<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 June 30, 2000

                                      or

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

          For the transition period from _____________  to  _____________

                       Commission File Number: 000-24831

                               _________________

                         CENTAUR PHARMACEUTICALS, INC.

            (Exact name of registrant as specified in its charter)

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


                              484 Oakmead Parkway
                          Sunnyvale, California 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 17,516,018 as of July 31, 2000.
================================================================================
<PAGE>

                         CENTAUR PHARMACEUTICALS, INC.

                                     INDEX

                         PART I: FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                                        Page
<S>                                                                                                     <C>
ITEM 1  Financial Statements--Unaudited

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

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

      Condensed Statements of Cash Flows--six month periods ended June 30, 2000
        and 1999.......................................................................................   5

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

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

ITEM 3  Quantitative and Qualitative Disclosures of Market Risk........................................  15

                                                    PART II: OTHER INFORMATION

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

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

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

        Exhibit Index..................................................................................  18
</TABLE>

                                       2
<PAGE>

PART I:   FINANCIAL INFORMATION

ITEM 1    FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
                                                                  June 30,    December 31,
                                                                   2000         1999*
                                                                   -----        -----
                                                                (Unaudited)
                                    ASSETS
                                    ------
<S>                                                               <C>          <C>
Current assets:
     Cash and cash equivalents.................................... $ 24,190    $  5,197
     Short-term investments.......................................      496       7,379
     Accounts receivable..........................................      444        --
     Prepaid expenses and other current assets....................    1,074         977
                                                                   --------    --------
          Total current assets....................................   26,204      13,553
     Property and equipment, net..................................    8,045       9,287
     Other assets.................................................      408         555
                                                                   --------    --------
          Total assets............................................ $ 34,657    $ 23,395
                                                                   ========    ========


                            LIABILITIES AND STOCKHOLDERS' EQUITY
                            ------------------------------------
Current liabilities:
     Accounts payable............................................. $    525    $    888
     Accrued compensation.........................................      385         305
     Other accrued liabilities....................................    1,065       1,175
     Current portion long-term debt...............................    2,484       2,308
                                                                   --------    --------
        Total current liabilities.................................    4,459       4,676
Deferred revenue..................................................       --       1,499
Long-term debt....................................................    2,182       3,470
                                                                   --------    --------
        Total liabilities.........................................    6,641       9,645
Stockholders' equity:
     Common stock.................................................       18          16
     Additional paid-in capital...................................   66,367      46,527
     Deferred compensation........................................     (746)     (1,265)
     Accumulated other comprehensive income.......................        6          (7)
     Accumulated deficit..........................................  (37,629)    (31,521)
                                                                   --------    --------
        Total stockholders' equity................................   28,016      13,750
                                                                   --------    --------
        Total liabilities and stockholders' equity................ $ 34,657    $ 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             Six Months
                                                                       Ended June 30,          Ended June 30,
                                                                       --------------          --------------
                                                                       2000       1999         2000       1999
                                                                       ----       ----         ----       ----
<S>                                                                  <C>         <C>         <C>         <C>
Net revenues........................................................ $  2,076    $  1,943    $  4,715    $  3,879
Expenses:
     Research and development.......................................    4,309       3,674       8,494       7,973
     General and administrative.....................................    1,445       1,056       2,424       2,114
                                                                     --------    --------    --------    --------
Total operating expenses............................................    5,754       4,730      10,918      10,087
                                                                     --------    --------    --------    --------

Loss from operations................................................   (3,678)     (2,787)     (6,203)     (6,208)

Share of losses in affiliate........................................      (43)        (59)       (175)       (118)
Interest and other (expense) income, net............................      257         (39)        270         (51)
                                                                     --------    --------    --------    --------
Net loss............................................................ $ (3,464)   $ (2,885)   $ (6,108)   $ (6,377)
                                                                     ========    ========    ========    ========

Basic and diluted net loss per share................................ $  (0.20)   $  (0.19)   $  (0.36)   $  (0.41)
                                                                     ========    ========    ========    ========

Shares used in computing basic and diluted net loss per share.......   17,513      15,563      16,785      15,515
                                                                     ========    ========    ========    ========
</TABLE>

                            See accompanying notes

                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                          For the Six
                                                                                          Months Ended
                                                                                            June 30,
                                                                                            -------
                                                                                         2000        1999
                                                                                         ----        ----
                                                                                          (unaudited)
<S>                                                                                    <C>         <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
          Net loss.................................................................... $ (6,108)   $ (6,377)
     Adjustments to reconcile net loss to net cash used by operating activities:
          Depreciation and amortization...............................................    1,363       1,454
          Amortization of deferred compensation.......................................      334         467
          Share of losses in affiliate................................................      175         118
          Changes in operating assets and liabilities:
               Accounts revenue receivable............................................     (444)        (12)
               Prepaid expenses and other current assets..............................      (97)       (135)
               Other assets...........................................................      (28)       --
               Accounts payable.......................................................     (363)       (139)
               Accrued compensation...................................................       80          82
               Other accrued liabilities..............................................     (110)         34
               Deferred revenue.......................................................   (1,499)        118
                                                                                       --------    --------
                    Net cash used in operating activities.............................   (6,697)     (4,390)

CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
     Capital expenditures.............................................................     (121)       (301)
     Purchases of investments.........................................................     (478)     (2,100)
     Sales and maturities of investments..............................................    7,374       6,150
                                                                                       --------    --------
                    Net cash provided by investing activities.........................    6,775       3,749

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
     Proceeds from issuance of common stock...........................................   20,027         123
     Principal payments on capital lease obligations..................................     --           (89)
     Repayment of debt financing......................................................   (1,112)       (959)
                                                                                       --------    --------
                    Net cash provided by (used in) financing activities...............   18,915        (925)
                                                                                       --------    --------

Net increase (decrease) in cash and cash equivalents..................................   18,993      (1,566)
Cash and cash equivalents at beginning of period......................................    5,197       5,628
                                                                                       --------    --------
Cash and cash equivalents at end of period............................................ $ 24,190    $  4,062
                                                                                       ========    ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Interest paid.................................................................... $    395    $    548
                                                                                       ========    ========
</TABLE>

                            See accompanying notes

                                       5
<PAGE>

                         CENTAUR PHARMACEUTICALS, INC.

                NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

                                 June 30, 2000
                                  (Unaudited)

1. BASIS OF PRESENTATION

     The accompanying interim unaudited condensed financial statements of
Centaur Pharmaceuticals, Inc. (the "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial information
and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, the condensed interim financial statements include
all adjustments (consisting only of normal recurring adjustments) which the
Company considers necessary for a fair presentation. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the Securities and Exchange Commission's rules and
regulations. These condensed interim financial statements should be read in
conjunction with the Company's audited financial statements as of December 31,
1999 as included in the Company's annual report on Form 10-K. The results of
operations for the six month period ended June 30, 2000 are not necessarily
indicative of the results to be expected for any subsequent quarter or for the
entire fiscal year ending December 31, 2000.

2. USE OF ESTIMATES

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

3. INVESTMENT IN AFFILIATE

     The Company's transactions with Cutanix Corporation, its skin-care
affiliate, have not been material through June 30, 2000. The Company's share of
losses in Cutanix for the six months ended June 30, 2000 was $175,000.

4. COMPREHENSIVE LOSS

     During the three months ended June 30, 2000 and 1999, total comprehensive
loss amounted to $3.5 million and $2.9 million, respectively. For the six months
ended June 30, 2000 and 1999, total comprehensive loss amounted to $6.1 and $6.4
million, respectively.

5. RECENT ACCOUNTING PRONOUNCEMENTS

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

                                       6
<PAGE>

Item 2.

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

     The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the unaudited
condensed financial statements and notes thereto set forth in Item 1 of this
report along with the Financial Statements and Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in the Company's annual report on Form 10-K for the year ended December
31, 1999. Except for the historical information contained herein, the matters
discussed in this Form 10-Q are forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Act of 1933, as amended. Words such as "believes,"
"anticipates," "expects," "future," "intends," "would," "may" and similar
expressions are intended to identify forward-looking statements. However, these
words are not the exclusive means of identifying such statements. Forward-
looking statements involve risks and uncertainties that could cause actual
results to differ materially from those anticipated. Such risks and
uncertainties include, but are not limited to, the Company's early stage of
development; technological uncertainties, uncertainty of preclinical and
clinical trials, novel therapeutic approach, dependence upon collaborators,
future capital needs; uncertainty of additional funding and dependence on
licenses, patents and proprietary technology. These and other risks are
described in the section labeled "Factors That May Affect Future Results," and
in the Company's annual report on Form 10-K for the year ended December 31,
1999. The Company undertakes no obligation to revise any of these forward-
looking statements to reflect events or circumstances after the date hereof.

Overview

     The Company was incorporated in March 1992 and has devoted substantially
all of its resources since that time to the research and development of
proprietary, small molecule pharmaceutical compounds for the treatment of
diseases involving the interruption and subsequent restoration of blood supply
and inflammation. From inception through June 30, 2000, the Company has
recognized cumulative revenues from collaborative research and development
agreements and grants of $49.1 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 June
30, 2000 of $37.6 million. The Company expects to incur additional operating
losses over at least the next several years as the Company continues its
clinical trial programs and expands its research and preclinical development.

     In June 1995, the Company entered into a collaborative agreement with
AstraZeneca PLC ("AstraZeneca) to research, develop and market drugs to treat
stroke, Alzheimer's disease, traumatic brain injury and multi-infarct dementia.
Under the terms of the AstraZeneca agreement, AstraZeneca agreed to make
payments to Centaur for certain development milestones and to pay up to $6.0
million per year for five years primarily as reimbursement for the Company's
project related research, subject to certain limitations. The $6 million annual
research reimbursement expired in June 2000. Additionally, AstraZeneca bears the
costs of its development work under the AstraZeneca agreement. AstraZeneca
received exclusive worldwide marketing rights from Centaur for the diseases
listed above, subject to certain exceptions. The Company retains worldwide
manufacturing rights for the active pharmaceutical ingredients of the product
and an option to obtain certain co-promotion rights in the United States for
five years. Through June 30, 2000, the Company recognized $39.8 million of
revenue under the AstraZeneca agreement.

     In a May 2000 stroke conference, the Company announced the results of a
Phase IIa safety study of NXY-059, the stroke compound being developed by
AstraZeneca under a license from the Company. The study indicated that

                                       7
<PAGE>

NXY-059 was safe in stroke patients at a dose that exceeded the highest dose
tested in the rat focal stroke model. The Company has 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. Separately, the Company recently announced completion of
enrollment in its U.S. Phase IIa clinical trials in AIDS dementia complex and
Parkinson's disease. The objective of both these trials is to test the safety
and evaluate preliminary efficacy information of Centaur's drug candidate, CPI-
1189.

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

Results of Operations

Three and Six Months Ended June 30, 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 and
six months ended June 30, 2000 were $2.1 million and $4.7 million, respectively,
compared to revenues of $1.9 million and $3.9 million for the corresponding
periods in 1999. In each of the six month periods, revenue consisted primarily
of research support from AstraZeneca. The increase in revenues for the three and
six months ended June 30, 2000 compared to the same periods 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. AstraZeneca's obligation to provide research
support expired on June 30, 2000 and accordingly the Company would expect its
revenues to decline in at least the near term unless AstraZeneca and the Company
agree on a continuation of research support, or milestone revenue or revenue
from other sources is earned.

     Research and development expenses increased to $4.3 million and $8.5
million in the three and six months ended June 30, 2000 from $3.7 million and
$8.0 million for the same periods in 1999. The increase in expenses for the
three and six months ended June 30, 2000, compared to the same periods in 1999
was primarily due to increased costs for producing higher volumes of NXY-059 and
increased personnel related expenses. If the results of the Company's Phase IIa
clinical trials for AIDS dementia complex and/or Parkinson's disease are
favorable, then the Company expects 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.

                                       8
<PAGE>

      General and administrative expenses increased to $1.4 million and $2.4
million in the three and six months ended June 30, 2000 from $1.1 million and
$2.1 million for the same periods in 1999, primarily due to increased personnel
related expenses. Increased personnel expenses include a one-time payment of
$320,000 related to the Company's plan to reassign headcount towards programs
closest to commercialization. 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 and six months ended June 30,
2000 was $257,000 and $270,000, respectively, compared to net interest and other
expenses of approximately $39,000 and $51,000 for the same periods in 1999. The
Company expects to continue to incur interest costs through the remainder of
2000 at approximately the same rate as the six months ended June 30, 2000, and
expects that its interest income will increase as a result of investing the net
proceeds from its underwritten offering, which closed on March 10, 2000.

Liquidity and Capital Resources

      From inception through June 30, 2000, the Company has financed its
operations primarily through $43.8 million generated from corporate
collaborations, $61.7 million received from private placements and underwritten
offerings of equity securities, including $20.0 million from an underwritten
offering of 1,904,169 shares of the Company's common stock in March 2000, $8.9
million obtained from a debt financing and $3.0 million from NIH grant funding.
As of June 30, 2000, the Company had approximately $24.7 million in cash, cash
equivalents and investment securities, compared to $12.6 million at December 31,
1999.

      The Company's operations used $6.7 million and $4.4 million of cash in the
six months ended June 30, 2000 and 1999, respectively. These uses of cash
primarily reflect the Company's net loss and changes in the Company's operating
assets and liabilities over such periods.

      The Company's investing activities provided $6.8 million and $3.7 million
of cash in the six months ended June 30, 2000 and 1999, respectively. This
primarily reflected sales and maturities of securities in which the Company has
invested its cash prior to use, offset in part by purchases of securities in the
six months ended June 30, 2000 and 1999.

      Financing activities provided $18.9 million of cash in the six months
ended June 30, 2000 and utilized $925,000 of cash in the six months ended June
30, 1999. The increase in cash provided by financing activities for the six
months ended June 30, 2000, compared to the same period in 1999, is primarily
due to the completion of an underwritten offering of 1,904,169 shares of its
Common Stock at a price of $11.50 per share on March 10, 2000. The cash used in
financing activities is primarily attributable to repayment of debt.

      We believe that our current resources will be sufficient to meet our
capital requirements for at least the next twelve months. We anticipate that
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, expanding (or reducing) our
      manufacturing capabilities;

                                       9
<PAGE>

 .     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, if at all. Any additional financing may result in dilution to
existing stockholders. Any transactions to raise additional funds may require
that we enter into arrangements that may require us to relinquish material
rights to our potential products on terms that we might otherwise find
unacceptable.

             FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS

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

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

      As a result, we may not be able to produce any commercially viable
products, and therefore may be unable to generate revenues or achieve
profitability.

Many of our disease targets do not have widely accepted models; the results of
our preclinical trials may not be indicative of the results from our clinical
trials; our clinical trials may not adequately demonstrate the safety and
efficacy of our products; we do not have any evidence of the efficacy of our
potential products in human clinical trials

      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

                                       10
<PAGE>

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.

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

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

      If AstraZeneca or any future collaborative partner breaches or terminates
their agreements with us or otherwise fails to conduct their collaborative
activities in a timely manner, the preclinical or clinical development or

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<PAGE>

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.

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

      Our revenues to date have consisted primarily of research and development
support from AstraZeneca. AstraZeneca's obligation to provide us with research
funding terminated as of June 30, 2000. AstraZeneca's research funding to us
represented 89% of our revenue for 1998 and 79% of our revenue for the year
ended December 31, 1999 and 66% of our revenue for the six months ended June 30,
2000. We are currently in discussions with AstraZeneca regarding an extension of
this funding, but there can be no assurance that the funding will be extended in
whole or in part. If the funding is not extended, or is extended at a lower
rate, the Company may take action to reduce expenses, which actions may include
reducing staff and or certain projects.

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

      We have generated no product revenue, and none is expected for at least
several years. We believe that our current resources will be sufficient to meet
our capital requirements for at least the next twelve months. We anticipate that
in the future, we will need to raise substantial additional funds for research,
development, expansion of manufacturing and administrative facilities and other
expenses, through equity or debt financings, research and development grants,
collaborative relationships or otherwise, prior to the commercialization of any
of our products. Our capital requirements depend on numerous factors, including:

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

 .     the status of our existing collaborative relationship;

 .     the establishment of additional collaborative relationships, if any;

 .     the cost and pace of establishing and expanding (or reducing) our
      manufacturing capabilities;

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

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

 .     competing technological and market developments.

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

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

      We have incurred losses since our inception and as of June 30, 2000 had an
accumulated deficit of $37.6 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

                                       12
<PAGE>

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.

      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.

                                       13
<PAGE>

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

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

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

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

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

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

      The manufacturing of sufficient quantities of new drugs is a time
consuming, complex and difficult process. If we are unable to fully develop our
own manufacturing capabilities or obtain and maintain third-party manufacturing
arrangements on acceptable terms, our competitive position and our ability to
achieve regulatory approval and/or profitability would be seriously harmed. In
1998, we completed construction of a 30,000 square foot manufacturing facility
in Santa Clara, California. The facility is licensed with the California
Department of Health Services. 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

                                       14
<PAGE>

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.

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<PAGE>

Part II.  OTHER INFORMATION

ITEM 2.   Changes in Securities and Use of Proceeds

     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. From the effective date of the 1998 S-1 to June 30,
2000, the Company has used the full net proceeds of the offering as working
capital.

ITEM 6.   Exhibits and Reports on Form 8-K

     (a) Exhibits

          The following exhibits are filed herewith:

         Exhibit
         Number          Exhibit Title
         ------          -------------
          10.01          Lease for additional space at 1210 & 1260 Memorex
                         Drive, dated, May 1, 2000.
          10.02          Lease for additional space at 1310 Memorex Drive,
                         dated, July 31, 2000.
          10.03          Lease extension for space at 1220 Memorex Drive, dated
                         July 31, 2000.
          10.04          Employment and consulting  agreement  effective January
                         1, 2000 between the Registrant and
                         Brian D. Frenzel.
          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
June 30, 2000.

                                       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)

August 14, 2000.                       By: /s/ Steinar J. Engelsen
                                           -----------------------------------
                                                    Steinar J. Engelsen
                                           Acting Chief Executive Officer and
                                           Chairman of the Board of Directors

                                         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
----                             --------------
10.01    Lease for additional space at 1210 & 1260 Memorex Drive, dated, May 1,
         2000.
10.02    Lease for additional space at 1310 Memorex Drive, dated, July 31, 2000.
10.03    Lease extension for space at 1220 Memorex Drive, dated July 31, 2000.
10.04    Employment and consulting agreement effective January 1, 2000 between
         the Registrant and Brian D. Frenzel.
27.01    Financial Data Schedule, June 30, 2000

                                       18