................................  18


                                                                               2
<PAGE>

PART I:   FINANCIAL INFORMATION

ITEM 1    FINANCIAL STATEMENTS

                          CENTAUR PHARMACEUTICALS, INC.

                            CONDENSED BALANCE SHEETS
                                 (in thousands)

                                                     September 30,  December 31,
                                                          1999           1998 *
                                                        --------       --------
                                                       (Unaudited)

                          ASSETS

Current assets:
    Cash and cash equivalents ......................    $  4,660       $  5,628
    Short-term investments .........................      10,679         12,906
    Contract revenue receivable ....................          25              7
    Prepaid expenses ...............................         540            128
    Other current assets ...........................         346            444
                                                        --------       --------
       Total current assets ........................      16,250         19,113
    Long-term investments ..........................          --          5,579
    Property and equipment, net ....................       9,986         11,665
    Other assets ...................................         683            876
                                                        --------       --------
       Total assets ................................    $ 26,919       $ 37,233
                                                        ========       ========

              LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:
       Accounts payable ............................    $    569       $    568
       Accrued compensation ........................         297            203
       Other accrued liabilities ...................       1,155          1,126
       Short-term obligations under capital lease ..          --             89
       Current portion of long term debt ...........       2,224          1,967
                                                        --------       --------
                Total current liabilities ..........       4,245          3,953
Deferred revenue ...................................       1,625          1,500
Long-term debt .....................................       4,079          5,802
                                                        --------       --------
         Total liabilities .........................       9,949         11,255
Stockholders' equity:
       Common stock ................................          16             15
       Additional paid in capital ..................      46,511         47,221
       Deferred compensation .......................      (1,443)        (2,970)
       Accumulated other comprehensive income (loss)         (13)           (52)
       Accumulated deficit .........................     (28,101)       (18,236)
                                                        --------       --------
         Total stockholders' equity ................      16,970         25,978
                                                        --------       --------
         Total liabilities and stockholders' equity     $ 26,919       $ 37,233
                                                        ========       ========

      * 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                    Nine Months
                                                      Ended September 30,             Ended September 30,
                                                    ------------------------        ------------------------
                                                      1999            1998            1999            1998
                                                    --------        --------        --------        --------
                                                           (unaudited)                     (unaudited)

<S>                                                 <C>             <C>             <C>             <C>
Total revenues ..............................       $  1,729        $  1,570        $  5,609        $  5,194

Operating expenses:
    Research and development ................          4,128           3,065          12,101           9,965
    General and administrative ..............            982             967           3,097           2,493
                                                    --------        --------        --------        --------
Total operating expenses ....................          5,110           4,032          15,198          12,458
                                                    --------        --------        --------        --------

Loss from operations ........................         (3,381)         (2,462)         (9,589)         (7,264)

Share of losses in affiliate ................            (73)            (89)           (191)           (220)

Interest and other (expense) income, net ....            (34)           (112)            (85)             47
                                                    --------        --------        --------        --------

Net loss                                            $ (3,488)       $ (2,663)       $ (9,865)       $ (7,437)
                                                    ========        ========        ========        ========

Basic and diluted net loss per share ........       $  (0.22)       $  (0.90)       $  (0.64)       $  (2.54)
                                                    ========        ========        ========        ========

Shares  used in  computing  basic and diluted
net loss per share ..........................         15,574           2,973          15,535           2,928
                                                    ========        ========        ========        ========
</TABLE>

                             See accompanying notes


                                                                               4
<PAGE>

                          CENTAUR PHARMACEUTICALS, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                    For the Nine
                                                                    Months Ended
                                                                    September 30,
                                                               ------------------------
                                                                 1999            1998
                                                               --------        --------
                                                                     (unaudited)
<S>                                                            <C>             <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
    Net loss ...........................................       $ (9,865)       $ (7,437)
    Adjustments to reconcile net loss to net cash
     used by operating activities:
       Depreciation and amortization ...................          2,209             899
       Amortization of deferred compensation ...........            652             967
       Share of losses in affiliate ....................            191             220
       Changes in operating assets and liabilities:
          Contract revenue receivable ..................            (18)           (196)
          Prepaid expenses .............................           (412)             58
          Other current assets .........................             98            (940)
          Other assets .................................              1             (83)
          Accounts payable .............................              1          (1,128)
          Accrued compensation .........................             94              58
          Other accrued liabilities ....................             29              90
          Deferred revenue .............................            125           1,575
                                                               --------        --------
              Net cash used in operating activities ....         (6,895)         (5,917)

CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
    Capital expenditures ...............................           (529)         (3,374)
    Purchases of investments ...........................         (2,055)         (8,355)
    Sales and maturities of investments ................          9,900          12,119
    Cash contribution to affiliate .....................             --            (145)
                                                               --------        --------
              Net cash provided by investing activities           7,316             245

CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:
    Proceeds from issuance of common stock .............            166              12
    Principal payments on capital lease obligations ....            (89)            (77)
    Net proceeds from debt financing ...................             --           9,159
    Repayment of debt financing ........................         (1,466)           (937)
                                                               --------        --------
              Net cash (used in) provided by financing
              activities ...............................         (1,389)          8,157
                                                               --------        --------
Net (decrease) increase in cash and cash equivalents ...           (968)          2,485
Cash and cash equivalents at beginning of period .......          5,628           1,469
                                                               --------        --------
Cash and cash equivalents at end of period .............       $  4,660        $  3,954
                                                               ========        ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Interest paid ......................................       $    797        $    550
                                                               ========        ========
    Income tax refund ..................................       $     --        $    498
                                                               ========        ========
</TABLE>

                             See accompanying notes


                                                                               5
<PAGE>

                          CENTAUR PHARMACEUTICALS, INC.

                 NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

                               September 30, 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 and nine month periods ended September 30, 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 September 30, 1999. The Company's share of losses
in Cutanix for the nine months ended September 30, 1999 was $191,000.

4. COMPREHENSIVE LOSS

      During the three months ended September 30, 1999 and 1998, total
comprehensive loss amounted to $3.5 million and $2.7 million, respectively. For
the nine months ended September 30, 1999 and 1998, total comprehensive loss
amounted to $9.9 million and $7.4 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 ischemia/reperfusion, inflammation and aging. From inception
through September 30, 1999, the Company has recognized cumulative revenues from
collaborative research and development agreements and grants of $42.6 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 September 30, 1999 of $28.1
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 agreement. The $6
million annual research reimbursement will expire in June 2000, although it may
be extended by AstraZeneca at its discretion. AstraZeneca receives exclusive
worldwide marketing rights to any pharmaceuticals resulting from the
collaboration. The Company retains worldwide manufacturing rights for active
pharmaceutical ingredients and an option to obtain certain co-promotion rights
in the United States for five years. Through September 30, 1999, the Company
recognized $34.1 million of revenue under the AstraZeneca 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 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 and Nine Months Ended September 30, 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 and
nine months ended September 30, 1999 were $1.7 million and $5.6 million,
respectively, compared to revenues of $1.6 million and $5.2 million for the
corresponding periods in 1998. In each of the nine month periods, revenue
consisted primarily of research support from AstraZeneca and research grants
from the NIH. There were no signing or milestone payments recognized during
these periods. The increase in revenues for the three and nine months ended
September 30, 1999 compared to the same period in 1998 was primarily due to
increased NIH grant revenue. This increase was partially offset by decreased
manufacturing revenue earned in 1999 from AstraZeneca as manufacturing of drug
compound for the stroke Phase IIa clinical studies was completed in 1998.

      Research and development expenses increased to $4.1 million and $12.1
million in the three and nine months ended September 30, 1999 from $3.1 million
and $10.0 million for the same periods in 1998. The increase in expenses for the
three and nine months ended September 30, 1999, compared to the same periods in
1998 was primarily due to increased external clinical study costs in 1999
resulting from the initiation of Phase IIa clinical studies of the Company's
compound for AIDS dementia in the fourth quarter of 1998. Additionally, the
November 1998 completion of the Santa Clara, California manufacturing facility
resulted in increased depreciation, amortization and facility related expenses
in 1999. 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 $982,000 and $3.1 million
in the three and nine months ended September 30, 1999 from $967,000 and $2.5
million for the same periods in 1998, primarily due to increased expenses of
operating as a public reporting company beginning in October 1998 and increased
patent activity. The additional costs of public reporting included public
relations, legal and financial printing costs. 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 and nine months ended
September 30, 1999 was $34,000 and $85,000, respectively, compared to
approximately $112,000 of net interest and other expense and $47,000 of net
interest and other income for the same periods in 1998. This change was due to
increased interest costs as a result of the Company's $8.9 million debt
financing in April 1998, which was partially offset by increased interest earned
on the larger cash balance resulting from the Company's stock offering in
October 1998. The Company expects to


                                                                               8
<PAGE>

continue to incur interest costs through the remainder of 1999 at approximately
the same rate as in the nine months ended September 30, 1999, and expects that
its interest income will decrease as a result of decreased cash balances.

Liquidity and Capital Resources

      From inception through September 30, 1999, the Company has financed its
operations primarily through $41.7 million received from private placements and
underwritten offerings of equity securities, $40.1 million generated from
corporate collaborations, $8.9 million obtained from a debt financing and $2.7
million from NIH grant funding. As of September 30, 1999, the Company had
approximately $15.3 million in cash, cash equivalents and investment securities,
compared to $24.1 million at December 31, 1998.

      The Company's operations used $6.9 million and $5.9 million of cash in the
nine months ended September 30, 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 and deferred revenue over such
periods.

      The Company's investing activities provided $7.3 million and $245,000 of
cash in the nine months ended September 30, 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
nine months ended September 30, 1999 and both purchases of securities and of
property and equipment in the nine months ended September 30, 1998. Additions to
property and equipment were $529,000 for the nine months ended September 30,
1999 compared with $3.4 million for the same period in 1998. The decreased
capital 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 $1.4 million of cash in the nine months ended
September 30, 1999 and provided $8.2 million of cash in the nine months ended
September 30, 1998. The cash used in financing activities is primarily
attributable to repayment of debt and payments of capital lease obligations. The
increased use of cash in debt repayments for the nine months ended September 30,
1999, compared to the same period in 1998, is due primarily to 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. The Company
intends to seek additional funding through a combination of private and public
equity financing, and revenues from new and existing collaborations. The Company
cannot be certain additional funds will be available on satisfactory terms when
needed. If the Company is unable to raise additional necessary capital, the
Company has plans to curtail their operations significantly. 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 additional funds are not available, the
Company will 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

      Centaur 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. Centaur has established procedures for evaluating and
managing the internal risks and costs associated with this problem and has
substantially completed any upgrade or replacement of software that is not Year
2000 compliant.

      Centaur has assessed 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, we have contacted our
collaborative partner and they have confirmed that they have an active Year 2000
compliance program. We have contacted the contract research organizations, or
CROs, that conduct our clinical studies to assess their state of readiness with
Year 2000 compliance. Our CROs have implemented Year 2000 compliance programs
and anticipate being compliant by year-end. Should our CROs not be ready for the
Year 2000, there could be delays in clinical trials and issues with the validity
of trial results. This could seriously harm our business and results of
operations. Centaur has completed contingency plans to identify alternative
vendors should significant third parties fail to adequately address Year 2000
issues. These plans may not 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.

      Centaur has incurred approximately $80,000 through September 30, 1999 on
implementing a Year 2000 compliance plan. A significant portion of total Year
2000 project expenses is represented by existing staff that has been redeployed
onto this project. Centaur does not believe that the redeployment of existing
staff has harmed its business or results of operations. In addition, incremental
expenses related to the Year 2000 project is not expected to significantly
impact its operating results in any one future period.

      A substantial portion of Centaur's Year 2000 compliance issues are
software or information technology ("IT") issues, which have been resolved by
either by upgrading or replacing non-Year 2000 compliant software. Centaur has
evaluated the non-IT issues, which are not significant. Centaur believes Year
2000 noncompliance by our critical third party relationships, such as
collaborative partners, CROs, utilities, and others may be the most reasonably
likely worst case scenario. Centaur has completed its assessment of the nature
and level of this risk, and has developed a comprehensive contingency plan to
address situations that may result if outside suppliers and service providers
are unable to achieve Year 2000 readiness.

      Although Centaur 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 party systems, it still
may experience serious unanticipated negative consequences and/or significant
costs caused by undetected errors or defects in such systems or by its failure
to adequately prepare for the results of these errors or defects, including
costs of any related litigation. These consequences could seriously harm
Centaur's business and results of operations.


                                                                              10
<PAGE>

              FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS

Centaur Is In The Development Stage And Is Subject To Technological
Uncertainties.

      We were incorporated in March 1992 and are in an early stage of
development. All of our potential products are in early stages of research,
development or testing, 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, our 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:

      o     Our product candidates will not receive FDA approval or equivalent
            approvals outside the United States;

      o     any or all of our product candidates will be found to be unsafe or
            ineffective;

      o     our products will be difficult to manufacture on a large scale or
            uneconomical to market;

      o     our products will not gain market acceptance;

      o     proprietary rights of third parties will preclude us from marketing
            such products; and

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

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

Our Target Diseases Are Complex And The Results Of Our Clinical Trials Are
Uncertain.

      Most of the diseases and disorders that we are targeting are highly
complex. Their causes, and the extent of oxidative stress involvement in such
diseases and disorders, are not fully known, and there are no widely accepted
"in vitro" or "in vivo" 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. 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.

      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


                                                                              11
<PAGE>

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 us.

Our Products Are Based On A Novel Therapeutic Approach.

      Centaur's product development efforts center around its family of NRTs
that we believe protect against the damaging effects of oxidation and
inflammation caused by oxidative stress. 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 and disorders being targeted by us do not
have widely accepted "in vitro" or "in vivo" models. Accordingly, our approach,
technologies or product candidates may not prove to be successful.

Centaur Relies On Third Parties To Develop, Market, Distribute And Sell Its
Potential Products And Those Third Parties May Not Perform.

      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.

      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. The AstraZeneca merger has recently been
completed and 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. We may
not be able to negotiate additional collaborative arrangements in the future on
acceptable terms, if at all, and any such 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, if at all, 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 certain markets or find that
the development, manufacture or sale of our products in such 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. These
strategic considerations may include the relative advantages of alternative
products being marketed or developed by others, including relevant patent and
proprietary positions. Our collaborative partners may develop, either alone or
with others, products that compete with the development and marketing of our
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 our technology, which would
seriously harm us.

      AstraZeneca has the right to terminate its agreement with us, upon twelve
months notice, and can terminate research funding and Centaur's 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. AstraZeneca's obligation to provide Centaur with research funding
terminates as of June 30, 2000.

      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


                                                                              12
<PAGE>

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.

      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 us 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 us.

Centaur Will Need Additional Financing And Cannot Be Certain Of Obtaining It.

      Centaur has generated no product revenue, and none is expected for at
least several years. We anticipate that 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 funding requirements depend
on numerous factors, including

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

      o     the establishment of additional collaborative relationships, if any;

      o     the status of our existing collaborative relationship;

      o     the cost and pace of manufacturing scale-up;

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

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

      o     competing technological and market developments.

      Additional funding may not be available to us on reasonable terms. Any
additional financing may result in dilution to existing stockholders. If
adequate additional funds are not available, we will 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 it might otherwise find
unacceptable.

Centaur Has A History Of Operating Losses And May Not Ever Be Profitable.

      Centaur has incurred losses since its inception and as of September 30,
1999, had an accumulated deficit of $28.1 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, our now terminated agreement with Lundbeck and U.S. government
research grants. Revenues from product sales and collaborative agreement
royalties are not expected for at least several years, if at all.

Centaur's Products May Not Receive FDA Approval; Centaur Is Subject To
Comprehensive Government Regulation

      Centaur's research, development, manufacturing, preclinical and clinical
testing, labeling, distribution, advertising, marketing, promotion and sales
activities, as well as the operations of its current and any future
collaborators, are subject to extensive regulation by numerous government
authorities in the United States and other countries. Our potential products
require governmental approvals for commercialization, which have not yet been


                                                                              13
<PAGE>

obtained. Regulatory approvals may not be obtained within a reasonable period of
time, if at all, and any approved labeling may have significant limitations
pertaining to the conditions of use. We do not expect that applications for FDA
approval for the marketing and sale of any of our products will be submitted to
the FDA for at least several years. The approval process, which includes
preclinical and clinical testing to establish safety and efficacy of the
product, can take many years and requires the expenditure of substantial funds
and other resources. Centaur has had only limited experience in conducting
preclinical testing and human clinical trials and obtaining FDA and other
regulatory approvals for investigations, and no experience in obtaining FDA and
other regulatory approvals for marketing. Data obtained from preclinical and
clinical activities are susceptible to varying interpretations, which could
delay, limit or prevent regulatory approval. In addition, delays or rejection
may be encountered based upon changes in regulatory policies for drug approval
during the period of product development and regulatory review. Delays in
obtaining such approvals could adversely affect the marketing of products
developed by us and our ability to generate commercial product revenues.

      Additionally, the Phase I and IIa clinical studies for our stroke drug
candidate were conducted by AstraZeneca in Europe. These studies are not
required to be conducted under an FDA Investigational New Drug application and
accordingly the FDA may not accept the studies to support regulatory filings in
the United States.

      Even if regulatory approval is obtained, Centaur, any marketed product,
and its manufacturing facilities would be subject to continual review and
periodic inspections, and later discovery of previously unknown problems with a
product, Centaur or its facilities may result in restrictions, including
withdrawal of the product from the market. Failure to comply with the applicable
regulatory requirements can, among other things, result in fines, suspensions
and/or withdrawals of regulatory approvals, product recalls, prohibitions
against manufacture, distribution, sales and/or marketing, operating
restrictions and criminal prosecution of a company and/or its officers and
employees. We are also subject to numerous environmental, health and workplace
safety laws and regulations, including those governing laboratory procedures and
the handling of hazardous materials. Any violations of, and cost of compliance
with, these laws and regulations could seriously harm us.

Centaur Is Dependent On Its Patents And Other Intellectual Property; If
Centaur's Intellectual Property Protection Proves Inadequate, Or If Centaur's
Compounds Are Found To Infringe The Intellectual Property Of Others, Centaur
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, 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. In addition, 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 certain 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.

      Our success will also depend, in part, on our not infringing patents
issued to others and not breaching the technology licenses upon which our
products are based. 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


                                                                              14
<PAGE>

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.

      Our competitors 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 ours. There is a substantial backlog of
pharmaceutical and biomedical patent applications at the PTO. Accordingly, we
cannot predict the time at which patent applications may issue as patents to us
or to our competitors. 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, we cannot be
certain that we have been or will be the first to discover the subject matter
covered by our patent applications or patents or that we were the first to file
patent applications for such inventions. We 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 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 certain 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
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 could lose rights to develop
or market certain products and/or enforce certain patents.

      We also seek to protect our proprietary technology by confidentiality
agreements and, if applicable, invention assignment agreements with its
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. In
addition, our collaborators, advisors, employees and consultants may assert
rights to intellectual property arising out of their research.

      We have received grants from the U.S. National Institutes of Health to
fund various of our projects. These grants give the U.S. government certain
rights to license for its own use inventions resulting from funded work, and
rights in certain very limited circumstances to grant others the right to use
such inventions. Our proprietary position may be seriously harmed should the
government exercise these rights.

Item 3.

             QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK.

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


                                                                              15
<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 has used, and expects to
continue 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 Registration Statement to September 30, 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, $8.1 million; and

      (ii) Working capital, $5.5 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:

        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
September 30, 1999.


                                                                              16
<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)


                                        By: /s/ BRIAN D. FRENZEL
November 12, 1999.                          -------------------------------
                                            Brian D. Frenzel
                                            President and CEO


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


                                                                              17
<PAGE>

                          CENTAUR PHARMACEUTICALS, INC.

                                  EXHIBIT INDEX


No.                        Exhibit
---                        -------
27.01        Financial Data Schedule, September 30, 1999


                                                                              18