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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
                                   FORM 10-K
 
            /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                      SECURITIES AND EXCHANGE ACT OF 1934
 
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
 
          / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
 
          FOR THE TRANSITION PERIOD FROM              TO
                         COMMISSION FILE NUMBER 0-21643
 
                            ------------------------
 
                             CV THERAPEUTICS, INC.
 
             (Exact name of Registrant as specified in its charter)
 
<TABLE>
<S>                            <C>
          DELAWARE                         43-1570294
(State or other jurisdiction   (IRS Employer Identification No.)
             of
      incorporation or
        organization)
</TABLE>
 
                 3172 PORTER DRIVE, PALO ALTO, CALIFORNIA 94304
          (Address of principal executive offices, including zip code)
 
                                 (415) 812-0585
              (Registrant's telephone number, including area code)
 
        Securities registered pursuant to Section 12(b) of the Act: NONE
 
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $.001
                                   PAR VALUE
 
    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/   No
 
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to be
the best Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
 
    The approximate aggregate market value of the Common Stock held by
nonaffiliates of the Registrant, based upon the last sale price of the Common
Stock reported on the Nasdaq Stock Market was $38,466,767 as of February 28,
1997.
 
     The number of shares of Common Stock outstanding as of March 10, 1997 was
                                   6,858,635.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
    Certain exhibits filed with the Registrant's Registration Statement on Form
S-1 (Registration No. 333-12675), as amended, and certain exhibits filed with
the Registrant's Registration Statement on Form S-8 (Registration No. 333-19389)
are incorporated herein by reference into Part IV of this report.
 
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                                     PART I
 
ITEM 1. BUSINESS
 
OVERVIEW
 
    CV Therapeutics, Inc. ("CVT" or the "Company") is a biopharmaceutical
company focused exclusively on the application of molecular cardiology to the
discovery, development and commercialization of novel, small molecule drugs for
the treatment of chronic cardiovascular diseases. Molecular cardiology was
developed, in part, by CVT scientists and their academic collaborators and is
based upon the application of molecular biology and genetics to cardiovascular
diseases. This discipline has yielded new insights into the mechanisms
underlying chronic cardiovascular diseases and has enhanced the search for
innovative cardiovascular drugs by providing an increasing number of new
molecular targets for drug discovery. To date, CVT has discovered five compounds
and completed the strategic in-license of a sixth compound for treatment of
chronic cardiovascular diseases.
 
    The Company has two advanced drug candidates, CVT-124 and ranolazine, both
of which are in clinical trials. CVT-124 is an adenosine A(1) receptor
antagonist discovered by CVT. Adenosine A(1) receptor antagonists block certain
actions of adenosine, a hormone that modulates different functions of the
cardiovascular system. CVT-124 has potential applications in the treatment of
edema (fluid accumulation) associated with congestive heart failure ("CHF") and
in the prevention and treatment of acute renal failure. A Phase I/II study
completed by the Company in the United States indicated that CVT-124 is
generally well tolerated and produces diuretic activity in healthy volunteers.
Approximately one-quarter of the 875,000 patients in the United States
hospitalized with a primary diagnosis of CHF exhibit resistance to current
intravenous diuretic treatments. The Company believes that these patients would
represent the initial target market for CVT-124 in this indication.
 
    In March 1997, CVT entered into two research collaboration and license
agreements, one with Biogen, Inc. ("Biogen") and one with Biogen's wholly-owned
subsidiary, Biotech Manufacturing Ltd. ("Biotech Manufacturing"), pursuant to
which CVT granted the Biogen entities exclusive worldwide rights to develop and
commercialize CVT-124 (the "Biogen Agreements").
 
    The Company's second compound in clinical trials, ranolazine, is a novel
compound for the treatment of angina. Ranolazine was licensed from Syntex
(U.S.A.), Inc. ("Syntex"), an indirect subsidiary of Roche Holding Limited
("Roche") in March 1996. Its novel metabolic mechanism of action was discovered,
in part, by cardiovascular researchers now at or associated with CVT. In Phase I
and Phase II clinical trials conducted by Syntex, an immediate release
formulation of ranolazine ("ranolazine IR") was administered to over 1,200
patients. These clinical trials have indicated that ranolazine IR improved
exercise tolerance in angina patients without adversely affecting heart rate or
decreasing blood pressure, a clinical profile absent from currently available
drugs. Based on these data, as well as the Syntex pilot Phase II data from a
sustained release formulation of ranolazine ("ranolazine SR") for intermittent
claudication (pain in the legs due to insufficient blood flow), the Company
intends to commence further clinical trials of ranolazine SR. The Company
believes ranolazine could particularly benefit angina patients who also suffer
from CHF or remain symptomatic despite maximal doses of currently available
anti-anginal drugs. In the United States, approximately 6.7 million patients are
currently diagnosed with angina. Based on published studies, approximately
one-third, or 2.2 million, are either diagnosed with both angina and CHF or are
resistant to currently available treatments. The Company believes these patients
would represent the initial target market for ranolazine.
 
    The Company has discovered other compounds which are in preclinical studies.
CVT-313 is a selective inhibitor of the cell cycle enzyme, cyclin-dependent
kinase 2 ("CDK2"). The Company believes that CVT-313 may be useful in a variety
of cellular proliferative disorders, including the prevention of restenosis, as
an adjunct to coronary artery bypass surgery and as a treatment for
cardiomyopathy (heart muscle damage). CVT-634, an inhibitor of another cell
cycle regulating enzyme, is also being evaluated in
 
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animal models of chronic cardiovascular disease. Finally, the Company believes
that a series of compounds which are highly selective adenosine A(1) receptor
agonists may have potential activity in treating certain common cardiac
arrhythmias. The Company believes that compared to current therapies, these
compounds may offer an improved clinical profile for immediate treatment of
these arrhythmias without unwanted blood pressure lowering effects.
 
    In addition, the Company has discovered a novel inflammatory factor found in
human cardiovascular diseases, which it partnered to Bayer AG for continued
development.
 
RISK FACTORS
 
    In this section, the Company summarizes certain risks that should be
considered by stockholders and prospective investors in the Company. These risks
are discussed in greater detail below, and are discussed in context in other
sections of this report.
 
UNCERTAINTIES RELATED TO EARLY STAGE OF DEVELOPMENT
 
    The Company is a development stage company and must be evaluated in light of
the uncertainties and complications present in an early stage biopharmaceutical
company. In addition, all of the Company's products are at an early stage of
development. Since the Company's inception in 1990, substantially all of the
Company's resources have been dedicated to research and development, and the
Company has not generated any product revenue. Because all of the Company's
potential products are in research, preclinical or clinical development, product
revenues will not be realized for at least several years, if at all. Drug
discovery methods based upon molecular cardiology are relatively new, and there
can be no assurance that the Company will be able to employ these methods of
drug discovery successfully or that these methods will lead to the development
of commercially viable pharmaceutical products. Certain of the Company's
compounds within the Company's cell cycle, chronic inflammation and adenosine
A(1) receptor programs are in the early stages of research and development, and
the Company does not expect to commence clinical trials for such new compounds
for several years. There can be no assurance that any of the Company's product
development efforts will be successfully completed, that any of the Company's
products will be proven to be safe and effective, that regulatory approvals will
be obtained at all or be as broad as sought, that the Company's products will be
capable of being produced in commercial quantities or that any products, if
introduced, will achieve market acceptance.
 
UNCERTAINTIES RELATED TO CLINICAL TRIALS
 
    The Company's potential products are subject to the risks of failure
inherent in the development of pharmaceutical products. The Company currently
has only two products in clinical development, CVT-124 and ranolazine. The
Company's product candidates will require additional development, preclinical
studies, clinical trials and regulatory approval prior to commercialization. The
results from preclinical studies and early clinical trials may not be predictive
of results obtained in later clinical trials, and there can be no assurance that
clinical trials conducted by the Company will demonstrate sufficient safety and
efficacy to obtain the requisite approvals or that marketable products will
result. For example, in November 1995, based on unfavorable efficacy data from a
Phase II trial, the Company terminated its development program for the CVT-1
product for treatment of primary hypercholesterolemia.
 
    The rate of completion of the Company's clinical trials may be delayed by
many factors, including slower than anticipated patient enrollment, difficulty
in finding a sufficient number of patients fitting the appropriate trial profile
or in the acquisition of sufficient supplies of clinical trial materials or
adverse events occurring during the clinical trials. Completion of testing,
studies and trials may take several years, and the length of time varies
substantially with the type, complexity, novelty and intended use of the
product. There can be no assurance that the Company's drug discovery efforts
will progress as expected or that such efforts will lead to the discovery or
development of any product. In addition, data obtained from
 
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preclinical and clinical activities are susceptible to varying interpretations,
which could delay, limit or prevent regulatory approval. Delays or rejections
may be encountered based upon many factors, including changes in regulatory
policy during the period of product development. No assurance can be given that
any of the Company's development programs will be successfully completed, that
any investigational new drug ("IND") applications will become effective or that
additional clinical trials will be allowed by the Food and Drug Administration
("FDA") or other regulatory authorities or that clinical trials will commence as
planned.
 
    The Company's clinical development plan for ranolazine assumes that Phase I
data and data from several Phase II angina trials with ranolazine IR combined
with Phase I data and safety and tolerability data from a pilot Phase II trial
for intermittent claudication with ranolazine SR will be accepted by the FDA and
other regulatory authorities as a basis to initiate Phase III trials with
ranolazine SR. There can be no assurance that such clinical data will be
accepted by the FDA in support of initiation of such Phase III studies with
ranolazine SR for the treatment of angina or that the Company will not be
required or otherwise choose to conduct additional Phase II clinical trials of
ranolazine SR prior to commencement of Phase III clinical trials. As a result of
FDA reviews or complications that may arise in any phase of the clinical trial
program, there can be no assurance that the proposed schedules for IND and
clinical protocol submissions to the FDA, initiations of studies and completions
of clinical trials can be maintained. Any delays in the Company's clinical
trials would have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Government Regulation."
 
DEPENDENCE ON COLLABORATIVE AND LICENSING ARRANGEMENTS
 
    The Company's strategy for the research, development and commercialization
of its product candidates has required, and will continue to require, the
Company to enter into various arrangements with corporate and academic
collaborators, licensors, licensees and others, and the Company will therefore
be dependent upon the success of these parties in performing their
responsibilities. There can be no assurance that the Company will be able to
enter into additional collaborative arrangements or license agreements on
acceptable terms, or at all, or that any or all of the contemplated benefits
from such collaborative arrangements or license agreements will be realized.
Failure to obtain such arrangements or agreements would result in delays in the
development of the Company's proposed products or the inability to proceed with
the development, manufacture or sale of products, or the loss of third party
licenses or could require the Company to fund development internally. If the
Company were required to fund development internally, its future capital
requirements would increase substantially. There can be no assurance that the
Company could obtain additional funds to meet such increased capital
requirements on acceptable terms, or at all.
 
    Under the Company's collaborative arrangement with the Biogen entities, the
Biogen entities are responsible for pursuing commercialization of CVT-124. In
addition, certain of the collaborative arrangements that the Company may enter
into in the future may place responsibility on the collaborative partner for
preclinical testing and clinical trials, for manufacturing and for preparation
and submission of applications for regulatory approval of potential
pharmaceutical products. The Company cannot control the amount and timing of
resources which its collaborative partners devote to the Company's programs or
potential products. Should a collaborative partner fail to develop or
commercialize successfully any product candidate to which it has rights, the
Company's business may be materially and adversely affected. There can be no
assurance that collaborators will not pursue other technologies or product
candidates either on their own or in collaboration with others.
 
    Collaborative arrangements may also require the Company to expend funds and
to meet certain milestones, and there can be no assurance that the Company will
be successful in doing so. The Company's agreement with the University of
Florida Research Foundation, Inc. in the area of adenosine receptors requires
the Company to reach certain preclinical and clinical milestones within defined
time periods to maintain exclusive rights under the license. The Company's
agreement with Syntex for ranolazine requires
 
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it to make certain payments based on the time and progress of development
activities. Failure of the Company to meet its obligations under its
collaborative arrangements could result in a termination of those arrangements
and the loss of rights to the compounds under development and could have a
material adverse effect on the Company's business, financial condition and
results of operations.
 
    There can be no assurance that disputes will not arise in the future with
respect to the ownership of rights to any technology developed with or by third
parties. These and other possible disagreements between collaborators and the
Company could lead to delays in the collaborative research, development or
commercialization of certain product candidates or could require or result in
litigation or arbitration, which would be time consuming and expensive, and
would have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Licenses and
Collaborations."
 
HISTORY OF LOSSES AND EXPECTATION OF FUTURE LOSSES; UNCERTAINTY OF FUTURE
PROFITABILITY; ACCUMULATED DEFICIT
 
    Since its inception, the Company has been engaged in research and
development activities and has generated no product revenues. As of December 31,
1996, the Company had an accumulated deficit of approximately $45.6 million. The
process of developing the Company's products will require significant additional
research and development, preclinical testing and clinical trials, as well as
regulatory approval. These activities, together with the Company's general and
administrative expenses, are expected to result in operating losses for the
foreseeable future. The Company will not receive product revenues unless and
until it or its collaborative partners complete clinical trials with respect to
one or more products and successfully commercialize such products. There can be
no assurance that the Company will generate revenues or achieve and sustain
profitability in the future. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
 
NEED FOR ADDITIONAL FUTURE CAPITAL; UNCERTAINTY OF ADDITIONAL FUNDING
 
    The Company will require substantial additional funding in order to complete
its research and development activities and commercialize any potential
products. The Company has financed its operations primarily through the sale of
preferred equity securities, equipment and leasehold improvement financing and
other debt financing. The Company has generated no product revenue, and none is
expected for at least several years. The Company anticipates that its existing
resources and projected interest income, will enable the Company to maintain its
current and planned operations through 1998. However, there can be no assurance
that the Company will not require additional funding prior to such time. The
Company's future capital requirements will depend on many factors, including
scientific progress in its research and development programs, the size and
complexity of such programs, the scope and results of preclinical studies and
clinical trials, the ability of the Company to establish and maintain corporate
partnerships, the time and costs involved in obtaining regulatory approvals, the
costs involved in filing, prosecuting and enforcing patent claims, competing
technological and market developments, the cost of manufacturing preclinical and
clinical material and other factors not within the Company's control. There can
be no assurance that such additional financing to meet the Company's capital
requirements will be available on acceptable terms or at all. Insufficient funds
may require the Company to delay, scale back or eliminate some or all of its
research or development programs or to lose rights under existing licenses or to
relinquish greater or all rights to product candidates at an earlier stage of
development or on less favorable terms than the Company would otherwise seek or
may adversely affect the Company's ability to operate as a going concern. If
additional funds are raised by issuing equity securities, substantial dilution
to existing stockholders may result. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
 
UNCERTAINTY OF MARKET ACCEPTANCE
 
    The Company's future profitability is dependent on commercial acceptance of
its potential products. The Company believes that market acceptance of its
potential products will depend on the Company's
 
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ability to provide acceptable evidence of the safety, efficacy and cost
effectiveness of its products, as well as the marketing strength of the
Company's corporate partners. In addition, third party payors can indirectly
affect the demand for the Company's potential products by regulating the maximum
amount of reimbursement that will be provided. There can be no assurance that
potential products developed by the Company will achieve market acceptance among
patients, physicians or third party payors, even if necessary regulatory and
reimbursement approvals are obtained. Failure to achieve market acceptance would
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business -- Marketing and Sales" and "--
Government Regulation."
 
INTENSE COMPETITION; RAPID TECHNOLOGICAL CHANGE
 
    The pharmaceutical and biopharmaceutical industries are subject to intense
competition and significant, rapid technological change. If regulatory approvals
are received, certain of the Company's potential products will compete with well
established, FDA approved proprietary and generic therapies that have generated
substantial sales over a number of years and which are reimbursed from
government health administration authorities and private health insurers. In
addition, CVT is aware of companies which are developing products that will
compete for the same disease markets as its potential products. Many of the
Company's competitors and potential competitors have substantially greater
product development capabilities and financial, scientific, marketing and sales
resources than the Company. Other companies may succeed in developing products
earlier than the Company, obtaining approvals for such products from the FDA
more rapidly than the Company and its corporate partners, or developing products
that are safer or more effective than those under development or proposed to be
developed by the Company and its corporate partners. There can be no assurance
that research and development by others will not render the Company's technology
or its potential products obsolete or non-competitive. In addition, there can be
no assurance that the Company's competitors will not develop more effective or
more affordable products or achieve patent protection, regulatory approval or
product commercialization earlier than the Company. See "Business --
Competition."
 
UNCERTAINTY OF PATENT POSITION AND PROPRIETARY RIGHTS
 
    The Company's success will depend to a significant degree on its ability to
obtain patents and licenses to patent rights, to maintain trade secrets and to
operate without infringing on the proprietary rights of others, both in the
United States and other countries. The Company has filed a number of United
States and foreign patent applications. In addition, in connection with its
corporate and academic collaborations, the Company has received licenses to a
number of issued patents and patent applications for CVT 124 and ranolazine. The
Company intends to continue to file applications as appropriate for patents
covering both its potential products and processes. There can be no assurance
that patents will issue from any of these applications, that any patent will
issue on technology arising from additional research or that patents that may
issue from such applications will be sufficient to protect the Company's
technology. Patent applications in the United States are maintained in secrecy
until a patent issues, and the Company cannot be certain that others have not
filed patent applications for technology covered by the Company's pending
applications or that the Company was the first to invent the technology that is
the subject of such patent applications. Competitors may have filed applications
for, or may have received patents and may obtain additional patents and
proprietary rights relating to, compounds, products or processes that block or
compete with those of the Company. If any of its competitors have filed patent
applications in the United States that claim technology also invented by the
Company, the Company may have to participate in interference proceedings
declared by the Patent and Trademark Office in order to determine priority of
invention and, thus, the right to a patent for the technology in the United
States, all of which could result in substantial cost to the Company. In
addition, litigation, which would result in substantial cost to the Company, may
be necessary to enforce any patents issued to the Company or to determine the
scope and validity of the proprietary rights of third parties. There can be no
assurance that any patents issued to the Company or to licensors from whom the
Company has licensed rights will not be challenged, invalidated or
 
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circumvented, or that the rights granted thereunder will provide proprietary
protection or commercial advantage to the Company.
 
    The commercial success of the Company will depend in part on the Company not
infringing patents issued to competitors and not breaching the licenses that
might cover technology used in the Company's potential products. Failure by the
Company to obtain a license to any technology required to commercialize its
potential products could have a material adverse effect on the Company's
business, financial condition and results of operations.
 
    The Company also relies on trade secrets to develop and maintain its
competitive position. Although the Company protects its proprietary technology
in part by confidentiality agreements with its employees, consultants,
collaborators, advisors and corporate partners, there can be no assurance that
these agreements will not be breached, that the Company will have adequate
remedies for any breach or that the Company's trade secrets will not otherwise
become known or be discovered independently by its competitors. See "Business --
Patents and Proprietary Technology."
 
DEPENDENCE ON KEY PERSONNEL; NEED TO ATTRACT AND RETAIN KEY EMPLOYEES AND
  CONSULTANTS
 
    The Company is highly dependent on certain members of its management and
scientific staff. In addition, the Company relies on consultants and advisors.
The loss of any of these persons could have a material adverse effect on the
Company's business, financial condition and results of operations. In order to
pursue its research and product development plans, the Company will be required
to attract and retain additional qualified scientific and other personnel. There
can be no assurance that the Company will be successful in attracting and
retaining these skilled persons who generally are in high demand by
pharmaceutical and biopharmaceutical companies and by universities and other
research institutions. The failure to successfully attract and retain qualified
personnel, consultants and advisors may impede the achievement of development
objectives and have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, a substantial
portion of the stock options currently held by many of the Company's key
employees are vested and may be fully vested over the next several years before
the Company achieves significant revenues or profitability. The Company intends
to grant additional options and provide other forms of incentive compensation to
attract and retain such key personnel.
 
LIMITED MANUFACTURING, MARKETING AND SALES EXPERIENCE
 
    The Company has no experience in manufacturing, and currently lacks the
resources or capability to manufacture any of its potential products on a
clinical or commercial scale. The Company is currently, and will continue to be,
dependent on corporate partners, licensees or other third parties for the
manufacturing of clinical and commercial scale quantities of its products. There
can be no assurance that the Company will be able to maintain existing
agreements for manufacturing of clinical quantities of potential products, that
it will be able to enter into additional agreements with other third parties for
commercial scale manufacturing or that these parties will be able to develop
adequate manufacturing capabilities.
 
    To date, the Company has no experience with sales, marketing or
distribution. The Company intends to rely on relationships with one or more
pharmaceutical companies or collaborative partners with established distribution
systems and direct sales forces to market its products. In the event that the
Company is unable to reach and maintain agreement with one or more
pharmaceutical companies or collaborative partners to market its products, it
may be required to market its products directly and to develop a marketing and
sales force with technical expertise and with supporting distribution
capability. There can be no assurance that the Company will be able to establish
in-house sales and distribution capabilities or relationships with third
parties, or that it will be successful in commercializing any of its potential
products. To the extent that the Company enters into co-promotion or other
licensing arrangements, any revenues received by the Company will depend upon
the efforts of third parties, and there can
 
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be no assurance that such efforts will be successful. See "Business -- Marketing
and Sales" and "-- Manufacturing."
 
SIGNIFICANT GOVERNMENT REGULATION; NO ASSURANCE OF REGULATORY APPROVAL
 
    The research, testing, manufacture and marketing of drug products is subject
to extensive regulation by numerous regulatory authorities in the United States
and other countries. Failure to comply with FDA or other applicable regulatory
requirements may subject a company to administrative or judicially imposed
sanctions such as warning letters, civil penalties, criminal prosecution,
injunctions, product seizure or detention, product recalls, total or partial
suspension of production, and FDA refusal to approve pending new drug
applications ("NDAs") or supplements to approved NDAs. The Company has not
received regulatory approval in the United States or any foreign jurisdiction
for the commercial sale of any of its products. The process of obtaining FDA and
other required regulatory approvals, including foreign approvals, often takes
many years and can vary substantially based upon the type, complexity and
novelty of the products involved. Furthermore, such approval process is
extremely expensive and uncertain. There can be no assurance that the Company's
potential products will be approved for marketing by the FDA. Even if regulatory
approval of a product is granted, there can be no assurance that the Company
will be able to obtain the labeling claims necessary or desirable for the
promotion of those products. FDA requirements prohibit the marketing or
promotion of a drug for unapproved indications. Furthermore, regulatory
marketing approval may entail ongoing requirements for postmarketing studies. If
regulatory approval is obtained, the Company will be subject to ongoing FDA
obligations and continued regulatory review. In particular, the Company or its
third party manufacturer will be required to adhere to regulations setting forth
current Good Manufacturing Practices ("cGMPs"), which require that the Company
manufacture its products and maintain its records in a prescribed manner with
respect to manufacturing, testing and quality control activities. Further, the
Company or its third party manufacturer must pass a preapproval inspection of
its manufacturing facilities by the FDA before obtaining marketing approval.
Failure to comply with applicable regulatory requirements may result in
penalties such as restrictions on a product's marketing or withdrawal of the
product from the market. In addition, identification of certain side effects
after a drug is on the market or the occurrence of manufacturing problems could
cause subsequent withdrawal of approval, reformulation of the drug, additional
preclinical testing or clinical trials and changes in labeling of the product.
 
    Prior to the submission of an NDA, drugs developed by the Company must
undergo rigorous preclinical and clinical testing, which may take several years
and the expenditure of substantial resources. Before commencing clinical trials
in humans, the Company must submit to the FDA and receive clearance of an IND.
There can be no assurance that submission of an IND for future clinical testing
of any products under development or other future products of the Company would
result in FDA permission to commence clinical trials or that the Company will be
able to obtain the necessary approvals for future clinical testing in any
foreign jurisdiction. Success in preclinical studies or early stage clinical
trials does not assure success in later stage clinical trials. Data obtained
from preclinical and clinical activities are susceptible to varying
interpretations which could delay, limit or prevent regulatory approval.
Further, there can be no assurance that if such testing of products under
development is completed, any such drug compounds will be accepted for formal
review by the FDA or any foreign regulatory body, or approved by the FDA for
marketing in the United States or by any such foreign regulatory bodies for
marketing in foreign jurisdictions. Future federal, state, local or foreign
legislation or administrative acts could also prevent or delay regulatory
approval of the Company's products. See "Business -- Government Regulation."
 
UNCERTAINTY OF PRODUCT PRICING AND REIMBURSEMENT
 
    The ability of the Company and its existing and potential corporate partners
to market and sell its potential products successfully will depend in part on
the extent to which reimbursement for the cost of
 
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such potential products and related treatments will be available from government
health administration authorities, private health insurers and other
organizations. Third party payors are increasingly challenging the price of
medical products and services. Significant uncertainty exists as to the
reimbursement status of newly approved health care products. In addition, for
sales of the Company's products in Europe, the Company will be required to seek
reimbursement on a country-by-country basis. If the Company or any existing or
potential corporate partners succeed in bringing any products to market, there
can be no assurance that these products will be considered cost effective, that
reimbursement will be available, or if available, that the payors' reimbursement
policies will not adversely affect the Company's or any such existing or
potential corporate partner's ability to sell such products on a profitable
basis.
 
PRODUCT LIABILITY EXPOSURE; AVAILABILITY OF INSURANCE
 
    The manufacture and sale of biopharmaceutical products involve an inherent
risk of product liability claims and associated adverse publicity. The Company
currently has only limited product liability insurance for clinical trials and
no commercial product liability insurance. There can be no assurance that it
will be able to maintain existing or obtain additional product liability
insurance on acceptable terms or with adequate coverage against potential
liabilities. Such insurance is expensive, difficult to obtain and may not be
available on acceptable terms, or at all. An inability to obtain sufficient
insurance coverage on reasonable terms or to otherwise protect against potential
product liability claims could prevent or inhibit the commercialization of the
Company's potential products. A successful product liability claim brought
against the Company in excess of its insurance coverage, if any, could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Product Liability Insurance."
 
HAZARDOUS AND RADIOACTIVE MATERIALS; ENVIRONMENTAL MATTERS
 
    The Company's research and development processes involve the controlled use
of hazardous materials, chemicals and radioactive materials, and produce waste
products. The Company is subject to federal, state and local laws and
regulations governing the use, manufacture, storage, handling and disposal of
such materials and waste products. Although the Company believes that its safety
procedures for handling and disposing of such materials comply with the
standards prescribed by such laws and regulations, the risk of contamination or
injury from these materials cannot be eliminated completely. In such event, the
Company could be held liable for any damages that result and any such liability
could exceed the resources of the Company. Although the Company believes that it
is in compliance in all material respects with applicable environmental laws and
regulations, there can be no assurance that it will not be required to incur
significant costs to comply with environmental laws and regulations in the
future, or that the Company's business, financial condition or results of
operations will not be materially adversely affected by current or future
environmental laws or regulations. See "Business -- Government Regulation."
 
VOLATILITY OF STOCK PRICE
 
    Prior to November 19, 1996, there had been no public market for the
Company's Common Stock, and there can be no assurance that an active market will
be maintained. The market price of the shares of Common Stock, like that of the
common stock of many other biopharmaceutical companies, is likely to be highly
volatile. Factors such as the Company's operating results, developments in the
Company's relationships with corporate partners, developments affecting the
Company's corporate partners, announcements of results of preclinical studies
and clinical trials by the Company, its corporate partners or its competitors,
negative regulatory action or regulatory approval with respect to the Company or
its competitors, announcements of new products by the Company or its
competitors, developments related to patent or other proprietary rights by the
Company or its competitors, changes in the position of securities analysts with
respect to the Common Stock, and market conditions for biopharmaceutical or
biotechnology stocks in general, may cause the market price of the Common Stock
to fluctuate, perhaps substantially. In
 
                                       9
<PAGE>
addition, in recent years the stock market in general, and the shares of
biopharmaceutical, biotechnology and healthcare companies in particular, have
experienced extreme price fluctuations. These broad market and industry
fluctuations may materially adversely affect the market price of the Common
Stock. In some future quarter the Company's operating results may be below the
expectations of public market analysts and investors, and, as a result, the
price of the Common Stock would likely be materially adversely affected.
 
CONTROL BY EXISTING STOCKHOLDERS; ANTI TAKEOVER EFFECTS OF CERTAIN CHARTER
PROVISIONS AND DELAWARE LAW
 
    As of February 10, 1997, the Company's officers, directors and principal
stockholders beneficially owned approximately 43.87% of the outstanding shares
of Common Stock. As a result, such persons may have the ability to effectively
control the Company and direct its affairs and business. Such concentration of
ownership may also have the effect of delaying, deferring or preventing a change
in control of the Company. In addition, the Company's Board of Directors has the
authority to issue up to 5,000,000 shares of Preferred Stock and to determine
the price, rights, preferences and privileges of those shares without any
further vote or action by the stockholders. The rights of the holders of Common
Stock will be subject to, and may be materially adversely affected by, the
rights of the holders of any Preferred Stock that may be issued in the future.
The issuance of Preferred Stock could have the effect of making it more
difficult for a third party to acquire a majority of the outstanding voting
stock of the Company. Furthermore, certain provisions of the Company's Amended
and Restated Certificate of Incorporation may have the effect of delaying or
preventing changes in control or management of the Company, which could
adversely affect the market price of the Company's Common Stock. In addition,
the Company is subject to the provisions of Section 203 of the Delaware General
Corporation Law (the "Delaware Law"), an anti-takeover law. See "Security
Ownership of Officers, Directors and Principal Stockholders."
 
BACKGROUND
 
    The cardiovascular system is comprised of the heart, the blood vessels, the
kidneys and the lungs. Together, the components of the cardiovascular system
deliver oxygen and other nutrients to the tissues of the body and remove waste
products. The heart propels blood through a network of arteries and veins. The
kidneys closely regulate the blood volume and the balance of electrolytes (such
as sodium, potassium and chloride) in the blood, and the lungs oxygenate the
blood and remove carbon dioxide. To accomplish these tasks, the cardiovascular
system must maintain adequate blood flow, or cardiac output. Cardiac output is
determined by such factors as heart rate and blood pressure, which in turn are
controlled by a variety of hormones such as adrenaline, angiotensin and
adenosine. These hormones are small molecules which exert their effects by
binding to specific receptors on the surfaces of a variety of cell types in the
heart, lungs, blood vessels and kidneys. Any significant disruption of this
system results in cardiovascular disease.
 
    Cardiovascular disease is the leading cause of death in the United States,
claiming more than 950,000 lives in 1993. The American Heart Association
projects the total cost of cardiovascular medications in the United States for
1996 at $11 billion.
 
    Chronic cardiovascular diseases, including atherosclerosis (hardening of the
arteries), hypertension (high blood pressure) and others, may cause permanent
damage to the heart and blood vessels, leading to CHF, (4.7 million patients),
angina (6.8 million patients) and, heart attack (1.5 million patients). CHF
occurs when the heart becomes weakened and, as a result, can no longer maintain
adequate blood circulation throughout the body. The kidneys respond to this
decrease in blood flow by increasing the retention of salt and water, leading to
chronic symptoms such as shortness of breath and edema (fluid retention) in the
legs and lungs.
 
    Over the past twenty years, drugs such as nitrates, beta blockers, calcium
channel blockers and ACE inhibitors, have been developed to treat cardiovascular
diseases. These drugs have contributed to an
 
                                       10
<PAGE>
increase in the survival of patients who suffer from chronic cardiovascular
disease; however, they also can cause a variety of undesirable side effects,
including fatigue, depression, impotence, headaches, palpitations and edema.
Molecular cardiology has provided new insight into the mechanisms underlying
chronic cardiovascular diseases, thus creating the opportunity for improved
therapies.
 
DRUG DISCOVERY PLATFORM
 
    CVT's drug discovery platform supports several programs, including those
focused on the adenosine A(1) receptor, the cell cycle and chronic inflammation
in the cardiovascular system. These programs have produced compounds currently
in clinical or preclinical development or outlicensed for use in third party
drug discovery programs. CVT's expertise in molecular cardiology and drug
development has been critical to the identification of these drug candidates.
 
    The Company believes that its drug discovery platform allows it to
efficiently select novel, clinically relevant drug candidates that have a
significant probability of commercial potential. CVT first evaluates new targets
with respect to clinical relevance and suitability for small molecule
inhibition. CVT then utilizes a highly integrated, multidisciplinary approach to
produce novel small molecules as drug candidates for these targets. The Company
combines molecular modeling and combinatorial chemistry to assemble targeted
libraries of new chemical entities, an approach which the Company believes
expedites the identification of potential drug leads. The Company has developed
a comprehensive proprietary database correlating biological activity of
candidate drugs with their structures. From this database, CVT identifies final
lead compounds based on predetermined development criteria including potency,
specificity, manufacturability, and pharmacologic activity in animal and in
vitro models. The Company determines the proper selection of cell-based assays
and animal models of disease to enhance development of the drug candidate based
on its projected use in the clinical setting.
 
PRODUCTS UNDER DEVELOPMENT
 
CVT-124
 
    The Company believes that CVT-124 is the most potent and selective adenosine
A(1) receptor antagonist reported to date. Preclinical studies and clinical
trials have shown statistically significant increases in sodium excretion in
response to CVT-124. Thus, the Company believes that CVT-124 has the potential
to be an effective new therapy for treatment of edema due to CHF and prevention
and treatment of acute renal failure.
 
    CVT-124 was identified in the Company's adenosine A(1) receptor program.
This program is focused on the development of agents that are highly selective
for the adenosine A(1) receptor and has produced both antagonists and agonists
to this class of receptors. The Company continues to explore additional
applications of the technology developed in the adenosine A(1) receptor program.
 
    Adenosine is a naturally occurring hormone that modulates different
functions of the heart, brain, kidney and blood vessels. Its actions are
mediated in these organs by two classes of receptors, A(1) and A(2), that
stimulate very different physiological effects that can be separately targeted
in drug development. Adenosine A(1) receptors are located on the proximal
tubules of the kidney where they stimulate reabsorption of sodium and hence of
water. The Company believes that it was among the first to identify the presence
of these adenosine A(1) receptors in the proximal tubule of the kidney. In
contrast to A(1) receptors, adenosine A(2) receptors stimulate the dilation of
blood vessels in the heart, muscles and kidney thereby lowering blood pressure.
 
    CVT has focused on creating an adenosine A(1) receptor antagonist specific
enough to avoid blocking the A(2) receptor and thus avoiding unintended side
effects. This concept was developed based on the Company's insight into the
newly discovered role of the A(1) receptor on the proximal tubule cell of the
 
                                       11
<PAGE>
kidney and its potential importance in treatment of edema states, such as CHF,
which are characterized by excessive accumulation of sodium and water in the
body.
 
INDICATIONS
 
    EDEMA ASSOCIATED WITH CONGESTIVE HEART FAILURE.  Approximately 4.7 million
people in the United States suffer from CHF, with an estimated 400,000 new
diagnoses each year. These patients typically seek medical help because of
edema, an accumulation of fluid in the lungs and extremities. Approximately
875,000 patients are hospitalized each year in the United States with a primary
diagnosis of CHF, and CHF is the leading cause of hospital admissions among
patients over 65. Approximately one-quarter of these hospitalized patients
exhibit resistance to current intravenous diuretic treatments. The Company
believes that these patients would represent the initial target market for
CVT-124 in this indication.
 
    Edema fluid accumulates in the body because of adaptations by the kidney
during CHF. Each kidney is comprised of approximately one million tiny blood
filtering units called nephrons. Normally in each nephron, blood is filtered at
the renal glomerulus and sodium and water are reabsorbed by the kidney at three
locations further along the nephron. Fifty to seventy percent of the filtered
sodium is reabsorbed at the proximal tubule, the portion of the nephron closest
to the glomerulus. Up to 40% is reabsorbed at the loop of Henle, and the
remaining portion, usually less than 10%, is reabsorbed at the distal tubule.
The filtered, non-reabsorbed impurities wash out into the urine. In patients
suffering from CHF, blood flow through the kidney decreases because of the poor
pumping function of the heart. The kidney interprets this event as blood loss
and attempts to increase its retention of salt and water to maintain blood
pressure. It does this by shifting more (up to 99%) of its reabsorption of
sodium to the proximal tubule. The result is the harmful build-up of salt and
water in the body, leading to edema.
 
    Current treatment of CHF consists of therapy designed to improve the pumping
function of the heart combined with the administration of diuretics to eliminate
excess sodium and water from the body by blocking reabsorption in the kidney.
However, current diuretic therapies inhibit sodium reabsorption either at the
loop of Henle (furosemide) or the distal tubule (thiazides and spironolactone),
where as little as one percent of reabsorption of sodium can take place in
patients with advanced CHF. Since increasing amounts of sodium are reabsorbed
proximally as CHF worsens, distally acting drugs are correspondingly less
effective over time and patients become more symptomatic. Approximately one
quarter of hospitalized CHF patients exhibit resistance to current intravenous
diuretic therapies due to excessive fluid reabsorption in the proximal tubule,
and no therapy currently exists which targets this site of the disease process.
The dosage for the most commonly prescribed diuretics for edema associated with
CHF are often increased as the disease progresses, and therefore are
increasingly associated with toxic side effects, including potassium loss, which
may lead to an increased incidence of cardiac arrhythmias if potassium is not
monitored and replaced, and uric acid build-up which may lead to gout.
 
    Preclinical studies conducted by the Company have indicated that CVT-124
acts as a potent diuretic by blocking the adenosine A(1) receptors in the
proximal tubule that would ordinarily stimulate sodium reabsorption at that
site. These studies also indicated that CVT-124 acted at the distal tubule to
reduce sodium reabsorption and minimize potassium excretion. This combination of
diuretic mechanisms indicates a unique clinical profile as compared to currently
available drugs and suggests that CVT-124 may be particularly useful in the
treatment of edema associated with CHF on an acute and chronic basis.
 
    CVT completed a double-blind, placebo-controlled Phase I/II trial of
intravenous CVT-124 in 26 healthy volunteers. Data from this trial support
CVT-124's combination of diuretic mechanisms. Statistically significant,
dose-related increases in sodium excretion were observed in response to CVT-124,
amounting to a doubling or more in the excretion of sodium compared to placebo.
In contrast, mean potassium excretion did not show clinically significant
increases. Uric acid excretion was also significantly increased by CVT-124
compared to placebo. CVT-124 was generally well-tolerated.
 
                                       12
<PAGE>
    ACUTE RENAL FAILURE.  Acute renal failure is a decline in kidney function
that may require temporary or chronic therapy with dialysis procedures. Acute
renal failure is a complication of certain general medical conditions associated
with low blood flow and certain commonly used medications or diagnostic agents,
such as cyclosporine, gentamicin, amphotericin, cisplatin, and radiocontrast dye
used in x-ray studies. Because the A(1) receptor may be relevant in this type of
kidney failure, CVT and the Biogen entities are exploring the possibility of
conducting clinical trials in acute renal failure to assess the opportunity for
its treatment and prevention by CVT-124.
 
FUTURE DEVELOPMENT OF CVT-124
 
    In March 1997, CVT entered into two research collaboration and license
agreements, one with Biogen which covers the Americas and the other with
Biogen's wholly-owned subsidiary, Biotech Manufacturing, which covers the rest
of the world. The Biogen Agreements grant the Biogen entities the exclusive
worldwide rights to develop and commercialize CVT-124 and any other adenosine
A(1) antagonist owned by CVT for all indications. The Company and the Biogen
entities are currently planning a Phase II intravenous clinical trial in stable
CHF (18-24 patients) to begin in the first half of 1997. The Company and the
Biogen entities are evaluating further clinical trials for CVT-124.
 
    While the Company's clinical trials to date have utilized an intravenous
formulation of CVT-124, the Company and the Biogen entities intend to develop
CVT-124 in intravenous and oral formulations, for the treatment of edema in
fluid-retaining states like CHF and possibly for the treatment or prevention of
acute renal failure. There can be no assurance that CVT-124 will prove to be
safe or efficacious in humans or that CVT-124 will obtain FDA or other
regulatory or foreign marketing approval for any indication.
 
    The Company's current estimate of the commencement of various clinical
trials included in this report are forward-looking statements that involve risks
and uncertainties. The actual clinical trial dates could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including the success in completing preclinical development and the
other factors set forth under "Risk Factors" and elsewhere in this report.
 
RANOLAZINE
 
    Ranolazine is a patented compound which has been tested by Syntex in Phase I
and Phase II trials in patients with angina. The compound fits the Company's
criteria for development candidates as it is a small molecule which works
through a novel mechanism of action. The Company successfully obtained a license
for ranolazine from Syntex in March 1996, after the acquisition of Syntex by
Roche. The Company is developing ranolazine to treat angina because the Company
believes it does not impair blood pressure or heart rate and has an improved
tolerability profile.
 
    Ranolazine acts by modulating the body's metabolism to shift the source of
energy for the heart from fatty acid toward glucose. Ranolazine decreases the
heart's oxygen demand for a given level of cardiac work because less oxygen is
required to produce an equivalent amount of energy from glucose than from fatty
acids. The Company believes this effect on muscle metabolism may also benefit
patients suffering from intermittent claudication.
 
INDICATIONS
 
    ANGINA.  Angina is a clinical syndrome manifested by chest pain caused by
myocardial ischemia (insufficient blood flow to the heart muscle) due to
blockage of the coronary arteries. Patients usually experience chest pain on
exertion which can become more severe over time. In the United States,
approximately 6.7 million patients are currently diagnosed with angina. Based on
a published multicenter study involving over 5,000 angina patients, over half of
these patients are currently being treated with multiple medications, including
nitrates, beta blockers and calcium channel blockers. These anti-anginal drugs
accounted for over $3.0 billion in U.S. sales in 1995. Based on published
studies, approximately one-
 
                                       13
<PAGE>
third, or 2.2 million, of angina patients are either diagnosed with both angina
and CHF or are resistant to currently available treatments. The Company believes
these patients would represent the initial target market for ranolazine.
 
    All currently available drugs to treat angina reduce the heart's oxygen
demand by reducing cardiac work via hemodynamic mechanisms (reduction of pump
function, heart rate, and/or blood pressure). These hemodynamic effects can
limit or prevent the use of currently available drugs in patients whose blood
pressure or cardiac function is already decreased. These effects can be
particularly pronounced when these drugs are used in combination. Additional
adverse effects include lower extremity edema associated with calcium channel
blockers, impotence and depression associated with beta blockers and headaches
associated with nitrates. Consequently, for some patients, presently available
medical treatment cannot provide complete relief of angina without unacceptable
adverse effects.
 
    Ranolazine IR has been administered to over 200 healthy human volunteers and
over 1,200 patients with ischemic heart disease or CHF in clinical trials
conducted by Syntex. Placebo controlled ranolazine IR trials involving treadmill
testing in patients with chronic stable angina have demonstrated statistically
significant and clinically meaningful increases in (i) exercise time to onset of
angina, (ii) total exercise duration, and (iii) exercise time to onset of an
electrocardiographic change associated with insufficient blood flow to the heart
muscle. The anti-anginal effect of ranolazine IR was observed in these trials
regardless of whether the drug was given alone or in combination with beta
blockers or calcium channel blockers, and the drug was generally well tolerated
without a significant incidence of adverse events.
 
    In initial clinical trials, ranolazine IR was administered on a three times
daily schedule. To achieve a more commercially attractive product with a
twice-daily dosing schedule, Syntex developed ranolazine SR. In volunteer trials
conducted by Syntex, the SR formulation maintained ranolazine plasma
concentrations in the range associated with increased exercise times in the
stable angina trials of ranolazine IR.
 
    Although CVT intends to pursue regulatory approval for treatment of all
patients with chronic angina, the Company believes angina patients who are
resistant to currently available treatments and those with angina and CHF would
represent the initial market for ranolazine.
 
    INTERMITTENT CLAUDICATION.  Intermittent claudication is a clinical syndrome
manifested by pain in the legs during exercise. Like angina, this syndrome is
caused by blockage or narrowing of arteries. These patients generally either
limit their activity or in severe cases undergo vascular surgery. Over two
million people in the United States suffer from intermittent claudication. Only
one drug is approved by the FDA to treat this condition in the United States,
and worldwide sales in 1995 were approximately $400 million.
 
    A pilot trial of ranolazine SR in patients with intermittent claudication
was completed by Syntex in 1994. Ranolazine SR was generally well tolerated and
exhibited a trend toward prolongation of exercise duration and time to onset of
claudication. This clinical trial was not intended to be large enough to
demonstrate statistical significance. Further trials will be required to
demonstrate the utility of ranolazine SR for this indication.
 
DEVELOPMENT HISTORY OF RANOLAZINE
 
    Following the acquisition of Syntex by Roche in 1994, ranolazine clinical
development was discontinued. Previously, Syntex had met with the FDA to
establish a Phase III clinical development program for ranolazine SR in both
angina and intermittent claudication and had begun enrollment in an angina Phase
III trial in late 1994.
 
FUTURE DEVELOPMENT OF RANOLAZINE
 
    CVT plans to initiate Phase III trials in angina in the second half of 1997.
The Company's clinical development plan for ranolazine assumes that Phase I data
and several Phase II angina trials with ranolazine IR combined with Phase I data
and safety and tolerability data from a pilot Phase II trial for
 
                                       14
<PAGE>
intermittent claudication with ranolazine SR will be accepted by the FDA to
initiate Phase III trials with ranolazine SR. There can be no assurance that
such clinical data will be accepted by the FDA in support of initiation of such
Phase III trials with ranolazine SR or that the Company will not be required or
otherwise choose to conduct additional Phase II clinical trials of ranolazine SR
prior to commencement of Phase III clinical trials. Commencement of the Phase
III trials by Syntex in 1994 was based upon Phase I and II ranolazine IR data
combined with Phase I ranolazine SR data. The Company has initiated
pharmacological and mechanism studies and has completed the transfer of
manufacturing technology from Syntex. There can be no assurance that ranolazine
will obtain FDA or other regulatory or foreign marketing approval for any
indication.
 
A(1) AGONISTS
 
    The Company has designed and synthesized a series of A(1) agonist compounds
in the Company's adenosine A(1) receptor program which the Company believes may
have potential application in treating supraventricular tachycardia, as well as
additional applications. Based on preclinical data, the Company believes these
compounds are among the most selective adenosine A(1) receptor agonists
reported. Preclinical studies conducted by the Company indicated that these
compounds slowed electrical impulses in the conduction tissue of the heart by
stimulating the adenosine A(1) receptor.
 
    Supraventricular tachycardias (atrial fibrillation, atrial flutter and AV
nodal re-entrant tachycardias) are among the most common cardiac arrhythmias
complicating ischemic heart disease and cardiac surgical procedures and account
for over 300,000 new hospital admissions in the United States each year. They
originate in the atria as rapid and irregular heart beats that then spread to
the ventricles. The ventricular contractions stimulated by the atrial impulses
can be so fast and irregular that cardiac function can be severely compromised,
resulting in dangerously low blood pressure, fluid in the lungs, and ischemic
damage to the heart, brain and other organs.
 
    Because of the severity of these conditions and the need to treat patients
quickly, intravenous therapies are typically used. Current medical therapies aim
to slow the heart to a normal rate but have significant limitations in the acute
care setting. Digitalis is effective in controlling heart rate, but requires a
long time to take effect, which can be dangerous in patients with a failing
heart. Calcium channel blockers, beta blockers and adenosine act quickly but are
themselves associated with hypotension and depressed cardiac function,
potentially exacerbating the condition of patients already experiencing cardiac
dysfunction as a complication of the tachycardia.
 
    For the treatment of supraventricular tachycardia, selective stimulation of
the A(1) receptor is required to slow the heart rate without significant
stimulation of the A(2) receptor which would lower blood pressure. The Company
has identified these compounds as candidates for clinical development of
intravenous agents and is proceeding with preclinical studies.
 
CVT-313 AND CVT-634
 
    CVT-313 and CVT-634 were designed and synthesized in the Company's cell
cycle inhibitor program. The goal of this program is to develop a new class of
therapeutics that suppresses abnormal cellular proliferation, which contributes
to progressive cardiovascular diseases. Excessive proliferation of
cardiovascular connective tissue cells or vascular smooth muscle cells causes
the scarring and loss of function that is characteristic of chronic diseases of
the heart, blood vessels and kidneys. Several of the Company's scientists and
scientific advisors have been among the leaders in identifying the role of cell
proliferation in causing a variety of cardiovascular diseases. As part of its
drug discovery strategy, the Company has focused upon newly discovered enzymes
referred to collectively as the cell cycle enzymes that regulate cellular
proliferation. In particular, two important targets identified by the Company,
CDK2 and the proteasomal protease, may have different clinical applications. The
Company is continuing to explore other cell cycle regulatory enzymes as
potential targets in this program. CVT-313 is a novel compound
 
                                       15
<PAGE>
which specifically inhibits CDK2, a critical regulatory protein which
participates in the control of the cell cycle. CDK2, whose three dimensional
structure was first determined by academic collaborators of the Company, is
central to cellular proliferation and was chosen as the Company's first target
in the cell cycle inhibitor program. Preclinical studies have shown significant
reduction of restenosis after vascular injury, both confirming the appropriate
selection of the target and identifying a potential initial clinical
application.
 
    CVT-634, also identified in this program, has been shown to be a potent
inhibitor of proteasomal protease, which regulates both CDK2 activation and
macrophage activation. CVT-634 has been shown in preclinical studies to control
smooth muscle cell proliferation. This compound is undergoing further
preclinical testing.
 
CHRONIC ANTI-INFLAMMATORY INHIBITORS
 
    CVT is seeking to address chronic inflammatory diseases of the
cardiovascular system by targeting macrophage infiltration into the heart and
kidney. Activated macrophages are a type of white blood cell found in lesions
associated with virtually all chronic cardiovascular diseases, including
atherosclerotic plaque, and are known to secrete growth factors which promote
cellular proliferation and scarring. The Company has discovered a novel
inflammatory factor in this program which has been partnered to Bayer AG for
continued development.
 
LICENSES AND COLLABORATIONS
 
    CVT has licensed certain chemical compounds from academic collaborators and
other companies and has applied its drug discovery strategies to analog and
optimize these structures and to identify applications for preclinical and
clinical development. The Company has established and intends to establish
strategic partnerships to expedite development and commercialization of these
drug candidates. For those programs which provide knowledge useful in the
identification of compounds with potential application outside of chronic
cardiovascular disease, the Company intends to find corporate partners at the
preclinical stage. The Company's licenses and collaborations currently in effect
include:
 
UNIVERSITY OF FLORIDA RESEARCH FOUNDATION
 
    In June 1994, the Company entered into a license agreement with the
University of Florida Research Foundation, Inc. ("UFRFI") under which the
Company received exclusive worldwide rights to develop adenosine A(1) receptor
antagonists and agonists for the detection, prevention and treatment of human
and animal diseases. In consideration for the license, the Company paid UFRFI an
initial license fee and is obligated to pay royalties based on net sales of
products which utilize the licensed technology. Pursuant to the agreement, the
Company must exercise commercially reasonable efforts to develop and
commercialize one or more products covered by the licensed technology and is
obligated to meet milestones in completing certain preclinical work. In the
event the Company fails to reach those milestones, UFRFI may convert the
exclusive license into a non-exclusive license. As part of the license agreement
with UFRFI, the Company entered into a research agreement with the University of
Florida.
 
SYNTEX/ROCHE
 
    In March 1996, the Company entered into a license agreement with Syntex for
United States and foreign patent rights to a compound having the generic name of
ranolazine for products treating angina and certain other cardiovascular
indications. The agreement provides for Syntex to also supply certain quantities
of the compound to the Company. The license agreement is exclusive and worldwide
except for the following countries which Syntex licensed exclusively to Kissei
Pharmaceuticals, Ltd. of Japan: Japan, Korea, China, Taiwan, Hong Kong, the
Philippines, Indonesia, Singapore, Thailand, Malaysia, Vietnam, Myanmar, Laos,
Cambodia and Brunei. Under the license agreement, the Company paid an initial
license
 
                                       16
<PAGE>
fee. In addition, the Company is obligated to make payments on the achievement
of certain development milestones and to make royalty payments based on net
sales of products which utilize the licensed technology. The Company is required
to use commercially reasonable efforts to develop the compound for angina within
certain milestone guidelines. The Company may be obligated to make milestone
payments totaling $3.0 million to Syntex in 1997 unless the Company elects to
terminate the agreement. The license agreement also sets milestones within which
the Company must launch products in each country covered by the license or lose
exclusivity in such territories.
 
BAYER AG
 
    In May 1996, the Company granted an exclusive worldwide license to Bayer AG
for a novel inflammatory factor for preclinical and clinical development for any
therapeutic, prophylactic or diagnostic use in humans or animals. In
consideration of this license, Bayer AG paid the Company a non-refundable
license fee of $250,000, and agreed to make certain cash milestone payments
related to the progress of product development. Bayer AG is also obligated to
pay the Company royalties based on net sales of products which utilize the
licensed technology. The Company is responsible for the expenses of patent
prosecution for the licensed technology. Bayer AG may terminate the agreement
for any reason upon written notice to the Company.
 
BIOGEN AND BIOTECH MANUFACTURING
 
    In March 1997, the Company entered into two research collaboration and
license agreements, one with Biogen which covers the Americas and the other with
Biogen's wholly-owned subsidiary, Biotech Manufacturing, which covers the rest
of the world. The Biogen Agreements grant the Biogen entities the exclusive
worldwide right to develop and commercialize CVT-124 and any other adenosine
A(1) antagonist owned by CVT for all indications. In exchange for such rights to
develop, manufacture and sell the technology, CVT may receive development
milestones, equity investments, funding under a general purpose loan facility
and royalties from any future product sales. Biogen and Biotech Manufacturing
have control and responsibility, with assistance from CVT, for conducting,
funding and pursuing all aspects of the development, submissions for regulatory
approvals, manufacture and commercialization of the technology.
 
    In connection with the Biogen Agreements, Biogen paid the Company an initial
non- refundable payment of $5.0 million and Biotech Manufacturing purchased
669,857 shares of Common Stock for a total purchase price of $7.0 million. In
addition, CVT received advance funding of a milestone payment and funding under
a credit facility totalling $4.0 million. Under the terms of the collaboration,
the Company will conduct research on aspects of the technology for a period of
three years, and Biotech Manufacturing will fund such research through purchases
of the Company's Common Stock. Biogen and Biotech Manufacturing may terminate
the Biogen Agreements for any reason upon 90 days notice until a certain
clinical milestone is achieved, and then upon 60 days thereafter. If the Biogen
entities terminate the Biogen Agreements, all rights in the technology would
revert to CVT. In addition, Biotech Manufacturing may terminate its obligation
to fund the research conducted by the Company, and CVT's obligation to conduct
such research, without terminating the entire collaboration, upon 90 days notice
prior to each anniversary of the effective date. CVT may also terminate its
obligation to conduct such research, without terminating the entire
collaboration, after the achievement of a certain milestone upon 90 days notice
prior to each anniversary of the effective date. There can be no assurance that
the Biogen entities will not terminate the Biogen Agreements. Any such
termination would have a material adverse effect on the Company's business,
financial condition and results of operations.
 
                                       17
<PAGE>
MARKETING AND SALES
 
    The Company currently has no sales, marketing or distribution capability.
The Company intends to rely on relationships with one or more pharmaceutical
companies or collaborative partners with established distribution systems and
direct sales forces to market its products. In the event that the Company is
unable to reach and maintain agreement with one or more pharmaceutical companies
or collaborative partners to market its products, it may be required to market
its products directly and to develop a marketing and sales force with technical
expertise and with supporting distribution capability. There can be no assurance
that the Company will be able to establish in-house sales and distribution
capabilities or relationships with third parties, or that it will be successful
in commercializing any of its potential products. To the extent that the Company
enters into co-promotion or other licensing arrangements, any revenues received
by the Company will depend upon the efforts of third parties, and there can be
no assurance that such efforts will be successful.
 
MANUFACTURING
 
    CVT does not currently operate manufacturing facilities for clinical or
commercial production of its proposed products. The Company has no experience
in, and currently lacks the resources and capability to, manufacture any of its
proposed products on a commercial scale. Accordingly, the Company is, and will
continue to be, dependent on corporate partners, licensees or other third
parties for clinical and commercial scale manufacturing. The Company does have
experience in the transfer of synthetic technology from discovery to scale-up
manufacturing facilities, having successfully executed technology transfer for
the manufacture of clinical supplies of one orally administered agent and one
intravenously administered agent. There can be no assurance that the Company
will be able to reach and maintain satisfactory agreements with its partners or
third parties or that such parties will be able to develop adequate
manufacturing capabilities for commercial scale quantities of products.
 
PATENTS AND PROPRIETARY TECHNOLOGY
 
    Patents and other proprietary rights are important to the Company's
business. The Company's policy is to file patent applications and to protect
technology, inventions and improvements to inventions that are commercially
important to the development of its business. The Company also relies on trade
secrets, confidentiality agreements and other protective measures to protect its
technology and proposed products. The Company's failure to obtain patent
protection or otherwise protect its proprietary technology or proposed products
may have a material adverse effect on the Company's competitive position and
business prospects.
 
    The Company owns four pending patent applications in the United States
relating to an inflammatory factor licensed to Bayer AG, the A(1) agonist series
of compounds, CVT-313 and CVT-634, as well as one foreign patent application
with respect to the inflammatory factor licensed to Bayer. In addition, the
Company has acquired and, in turn has granted to the Biogen entities, an
exclusive license to one United States issued patent, two United States patent
applications and related foreign patent applications related to CVT-124. The
Company also has acquired a license which is exclusive in certain territories to
three United States issued patents, one United States patent application and
related foreign patent applications related to ranolazine. The patent
application process takes several years and entails considerable expense. There
is no assurance that patents will issue from these applications or, if patents
do issue, that the claims allowed will be sufficient to protect the Company's
technology. One of the primary patents relating to ranolazine will expire in May
2003 unless the Company is granted an extension based upon delays in the FDA
approval process.
 
    Patent applications in the United States are maintained in secrecy until a
patent issues, and the Company cannot be certain that others have not filed
patent applications for technology covered by the Company's pending applications
or that the Company was the first to invent the technology that is the
 
                                       18
<PAGE>
subject of such patent application. Competitors may have filed applications for,
or may have received patents and may obtain additional patents and proprietary
rights relating to, compounds, products or processes that block or compete with
those of the Company. There can be no assurance that third parties will not
assert patent or other intellectual property infringement claims against the
Company with respect to its products or technology or other matters. There may
be third party patents and other intellectual property relevant to the Company's
products and technology which are not known to the Company.
 
    Patent litigation is becoming more widespread in the biopharmaceutical
industry. Litigation may be necessary to defend against or assert claims of
infringement, to enforce patents issued to the Company, to protect trade secrets
or know-how owned by the Company, or to determine the scope and validity of the
proprietary rights of third parties. Although no third party has asserted that
the Company is infringing such third party's patent rights or other intellectual
property, there can be no assurance that litigation asserting such claims will
not be initiated, that the Company would prevail in any such litigation, or that
the Company would be able to obtain any necessary licenses on reasonable terms,
if at all. Any such claims against the Company, with or without merit, as well
as claims initiated by the Company against third parties, can be time-consuming
and expensive to defend or prosecute and to resolve. If other companies prepare
and file patent applications in the United States that claim technology also
claimed by the Company, the Company may have to participate in interference
proceedings to determine priority of invention which could result in substantial
cost to the Company even if the outcome is favorable to the Company.
 
    The Company also relies on trade secrets, confidentiality agreements and
other protective measures to protect its technology and proposed products. There
can be no assurance that third parties will not independently develop equivalent
proprietary information or techniques, will not gain access to the Company's
trade secrets or disclose such technology to the public, or that the Company can
maintain and protect unpatented proprietary technology. The Company typically
requires its employees, consultants, collaborators, advisors and corporate
partners to execute confidentiality agreements upon commencement of employment
or other relationships with the Company. There can be no assurance, however,
that these agreements will provide meaningful protection or adequate remedies
for the Company's technology in the event of unauthorized use or disclosure of
such information, or that the parties to such agreements will not breach such
agreements.
 
GOVERNMENT REGULATION
 
    FDA REQUIREMENTS FOR DRUG COMPOUNDS.  The research, testing, manufacture and
marketing of drug products are extensively regulated by numerous governmental
authorities in the United States and other countries. In the United States,
drugs are subject to rigorous regulation by the FDA. The federal Food, Drug and
Cosmetic Act, as amended (the "FDC Act"), and the regulations promulgated
thereunder, and other federal and state statutes and regulations, govern, among
other things, the research, development, testing, manufacture, storage,
recordkeeping, labeling, promotion and marketing and distribution of
pharmaceutical products. Failure to comply with applicable regulatory
requirements may subject a company to administrative or judicially imposed
sanctions such as warning letters, civil penalties, criminal prosecution,
injunctions, product seizure or detention, product recalls, total or partial
suspension of production, and FDA refusal to approve pending NDA applications or
NDA supplements to approved applications.
 
    The steps ordinarily required before a new pharmaceutical product may be
marketed in the United States include: (i) preclinical laboratory tests, IN VIVO
preclinical studies and formulation studies; (ii) the submission to the FDA of
an IND, which must become effective before clinical testing may commence; (iii)
adequate and well-controlled clinical trials to establish the safety and
effectiveness of the drug for each indication; (iv) the submission of an NDA to
the FDA; and (v) FDA review and approval of the NDA prior to any commercial sale
or shipment of the drug. Preclinical tests include laboratory evaluation of
product chemistry and formulation, as well as animal studies to assess the
potential safety and efficacy of the
 
                                       19
<PAGE>
product. Preclinical tests must be conducted in compliance with Good Laboratory
Practice regulations and compounds for clinical use must be formulated according
to cGMP requirements. The results of preclinical testing are submitted to the
FDA as part of an IND. A 30-day waiting period after the filing of each IND is
required prior to the commencement of clinical testing in humans. If the FDA has
not commented on or questioned the IND within this 30-day period, clinical
studies may begin. If the FDA has comments or questions, the questions must be
answered to the satisfaction of the FDA before initial clinical testing can
begin. In addition, the FDA may, at any time, impose a clinical hold on ongoing
clinical trials. If the FDA imposes a clinical hold, clinical trials cannot
commence or recommence without FDA authorization and then only under terms
authorized by the FDA. In some instances, the IND application process can result
in substantial delay and expense.
 
    Clinical trials involve the administration of the investigational new drug
to healthy volunteers or patients under the supervision of a qualified principal
investigator. Clinical trials are conducted in accordance with Good Clinical
Practice regulations under protocols detailing the objectives of the study, the
parameters to be used in monitoring safety and the effectiveness criteria to be
evaluated. Each protocol must be submitted to the FDA as part of the IND.
Further, each clinical study must be conducted under the auspices of an
independent Institutional Review Board ("IRB") at the institution at which the
study will be conducted. The IRB will consider, among other things, ethical
factors, the safety of human subjects and the possible liability of the
institution. Clinical trials to support NDAs are typically conducted in three
sequential phases, but the phases may overlap. In Phase I, the initial
introduction of the drug into healthy human subjects or patients, the drug is
tested to assess metabolism, pharmacokinetics and pharmacological actions and
safety, including side effects associated with increasing doses. Phase II
usually involves studies in a limited patient population to (i) determine the
efficacy of the drug in specific, targeted indications, (ii) determine dosage
tolerance and optimal dosage and (iii) identify possible adverse effects and
safety risks. If a compound is found to be effective and to have an acceptable
safety profile in Phase II evaluations, Phase III trials are undertaken to
further evaluate clinical efficacy and to further test for safety within an
expanded patient population at geographically dispersed clinical study sites.
There can be no assurance that Phase I, Phase II or Phase III testing will be
completed successfully within any specified time period, if at all, with respect
to any of the Company's products subject to such testing.
 
    After completion of the required clinical testing, generally an NDA is
submitted. FDA approval of the NDA is required before marketing may begin in the
United States. The NDA must include the results of extensive clinical and other
testing and the compilation of data relating to the product's chemistry,
pharmacology and manufacture, the cost of all of which is substantial. The FDA
reviews all NDAs submitted before it accepts them for filing and may request
additional information rather than accepting an NDA for filing. In such an
event, the NDA must be resubmitted with the additional information and, again,
is subject to review before filing. Once the submission is accepted for filing,
the FDA begins an in-depth review of the NDA. Under the FDC Act, the FDA has 180
days in which to review the NDA and respond to the applicant. The review process
is often significantly extended by FDA requests for additional information or
clarification regarding information already provided in the submission. The FDA
may refer the application to the appropriate advisory committee, typically a
panel of clinicians, for review, evaluation and a recommendation as to whether
the application should be approved. The FDA is not bound by the recommendation
of an advisory committee. If FDA evaluations of the NDA and the manufacturing
facilities are favorable, the FDA may issue either an approval letter or an
approvable letter, which usually contains a number of conditions that must be
met in order to secure final approval of the NDA. When and if those conditions
have been met to the FDA's satisfaction, the FDA will issue an approval letter,
authorizing commercial marketing of the drug for certain indications. As a
condition of NDA approval, the FDA may require postmarketing testing and
surveillance to monitor the drug's safety or efficacy. If the FDA's evaluation
of the NDA submission or manufacturing facilities is not favorable, the FDA may
refuse to approve the NDA or issue a not approvable letter, outlining the
deficiencies in the submission and often requiring additional testing or
information. Notwithstanding the submission of any requested additional data or
information in response to an approvable or not approvable letter, the FDA
ultimately may decide
 
                                       20
<PAGE>
that the application does not satisfy the regulatory criteria for approval. Once
granted, product approvals may be withdrawn if compliance with regulatory
standards is not maintained or problems occur following initial marketing.
 
    MANUFACTURING.  Each domestic drug manufacturing facility must be registered
with FDA. Domestic drug manufacturing establishments are subject to periodic
inspection by the FDA and must comply with cGMP. Further, the Company or its
third party manufacturer must pass a preapproval inspection of its manufacturing
facilities by the FDA before obtaining marketing approval of any products. To
supply products for use in the United States, foreign manufacturing
establishments must comply with cGMP and are subject to periodic inspection by
the FDA or corresponding regulatory agencies in countries under reciprocal
agreements with the FDA. Drug product manufacturing establishments located in
California must be licensed by the State of California in compliance with local
regulatory requirements, and other states may have comparable regulations. The
Company uses and will continue to use third party manufacturers to produce its
products in clinical and commercial quantities. There can be no guarantee that
future FDA inspections will proceed without any compliance issues requiring the
expenditure of money or other resources.
 
    FOREIGN REGULATION OF DRUG COMPOUNDS.  Whether or not FDA approval has been
obtained, approval of a product by comparable regulatory authorities may be
necessary in foreign countries prior to the commencement of marketing of the
product in such countries. The approval procedure varies among countries, can
involve additional testing, and the time required may differ from that required
for FDA approval. Although there are some procedures for unified filings for
certain European countries with the sponsorship of the country which first
granted marketing approval, in general each country has its own procedures and
requirements, many of which are time consuming and expensive. Thus, there can be
substantial delays in obtaining required approvals from foreign regulatory
authorities after the relevant applications are filed. In Europe, marketing
authorizations may be submitted at either a centralized, a decentralized or a
national level. The centralized procedure is mandatory for the approval of
biotechnology products and provides for the grant of a single marketing
authorization which is valid in all European Community member states. As of
January 1995, a mutual recognition procedure is available at the request of the
applicant for all medicinal products which are not subject to the centralized
procedure. The Company will choose the appropriate route of European regulatory
filing to accomplish the most rapid regulatory approvals. There can be no
assurance that the chosen regulatory strategy will secure regulatory approvals
on a timely basis or at all.
 
    HAZARDOUS MATERIALS.  The Company's research and development processes
involve the controlled use of hazardous materials, chemicals and radioactive
materials and produce waste products. The Company is subject to federal, state
and local laws and regulations governing the use, manufacture, storage, handling
and disposal of such materials and waste products. Although the Company believes
that its safety procedures for handling and disposing of such materials comply
with the standards prescribed by such laws and regulations, the risk of
accidental contamination or injury from these materials cannot be eliminated
completely. In the event of such an accident, the Company could be held liable
for any damages that result and any such liability could exceed the resources of
the Company. Although the Company believes that it is in compliance in all
material respects with applicable environmental laws and regulations, there can
be no assurance that it will not be required to incur significant costs to
comply with environmental laws and regulations in the future, or that the
operations, business or assets of the Company will not be materially adversely
affected by current or future environmental laws or regulations.
 
COMPETITION
 
    The pharmaceutical and biopharmaceutical industries are subject to intense
competition and rapid and significant technological change. While several of
CVT's products target diseases for which there are presently no effective
therapies, CVT nevertheless is aware of companies which are developing products
 
                                       21
<PAGE>
that will compete for the same disease markets. For example, Kyowa Hakko Co.,
Ltd., Fujisawa Pharmaceutical, Japan and Discovery Therapeutics, Inc., are each
developing adenosine A(1) receptor antagonists. In addition, Sandoz and Glaxo
Wellcome P.L.C. both have adenosine A(1) receptor agonists under development. If
regulatory approvals are received, ranolazine may compete with several classes
of existing drugs for the treatment of angina, some of which are available in
generic form, including calcium channel blockers, beta blockers and nitrates.
There are also non-pharmacologic treatments such as coronary artery bypass
grafting ("CABG") and percutaneous transluminal coronary angioplasty ("PTCA").
However, for those patients who do not respond adequately to existing therapies
and remain symptomatic despite maximal treatment with existing anti-anginal
drugs and who are not candidates for CABG or PTCA, there is no currently
effective treatment. In refractory patients who are candidates for CABG or PTCA,
there is no effective pharmacologic treatment available. In the treatment of
intermittent claudication, ranolazine may compete with Trental, an FDA approved
drug developed by Hoechst Marion Roussel, Inc., beraprost, a prostaglandin being
developed by Bristol-Myers Squibb, Cilostazol, a prostaglandin E(1) derivative
being developed by Otsuka Pharmaceutical Co., Ltd., and L-carnitine, an amino
acid derivative being developed by Sigma Tau Pharmaceuticals, Inc.
 
    CVT believes that the principal competitive factors in the markets for
ranolazine and CVT-124 will include the length of time to receive regulatory
approval, product performance, product price, product supply, marketing and
sales capability and enforceability of patent and other proprietary rights. CVT
believes that it and its collaborative partners are or will be competitive with
respect to these factors. Nonetheless, because the Company's products are still
under development, the relative competitive position of the Company in the
future is difficult to predict.
 
    The Company expects that the pharmaceutical and biopharmaceutical industries
will continue to experience rapid technological development which may render the
Company's potential products non-competitive or obsolete. Many current and
potential competitors have substantially greater product development
capabilities and financial, marketing, scientific, and human resources than the
Company. Other companies may succeed in developing products earlier than the
Company, obtaining approvals for such products from the FDA more rapidly than
the Company or developing products that are safer and more effective than those
under development or proposed to be developed by the Company. While the Company
will seek to expand its technological capabilities in order to remain
competitive, there can be no assurance that research and development by others
will not render its technology or potential products obsolete or non-competitive
or result in treatments or cures superior to any therapy developed by the
Company, or that therapy developed by the Company will be preferred to any
existing or newly developed technologies.
 
PRODUCT LIABILITY INSURANCE
 
    The manufacture and sale of human therapeutic products involve an inherent
risk of product liability claims and associated adverse publicity. The Company
has only limited product liability insurance for clinical trials and no
commercial product liability insurance. There can be no assurance that it will
be able to maintain existing or obtain additional product liability insurance on
acceptable terms or with adequate coverage against potential liabilities. Such
insurance is expensive, difficult to obtain and may not be available in the
future on acceptable terms, or at all. An inability to obtain sufficient
insurance coverage on reasonable terms or to otherwise protect against potential
product liability claims could prevent or inhibit the commercialization of the
Company's potential products. A product liability claim brought against the
Company in excess of its insurance coverage, if any, or a product withdrawal
could have a material adverse effect upon the Company's business, financial
condition and results of operations.
 
                                       22
<PAGE>
EMPLOYEES
 
    As of December 31, 1996, CVT employed 42 individuals full-time, including 16
who hold doctoral degrees. Of the Company's full-time work force, 30 employees
are engaged in or directly support research and development activities and 12
are engaged in business development, finance and administrative activities. The
Company's employees are not represented by a collective bargaining agreement.
The Company believes its relations with its employees are good.
 
ITEM 2. PROPERTIES
 
    The Company currently leases a 61,081 square foot building in Palo Alto,
California, of which approximately 33,783 square feet are subleased to two third
parties. The initial term of the lease expires in February 2002 with an option
to renew for five years, and the subleases expire in March 1997 and March 1998,
respectively. CVT believes that this facility will be adequate to meet the
Company's needs for the foreseeable future.
 
ITEM 3. LEGAL PROCEEDINGS
 
    The Company is not a party to any material legal proceedings.
 
                                       23
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
 
    The Company's Annual Meeting of Stockholders was held on October 29, 1996.
The matters voted upon at the meeting and the voting of the stockholders with
respect thereto are reflected below in numbers that do not reflect the 1-for-10
reverse stock split of the Company's Common Stock that was approved at the
meeting.
 
    1.  Election of the following directors to serve until the next Annual
Meeting of Stockholders and until their successors are elected:
 
<TABLE>
<S>                                                            <C>              <C>
Louis G. Lange, M.D., Ph.D...................................  For:  33,008,485 Withheld:  0
 
Samuel D. Colella............................................  For:  33,008,485 Withheld:  0
 
Thomas L. Gutshall...........................................  For:  33,008,485 Withheld:  0
 
Barbara J. McNeil, M.D., Ph.D................................  For:  33,008,485 Withheld:  0
 
J. Leighton Read, M.D........................................  For:  33,008,485 Withheld:  0
 
Costa G. Sevastopolous, Ph.D.................................  For:  33,008,485 Withheld:  0
 
Isaac Stein..................................................  For:  33,008,485 Withheld:  0
</TABLE>
 
    2.  Approval of an amendment to the Company's Restated Certificate of
Incorporation to: a) effect a 1-for-10 reverse stock split of the Company's
Common Stock; and b) eliminate the $2.00 threshold for automatic conversion of
the Preferred Stock upon an initial public offering:
 
<TABLE>
<S>                 <C>        <C>        <C>        <C>        <C>        <C>
Common Stock        For:       3,208,244  Against:           0  Abstain:           0
Preferred Stock     For:       29,750,241 Against       50,000  Abstain:      30,000
</TABLE>
 
    3.  Approval of the amendment and restatement of the Company's Restated
Certificate of Incorporation, as amended, to be effective concurrently with the
closing of the Company's initial public offering:
 
<TABLE>
<S>                 <C>        <C>        <C>        <C>        <C>        <C>
Common Stock        For:       3,202,161  Against:           0  Abstain:       6,083
Preferred Stock     For:       29,800,241 Against            0  Abstain:      30,000
</TABLE>
 
    4.  Approval of the amendment and restatement of the Company's Bylaws, to be
effective concurrently with the closing of the Company's initial public
offering:
 
<TABLE>
<S>                 <C>        <C>        <C>        <C>        <C>        <C>
                    For:       33,002,402 Against:           0  Abstain:      86,083
</TABLE>
 
    5.  Approval of the amendment and restatement of the Company's 1994 Equity
Incentive Plan:
 
<TABLE>
<S>                 <C>        <C>        <C>        <C>        <C>        <C>
                    For:       32,851,869 Against:     156,916  Abstain:      95,500
</TABLE>
 
    6.  Approval of the amendment and restatement of the Company's Non-Employee
Directors' Stock Option Plan:
 
<TABLE>
<S>                 <C>        <C>        <C>        <C>        <C>        <C>
                    For:       32,867,869 Against:     140,916  Abstain:     483,000
</TABLE>
 
    7.  Adoption of an Employee Stock Purchase Plan:
 
<TABLE>
<S>                 <C>        <C>        <C>        <C>        <C>        <C>
                    For:       32,867,869 Against:     140,916  Abstain:      80,000
</TABLE>
 
    8.  Adoption of a form of Indemnity Agreement to be entered into by the
Company with each of its directors and executive officers:
 
<TABLE>
<S>                 <C>        <C>        <C>        <C>        <C>        <C>
                    For:       32,801,869 Against:     206,916  Abstain:      92,500
</TABLE>
 
                                       24
<PAGE>
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
 
MARKET INFORMATION
 
    Prior to the effectiveness of the Company's Registration Statement on Form
S-1, No. 333-12675, on November 19, 1996, there had been no established public
trading market for the Company's Common Stock. Since that date, the Company's
Common Stock has traded on the Nasdaq National Market System under the symbol
"CVTX." From November 19, 1996 - December 31, 1996, the high and low sales
prices per share for the Company's Common Stock as reported on Nasdaq National
Market System were $7.63 and $6.38, respectively.
 
    On March 10, 1997, the closing price for the Company's Common Stock was
$10.00 per share.
 
    As of March 10, 1997, the Company had approximately 261 holders of record of
its Common Stock.
 
DIVIDENDS
 
    The Company has never declared or paid any cash dividends on its capital
stock. The Company currently intends to retain any future earnings to finance
the growth and development of its business and therefore, does not anticipate
paying any cash dividends in the foreseeable future.
 
RECENT SALES OF UNREGISTERED SECURITIES
 
    From January 1, 1996 through December 31, 1996, the Company sold and issued
the following unregistered securities:
 
    (1) From January 1, 1996 through December 31, 1996, the Company granted
stock options to purchase 356,290 shares of Common Stock to a total of 53
employees, consultants and non-employee directors at a weighted average exercise
price of $2.50 per share pursuant to the Company's 1992 Stock Option Plan, 1994
Equity Incentive Plan and Non-Employee Directors' Stock Option Plan.
 
    (2) In March 1996, the Company issued and sold 375,000 shares of Series E
Preferred Stock, convertible into 37,500 shares of Common Stock, and warrants to
purchase 187,500 shares of Series E Preferred Stock, convertible into 18,750
shares of Common Stock, at a pre-conversion exercise price of $2.00 per share to
an accredited investor pursuant to the terms of a License Agreement dated March
27, 1996.
 
    (3) In March and May 1996, the Company issued and sold 6,535,970 shares of
Series G Preferred Stock, convertible into 653,592 shares of Common Stock, and
warrants to purchase 980,392 shares of Common Stock, convertible into 980,392
shares of Common Stock, at an exercise price of $2.50 per share to a total of 64
accredited investors, including one director, three officers and two individuals
who were officers and directors, for cash in the aggregate amount of
$13,071,940.
 
    (4) In September 1996, the Company issued warrants to purchase an aggregate
of 84,500 shares of Common Stock, at an exercise price of $20.00 per share, and
warrants to purchase an aggregate of 84,500 shares of Common Stock, at an
exercise price of $2.50 per share, to two accredited investors in connection
with a $5.0 million debt financing and pursuant to the terms of a Common Stock
Warrant Purchase Agreement.
 
    The share amounts set forth in this section give effect to the 1-for-10
reverse stock split of the Company's Common Stock effected in October 1996. The
sales and issuances of securities in the transactions described in paragraphs
(2)-(4) were deemed to be exempt from registration under the Securities Act by
virtue of Section 4(2), Regulation D or Regulation S promulgated thereunder.
With respect to the grant of stock options described in paragraph (1), an
exemption from registration was
 
                                       25
<PAGE>
unnecessary in that none of the transactions involved a "sale" of securities as
such term is used in Section 2(3) of the Securities Act.
 
    Appropriate legends are affixed to the stock certificate issued in the
aforementioned transactions. Similar legends were imposed in connection with any
subsequent sales of any such securities. All recipients received adequate
information about the Company or had access, through employment or other
relationships, to such information.
 
                                       26
<PAGE>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
 
    The information set forth below is not necessarily indicative of the results
of future operations and should be read in conjunction with the consolidated
financial statements and notes thereto appearing elsewhere in this report.
 
<TABLE>
<CAPTION>
                                                                                              INCEPTION   INCEPTION
                                                                                              (DEC. 11,   (DEC. 11,
                                                                                              1990) TO     1990) TO
                                                         YEAR ENDED DECEMBER 31,              DEC. 31,     DEC. 31,
                                              ---------------------------------------------  -----------  ----------
                                                 1996        1995        1994       1993        1992         1996
                                              ----------  ----------  ----------  ---------  -----------  ----------
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                           <C>         <C>         <C>         <C>        <C>          <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
License revenue.............................  $      250  $   --      $   --      $  --       $  --       $      250
Operating expenses:
  Research and development..................       7,141      12,856       8,823      4,731       1,167       34,718
  General and administrative................       2,917       3,402       2,802        947         429       10,497
                                              ----------  ----------  ----------  ---------  -----------  ----------
Total operating expenses....................      10,058      16,258      11,625      5,678       1,596       45,215
                                              ----------  ----------  ----------  ---------  -----------  ----------
Loss from operations........................      (9,808)    (16,258)    (11,625)    (5,678)     (1,596)     (44,965)
Interest (income) expense, net..............         557         466        (258)      (161)         34          638
                                              ----------  ----------  ----------  ---------  -----------  ----------
    Net loss................................  $  (10,365) $  (16,724) $  (11,367) $  (5,517)  $  (1,630)  $  (45,603)
                                              ----------  ----------  ----------  ---------  -----------  ----------
                                              ----------  ----------  ----------  ---------  -----------  ----------
 
Net loss per share..........................  $    (5.44)
                                              ----------
                                              ----------
Shares used in computing net loss per
  share.....................................       1,906
                                              ----------
                                              ----------
Pro forma net loss per share (1)............              $    (4.33)
                                                          ----------
                                                          ----------
Shares used in computing pro forma net loss
  per share (1).............................                   3,861
                                                          ----------
                                                          ----------
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                 DECEMBER 31,
                                                           --------------------------------------------------------
                                                              1996        1995        1994       1993       1992
                                                           ----------  ----------  ----------  ---------  ---------
                                                                                (IN THOUSANDS)
<S>                                                        <C>         <C>         <C>         <C>        <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short term investments........  $   21,568  $    5,569  $    9,743  $   5,466  $   4,030
Working capital..........................................      20,278         271       7,686      5,196      3,904
Total assets.............................................      26,139      11,448      16,099      7,662      5,375
Long-term portion of debt and capital lease
  obligations............................................       5,000       3,402       2,698        745        500
Deficit accumulated during development stage.............     (45,626)    (35,261)    (18,537)    (7,170)    (1,653)
Total stockholders' equity...............................      18,676       1,804      10,561      6,363      4,568
</TABLE>
 
------------------------
 
(1) See Note 1 of Notes to Consolidated Financial Statements for a description
    of the shares used in calculating pro forma net loss per share.
 
                                       27
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS
 
    This Management's Discussion and Analysis of Financial Condition and Results
of Operations and other parts of this report contain forward-looking statements
which involve risks and uncertainties. The Company's actual results may differ
materially from the results discussed in the forward-looking statements. Factors
that might cause such a difference include, but are not limited to, those
discussed in "Risk Factors."
 
OVERVIEW
 
    CVT is a development stage biopharmaceutical company focused exclusively on
the application of molecular cardiology to the discovery, development and
commercialization of novel small molecule drugs for the treatment of chronic
cardiovascular disease. Since its inception in December 1990, substantially all
of the Company's resources have been dedicated to research and development. To
date, CVT has not generated any product revenue and does not expect to generate
any such revenues for at least several years. As of December 31, 1996, the
Company had an accumulated deficit of approximately $45.6 million. The Company
expects its sources of revenue, if any, for the next several years to consist of
payments under existing and future corporate partnerships and interest income.
The process of developing the Company's products will require significant
additional research and development, preclinical testing and clinical trials, as
well as regulatory approval. These activities, together with the Company's
general and administrative expenses, are expected to result in operating losses
for the foreseeable future. The Company will not receive product revenue unless
it or its collaborative partners complete clinical trials and successfully
commercialize one or more of its products.
 
    CVT is subject to risks common to biopharmaceutical companies, including
risks inherent in its research and development efforts and clinical trials,
reliance on collaborative partners, enforcement of patent and proprietary
rights, the need for future capital, potential competition and uncertainty of
regulatory approval. In order for a product to be commercialized, it will be
necessary for CVT and its collaborators to conduct preclinical tests and
clinical trials, demonstrate efficacy and safety of the Company's product
candidates, obtain regulatory clearances and enter into manufacturing,
distribution and marketing arrangements, as well as obtain market acceptance.
There can be no assurance that the Company will generate revenues or achieve and
sustain profitability in the future.
 
RESULTS OF OPERATIONS
 
YEARS ENDED DECEMBER 31, 1996 AND 1995
 
    REVENUES.  The Company recognized revenues of $250,000 for the year ended
December 31, 1996, due to a non-refundable, up-front fee earned from a license
agreement with Bayer AG.
 
    RESEARCH AND DEVELOPMENT EXPENSES.  The Company's research and development
expenses decreased to $7.1 million for the year ended December 31, 1996,
compared to $12.9 million for the year ended December 31, 1995. The higher
expenses in 1995 were largely due to higher development expenditures associated
with the CVT-1 hypercholesterolemia program, which was terminated in late 1995
and for which minimal costs were incurred in 1996. In addition, research and
development expenses decreased in 1996 as a result of a decrease in research
personnel and related expenses resulting from a reduction in headcount in
November 1995. This was partially offset by a $750,000 license fee paid in
equity securities to a collaborative partner in March 1996. Under a current
license agreement, the Company may be obligated to make milestone payments
totaling $3.0 million to Syntex in 1997 unless the Company elects to terminate
the agreement. In addition, the Company expects research and development
expenses to increase significantly over the next several years as the Company
expands research and product development efforts. See Note 8 of Notes to
Consolidated Financial Statements.
 
                                       28
<PAGE>
    GENERAL AND ADMINISTRATIVE EXPENSES.  General and administrative expenses
decreased to $2.9 million for the year ended December 31, 1996, compared to $3.4
million for the year ended December 31, 1995, due to decreases in personnel and
related expenses. The Company expects general and administrative expense to
increase in the future due to an increase in the level of the Company's
activities, additional expenses associated with being a public company and
amortization of deferred compensation expense.
 
    INTEREST (EXPENSE) NET.  Interest (expense), net increased to $(557,000) for
the year ended December 31, 1996, compared to $(466,000) for the year ended
December 31, 1995, as a result of higher loan balances and prepayment penalties
associated with a restructuring of the Company's debt, partially offset by
higher average cash balances. The Company expects that interest (expense), net
will decrease as a result of lower debt costs associated with the Company's debt
restructuring and anticipated increases in interest income generated from the
proceeds of the Company's initial public offering and potential future funding
from existing and future collaborative partners. See Note 10 of Notes to
Consolidated Financial Statements.
 
    The Company records and amortizes over the related vesting periods deferred
compensation representing the difference between the exercise price of options
granted and the deemed fair value of its Common Stock at the time of grant.
Options generally vest over four years. Deferred compensation of approximately
$2.3 million has been recorded and will be amortized to both research and
development expenses as well as general and administrative expenses over the
related vesting periods (generally four years) of the options granted.
 
    The Company has not generated taxable income to date. At December 31, 1996,
the net operating losses available to offset future taxable income for federal
income tax purposes were approximately $41.0 million. Because the Company has
experienced ownership changes, future utilization of the carryforwards may be
limited in any one fiscal year pursuant to Internal Revenue Code regulations.
The carryforwards expire at various dates beginning in 2007 through 2011 if not
utilized. As a result of the annual limitation, a portion of these carryforwards
may expire before becoming available to reduce the Company's federal income tax
liabilities.
 
YEARS ENDED DECEMBER 31, 1995 AND 1994
 
    RESEARCH AND DEVELOPMENT EXPENSES.  The Company's research and development
expenses increased to $12.9 million for the year ended December 31, 1995, from
$8.8 million for the year ended December 31, 1994. Research and development
expenses increased as a result of higher development expenses primarily
associated with the CVT-1 program which was terminated in late 1995, along with
higher expenses associated with the hiring of additional personnel to support
the Company's expanding research and product development efforts, at that time.
 
    GENERAL AND ADMINISTRATIVE EXPENSES.  The Company's general and
administrative expenses increased to $3.4 million for the year ended December
31, 1995, from $2.8 million for the year ended December 31, 1994, primarily as a
result of costs associated with the increasing level of the Company's
activities, including increased headcount and related expenses, at that time.
 
    INTEREST (EXPENSE) NET.  Interest (expense) net increased to $(466,000) for
the year ended December 31, 1995, from interest income, net of $(258,000) for
the year ended December 31, 1994. These changes relate primarily to increased
debt balances and decreased cash and investment balances.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    The Company has financed its operations since inception primarily through
private placements of preferred equity securities, equipment and leasehold
improvement financing, other debt financing and payments under a corporate
collaboration. In November 1996, the Company completed an initial public
offering and raised net proceeds of approximately $13.0 million. As of December
31, 1996, the Company
 
                                       29
<PAGE>
had received approximately $63.4 million in net proceeds from the sale of equity
securities, and approximately $13.9 million, before repayment, from loans and
equipment and leasehold financings.
 
    On March 7, 1997, the Company entered into two research collaboration and
license agreements, one with Biogen and one with Biogen's wholly owned
subsidiary, Biotech Manufacturing. The Biogen Agreements grant the Biogen
entities the exclusive worldwide rights to develop and commercialize CVT-124 and
any other adenosine A(1) antagonist owned by CVT for all indications. In
exchange for such rights to develop, manufacture and sell the technology, CVT
received an upfront payment of $16.0 million, including $5.0 million in cash, a
$7.0 million equity investment consisting of the purchase of 669,857 shares of
the Company's Common Stock at $10.45 per share, and advanced funding of a
milestone payment and funding under a credit facility totalling $4.0 million. In
addition, CVT may receive development milestones, equity investments, funding
under a general purpose loan facility and royalties from any future product
sales.
 
    Cash, cash equivalents and short-term investments at December 31, 1996
totalled $21.6 million compared to $5.6 million at December 31, 1995. The
increase in 1996 was due to the receipt of the net proceeds from the sale of
equity securities in the Company's initial public offering. The Company's funds
are currently invested in short-term, investment grade, interest-bearing debt
obligations.
 
    Net cash used in operations for the year ended December 31, 1996 was $8.3
million, compared to $14.3 million for the year ended December 31, 1995. The
decrease in cash used in operations was primarily a result of a decrease in
research and development expenses and reduced headcount and related expenses.
Net cash used in operations in 1995 was $14.3 million, compared to $10.3 million
in 1994. Net cash used in operations increased in 1995 as compared to 1994
primarily due to the increase in research and development expenses, most of
which were related to clinical trials and other development expenditures for the
CVT-1 program which was terminated in November 1995.
 
    Through December 31, 1996, the Company had invested approximately $6.1
million in property and equipment, of which approximately $4.4 million was
financed through equipment and leasehold financings.
 
    On September 27, 1996, the Company completed a refinancing of its existing
debt obligations with $5.0 million of debt financing from entities associated
with Hambrecht & Quist Group (the "H&Q Debt Financings"). The H&Q Debt
Financings consist of a $3.0 million term loan which bears interest at the rate
of 9.0% per annum, secured by all of the assets of the Company, and has a final
maturity in September 1999, and a $2.0 million term loan which bears interest at
9.0% per annum and is due January 1, 1997. On January 1, 1997, the Company
converted the $2.0 million term loan to an equipment lease which bears interest
at the rate of 9.0% per annum and has a final maturity in September 1999. Future
minimum lease payments will total $1.0 million in 1997, $0.8 million in 1998 and
$0.6 million in 1999. See Note 5 of Notes to Consolidated Financial Statements.
 
    The Company will require substantial additional funding in order to complete
its research and development activities and commercialize any potential
products. The Company currently estimates that its existing resources, including
the net proceeds from the Company's initial public offering, payments from the
Biogen entities and projected interest income, will enable the Company to
maintain its current and planned operations through 1998. However, there can be
no assurance that the Company will not require additional funding prior to such
time. The Company's forecast of the period of time through which its financial
resources will be adequate to support its operations is a forward-looking
statement that involves risks and uncertainties, and actual results could vary
as a result of a number of factors. The Company's future capital requirements
will depend on many factors, including scientific progress in its research and
development programs, the size and complexity of such programs, the scope and
results of preclinical studies and clinical trials, the ability of the Company
to establish and maintain corporate partnerships, the time and costs involved in
obtaining regulatory approvals, the costs involved in filing, prosecuting and
enforcing patent claims, competing technological and market developments, the
cost of manufacturing preclinical and clinical material and other factors not
within the Company's control. There can be no
 
                                       30
<PAGE>
assurance that such additional financing to meet the Company's capital
requirements will be available on acceptable terms or at all. Insufficient funds
may require the Company to delay, scale back or eliminate some or all of its
research or development programs, to lose rights under existing licenses or to
relinquish greater or all rights to product candidates at an earlier stage of
development or on less favorable terms than the Company would otherwise choose
or may adversely affect the Company's ability to operate as a going concern. If
additional funds are raised by issuing equity securities, substantial dilution
to existing stockholders may result.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
    The Company's Financial Statements and notes thereto appear beginning on
page F-1 of this report.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE
 
    Not applicable.
 
                                       31
<PAGE>
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
 
    The executive officers, directors and key employees of the Company and their
ages as of March 15, 1997 are as follows:
 
<TABLE>
<CAPTION>
NAME                                                       AGE                            POSITION
-----------------------------------------------------      ---      -----------------------------------------------------
<S>                                                    <C>          <C>
Louis G. Lange, M.D., Ph.D...........................          48   Chairman of the Board and Chief Executive Officer
Kathleen A. Stafford.................................          39   Chief Financial Officer
Michael M. Wick, M.D., Ph.D..........................          51   Senior Vice President, Research
Andrew A. Wolff, M.D.................................          42   Vice President, Clinical Research and Development
Michael J. Sterns, D.V.M.............................          38   Director of Business Development
Samuel D. Colella (1)(2).............................          57   Director
Thomas L. Gutshall (2)...............................          59   Director
Barbara J. McNeil, M.D., Ph.D. (2)...................          56   Director
J. Leighton Read, M.D. (1)...........................          46   Director
Costa G. Sevastopoulos, Ph.D. (1)....................          54   Director
Isaac Stein (2)......................................          50   Director
</TABLE>
 
------------------------------
 
(1) Member of the Compensation Committee
 
(2) Member of the Audit Committee
 
    LOUIS G. LANGE, M.D., PH.D., was a founder of the Company and has served as
its Chairman of the Board and Chief Executive Officer since August 1992. From
July 1980 to August 1992, Dr. Lange served on the faculty of Washington
University School of Medicine, including as Chief of Cardiology at Jewish
Hospital in St. Louis, Missouri from May 1985 to August 1992, and as a full
professor of medicine from July 1990 until August 1992. Dr. Lange is
internationally recognized as an expert in the field of molecular mechanisms of
cardiovascular disease. He holds an M.D. from Harvard Medical School and a Ph.D.
in biochemistry from Harvard University.
 
    KATHLEEN A. STAFFORD has served as Chief Financial Officer of the Company
since December 1995. From May 1995 to December 1995, Ms. Stafford served as a
consultant to the Company in the area of financial affairs. From January 1994 to
October 1994, Ms. Stafford served as a Vice President and the Chief Financial
Officer for ONYX Pharmaceuticals, Inc., a biotechnology company. From February
1989 until January 1994, Ms. Stafford served as a Treasurer for Amgen, Inc., a
biopharmaceutical company. Ms. Stafford holds a B.S. in combined science from
Santa Clara University and an M.B.A. from Virginia Polytechnic Institute.
 
    MICHAEL M. WICK, M.D., PH.D., has served as Senior Vice President, Research
for the Company since November 1995. From May 1995 to November 1995, Dr. Wick
served as Vice President, Biological Chemistry for the Company. From September
1990 until May 1995, he served as the Executive Director of Oncology-Immunology
Research and Discovery at Lederle Laboratories, American Cyanamid Inc., a
pharmaceutical company. In addition, from May 1994 to May 1995, he served as the
Executive Director of Clinical Research for Oncology and Chairman of the Joint
Immunex American Cyanamid Research and Development Committee. He holds an M.D.
from Harvard Medical School and a Ph.D. in chemistry from Harvard University.
 
    ANDREW A. WOLFF, M.D., has served as Vice President of Clinical Research and
Development for the Company since September 1996. From September 1994 to
September 1996, Dr. Wolff served as Vice
 
                                       32
<PAGE>
President of Clinical Research for the Company. From June 1993 until September
1994, Dr. Wolff served as the Executive Director of Medical Research and New
Molecules Clinical Programs Leader for Syntex, a pharmaceutical and healthcare
company. From July 1990 until June 1993, Dr. Wolff served as the Director,
Department for Cardiovascular Therapy for Syntex. In addition, from August 1992
to February 1993, he served as the acting Associate Director for Europe,
Institute for Cardiovascular and Central Nervous System Clinical Research,
Maidenhead, England. Since June 1988, Dr. Wolff has served also as an assistant
clinical professor of medicine in the Cardiology Division of the University of
California, San Francisco. He holds an M.D. from the Washington University
Medical School.
 
    MICHAEL J. STERNS, D.V.M., has served as the Director of Business
Development for the Company since February 1995. From March 1993 until February
1995, Dr. Sterns served as the Senior Director, Business Development for
Microcide Pharmaceuticals, Inc., a biopharmaceutical company. From October 1990
to March 1993, he served as Director, Business Development for ALZA Corporation,
a pharmaceutical company. Dr. Sterns holds a D.V.M. from the University of
California at Davis and an M.B.A. from the University of California at Berkeley.
 
    SAMUEL D. COLELLA has served as a director of the Company since October
1992. Since November 1984, Mr. Colella has been a General Partner of
Institutional Venture Partners, a private venture capital firm. He currently
serves as Chairman of the Board of Directors of ONYX Pharmaceuticals, Inc. He
also serves as a director of Integrated Medical Resources, Inc., Imagyn Medical,
Inc., Pharmacopeia, Inc. and Vivus, Inc. Mr. Colella holds a B.S. in business
and engineering from the University of Pittsburgh and an M.B.A. from Stanford
University.
 
    THOMAS L. GUTSHALL has served as a director of the Company since December
1994 and as a consultant to the Company since September 1996. Since August 1996,
Mr. Gutshall has served as the Chief Executive Officer of Cepheid Corporation, a
diagnostics company. From January 1995 to September 1996, he served as President
and Chief Operating Officer of the Company. From June 1989 until December 1994,
Mr. Gutshall served as an Executive Vice President at Syntex Corporation, a
pharmaceutical and healthcare company. Mr. Gutshall earned a B.S. in chemical
engineering from the University of Delaware and completed the Executive
Marketing Management Program at Harvard Business School.
 
    BARBARA J. MCNEIL, M.D., PH.D., has served as a director of the Company
since December 1994. Since 1990, Dr. McNeil has served as the Ridley Watts
Professor of Health Care Policy at Harvard Medical School. In addition, since
July 1988, she has served as the Chair of the Department of Health Care Policy
at Harvard Medical School. Since 1983, she has been a professor of radiology at
both Harvard Medical School and Brigham and Women's Hospital in Boston. Dr.
McNeil also serves as a director of Patient Infosystems, Inc. Dr. McNeil holds
an M.D. from Harvard Medical School and a Ph.D. in biological chemistry from
Harvard University.
 
    J. LEIGHTON READ, M.D., has served as a director of the Company since
September 1992. Dr. Read founded Aviron, a biopharmaceutical company focused on
prevention of disease, and has served as its Chairman and Chief Executive
Officer since April 1992. In 1987, he co-founded Affymax N.V. with Dr. Alejandro
Zaffaroni, serving initially as its Executive Vice President and Chief Operating
Officer and later as President of the Pharma Division and as a Managing Director
of the parent company. Prior to that, he was a partner in Interhealth Limited,
an investment partnership. Dr. Read trained in internal medicine and held
appointments at the Harvard Medical School and School of Public Health, where
his research dealt with techniques for assessing the cost-effectiveness of
pharmaceutical products. He is a co-inventor of Affymax's VLSIPS technology,
combining photolithography and combinatorial chemistry for which he shared in
the Newcomb Cleveland Prize awarded for the best paper of the year Science and
the Distinguished Inventor Award of the Intellectual Property Association. Dr.
Read holds a B.S. in biology and psychology from Rice University and an M.D.
from the University of Texas Health Science Center at San Antonio.
 
                                       33
<PAGE>
    COSTA G. SEVASTOPOULOS, PH.D., has served as a director of the Company since
October 1992. Since May 1994, Dr. Sevastopoulos has been an independent
consultant and a limited partner of Delphi Ventures I and II, both venture
capital partnerships. From April 1988 to April 1994, he served as a general
partner of Delphi BioVentures, a venture capital partnership, which he
co-founded. Dr. Sevastopoulos currently serves as Chairman of the Board of
Directors of Metra Biosystems, Inc. He holds a B.S. in physics from the
University of Athens, Greece, an M.S. in electrical engineering from the
California Institute of Technology, an M.B.A. from the European Institute of
Business Administration in Fontainebleau, France, and a Ph.D. in molecular
biology from the University of California at Berkeley.
 
    ISAAC STEIN has served as a director of the Company since March 1995. Since
its inception, Mr. Stein has served as the president of Waverley Associates,
Inc., a private investment firm, which he founded in 1983. In addition, Mr.
Stein currently serves as Chairman of Stanford Health Services and is a director
of Stanford University Hospital and a Trustee of Stanford University. He also
serves as the Chairman of the UCSF -- Stanford Health Care, formed in 1997 for
the proposed merger of clinical activities of UCSF and Stanford University. From
February 1993 to February 1994, Mr. Stein served as a special assistant to the
President of Stanford University. From July 1990 to December 1992, he served as
Chairman of Esprit de Corp., an apparel company, and from March 1991 to February
1992, he served as its acting President and Chief Executive Officer. Mr. Stein
currently serves as a director of ALZA Corporation, Raychem Corporation, and The
Benham Group. Mr. Stein holds a B.A. in economics and mathematics from Colgate
University, an M.B.A. from Stanford Business School and a J.D. from Stanford Law
School.
 
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
 
    Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission (the "Commission") initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than ten
percent stockholders are required by Commission regulation to furnish the
Company with copies of all Section 16(a) forms they file.
 
    To the Company's knowledge, based solely upon a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
 
ITEM 11. EXECUTIVE COMPENSATION
 
DIRECTOR COMPENSATION
 
    Other than Isaac Stein and Barbara McNeil, who receive $1,000 per meeting
attended as described below, the Company's directors currently do not receive
cash compensation for service on the Board of Directors or any committee
thereof, but directors may be reimbursed for reasonable expenses in connection
with attendance at Board and committee meetings.
 
    In July 1994, the Board of Directors adopted and in July 1995, the
stockholders approved the Non-Employee Directors' Stock Option Plan (the
"Directors' Plan"). On September 23, 1996, the Board of Directors amended and
restated, and on October 29, 1996, the stockholders approved the amended and
restated Directors' Plan. The Directors' Plan provides for automatic grants of
options to purchase shares of Common Stock to non-employee directors of the
Company ("Non-Employee Directors"). Pursuant to the terms of the Directors'
Plan, each Non-Employee Director is automatically granted an option to purchase
shares of Common Stock. On September 8, 1996, each Non-Employee Director was
granted an option to purchase 500 shares. These options vest at the rate of
1/36 per month. Upon the amendment and restatement of the Directors' Plan, each
Non-Employee Director was granted an additional option to purchase 15,000
shares. Each subsequently elected Non-Employee Director will also be granted an
option
 
                                       34
<PAGE>
to purchase 15,000 shares at his or her election. These options for 15,000
shares vest as to 33.33% of the shares 12 months from the date of grant, and at
the rate of 1/36 per month thereafter, if the Non-Employee Director provides
services to the Company or its affiliates through the applicable vesting date.
In addition, at each annual meeting of the Company's stockholders starting in
1997, each Non-Employee Director will be granted an option to purchase 5,000
shares, which will vest 12 months from the date of grant if the Non-Employee
Director provides services to the Company or its affiliates through such date.
 
    The exercise price of options granted under the Directors' Plan must equal
the fair market value of the Common Stock on the date of grant; provided,
however, that prior to the September 1996 amendment and restatement of the
Directors' Plan, the exercise price of options granted to any person possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or of any of its affiliates was 110% of the fair market value on the
date of grant. No option granted under the Directors' Plan may be exercised
after the expiration of ten years from date it was granted. No option may be
transferred by the optionee other than by will or the laws of descent or
distribution, provided that an optionee may designate a beneficiary who may
exercise the option following the optionee's death. Upon certain changes in
control of the Company, outstanding options will be assumed or substituted by
the surviving corporation. The Directors' Plan will terminate in September 2006,
unless earlier terminated by the Board.
 
    Under the terms of a Separation and Consulting Agreement between the Company
and Thomas L. Gutshall, the Company accepted Mr. Gutshall's resignation as
President and Chief Operating Officer effective September 2, 1996 and Mr.
Gutshall agreed to continue to serve as a member of the Company's Board of
Directors and to serve as a consultant to the Company through December 31, 1998.
Pursuant to this agreement, Mr. Gutshall received $22,750 as compensation for
his consulting services in the fiscal year ended December 31, 1996. Mr. Gutshall
will receive $3,500 per month as consulting fees during the fiscal years ending
December 31, 1997 and 1998.
 
    Under the terms of a Consulting Agreement for Individual Consultants between
the Company and Barbara J. McNeil, M.D., Ph.D., the Company agreed to pay a
fixed fee of $1,000 per day as compensation for Dr. McNeil's services. In the
fiscal year ended December 31, 1996, Dr. McNeil earned $2,000 as compensation
for her services. The Company paid that amount to Dr. McNeil in 1997. The
Company may terminate this agreement for any reason upon written notice.
 
    Under the terms of a Consulting Agreement for Individual Consultants between
the Company and Isaac Stein, Mr. Stein received $6,000 as compensation for his
services in the fiscal year ended December 31, 1996. In addition, in September
1996 the Company granted Mr. Stein an option to purchase 10,000 shares of Common
Stock outside the Directors' Plan at an exercise price of $2.50 per share. The
option vests over a three year period. The Company may terminate the agreement
for any reason upon written notice.
 
    As compensation for consulting services rendered in the fiscal year ended
December 31, 1996, the Company paid Dr. Sevastopoulos $30,000 in 1997. In
addition, in September 1996, the Company granted him an option to purchase 5,000
shares of Common Stock at an exercise price of $2.50 per share. The option grant
vests over a three year period.
 
                                       35
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
 
    The following table sets forth certain compensation awarded or paid by the
Company during the fiscal years ended December 31, 1995 and 1996 to its Chief
Executive Officer and the Company's next four most highly compensated officers
during the fiscal year ended December 31, 1996 (collectively, the "Named
Executive Officers"):
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                                                  LONG-TERM
                                                                                                COMPENSATION
                                                                ANNUAL COMPENSATION             -------------
                                                     -----------------------------------------   SECURITIES
                                                                               OTHER ANNUAL      UNDERLYING        ALL OTHER
NAME AND PRINCIPAL POSITION                 YEAR     SALARY($)   BONUS($)     COMPENSATION($)    OPTIONS(#)     COMPENSATION($)
----------------------------------------  ---------  ---------  -----------  -----------------  -------------  -----------------
<S>                                       <C>        <C>        <C>          <C>                <C>            <C>
Louis G. Lange, M.D., Ph.D.                 1995       250,000      --              30,000(1)        55,000           --
  Chairman of the Board                     1996       250,000      10,000          94,242(2)        65,000           --
  and Chief Executive Officer
 
Kathleen A. Stafford                        1995         5,000      --              --               35,250           95,425(3)
  Chief Financial Officer                   1996       109,800      --              --               14,250           --
 
Michael M. Wick, M.D., Ph.D.                1995       160,045      30,000          --               62,500           --
  Senior Vice President,                    1996       190,000      10,000          --               27,500           --
  Research
 
Andrew W. Wolff, M.D.                       1995       175,500      17,500          --                7,500           --
  Vice President, Clinical                  1996       184,000      10,000          --               22,500           --
  Research and Development
 
George F. Schreiner, M.D., Ph.D.            1995       159,750      --              26,625(1)        12,800           --
  Vice President, Clinical                  1996       163,000       5,000          22,785(5)        15,000           --
  Research and Development (4)
</TABLE>
 
------------------------------
 
(1) Consists of amounts forgiven on loan obligations.
 
(2) Consists of $92,880 forgiven on loan obligations and $1,362 paid to satisfy
    related tax obligations. See "Certain Transactions."
 
(3) Consists of fees paid for consulting services.
 
(4) Dr. Schreiner terminated his employment with the Company in January 1997.
 
(5) Consists of $15,066 forgiven on loan obligations, $219 paid to satisfy
    related tax obligations and $7,500 in mortgage assistance. See "Certain
    Transactions."
 
                                       36
<PAGE>
                       OPTION GRANTS IN LAST FISCAL YEAR
 
    The following table sets forth each grant of stock options made during the
fiscal year ended December 31, 1996 to each of the Named Executive Officers:
 
<TABLE>
<CAPTION>
                                                                 INDIVIDUAL GRANTS                     POTENTIAL REALIZABLE
                                               ------------------------------------------------------    VALUE AT ASSUMED
                                                             PERCENTAGE OF                               ANNUAL RATES OF
                                                NUMBER OF    TOTAL OPTIONS                                 STOCK PRICE
                                               SECURITIES     GRANTED TO                                 APPRECIATION FOR
                                               UNDERLYING    EMPLOYEES IN     EXERCISE                    OPTION TERM(3)
                                                 OPTIONS        FISCAL          PRICE     EXPIRATION   --------------------
NAME                                           GRANTED(#)     YEAR(%)(1)     ($/SH) (2)      DATE        5%($)     10%($)
---------------------------------------------  -----------  ---------------  -----------  -----------  ---------  ---------
<S>                                            <C>          <C>              <C>          <C>          <C>        <C>
Louis G. Lange, M.D., Ph.D...................      65,000(4)        18.21          2.50     09/09/06     102,195    258,983
Kathleen A. Stafford.........................      12,000(5)         3.36          2.50     09/09/06      18,867     47,812
                                                    2,250(6)         0.63          2.50     03/27/06       3,538      8,965
Michael M. Wick, M.D., Ph.D..................      27,500(5)         7.72          2.50     09/09/06      43,237    109,570
Andrew A. Wolff, M.D.........................      22,500(5)         6.32          2.50     09/09/06      35,375     89,648
George F. Schreiner, M.D., Ph.D. (7).........      15,000           4.21           2.50     04/07/97           0          0
</TABLE>
 
------------------------------
 
(1) Based on an aggregate of options to purchase 356,290 shares of the Company's
    Common Stock granted to employees and directors of, and consultants to, the
    Company during the fiscal year ended December 31, 1996, including the Named
    Executive Officers.
 
(2) The exercise price per share of each option was equal to the fair market
    value of the Common Stock on the date of grant as determined by the Board of
    Directors.
 
(3) The potential realizable value is calculated based on the term of the option
    at its time of grant (ten years). It is calculated assuming that the stock
    price on the date of grant appreciates from the date of grant at the
    indicated annual rate compounded annually for the entire term of the option
    and the option is exercised and sold on the last day of its term for the
    appreciated stock price. No gain to the optionee is possible unless the
    stock price increases over the option term.
 
(4) Twenty percent of the option vests one year from the vesting commencement
    date, with subsequent vesting at a rate of 1.67% each month until fully
    vested. The option expires ten years from the date of grant or earlier upon
    termination of employment.
 
(5) Twenty-four percent of the option vests one year from the vesting
    commencement date, with subsequent vesting at a rate of two percent per
    month until fully vested. The option expires ten years from the date of
    grant or earlier upon termination of employment.
 
(6) The option is fully vested and expires ten years from the date grant or
    earlier upon termination of employment.
 
(7) In connection with the termination of Dr. Schreiner's employment, the option
    to purchase 15,000 shares did not vest and will be cancelled on April 7,
    1997.
 
                                       37
<PAGE>
 AGGREGATE OPTION EXERCISES IN FISCAL 1996 AND DECEMBER 31, 1996 OPTION VALUES
 
    The following table sets forth the number and value of securities underlying
unexercised options held by each of the Named Executive Officers at December 31,
1996. No options were exercised by the Named Executive Officers in the fiscal
year ended December 31, 1996.
 
<TABLE>
<CAPTION>
                                                                                            VALUE OF UNEXERCISED
                                                                                           IN- THE-MONEY OPTIONS
                                                                NUMBER OF SECURITIES          AT DECEMBER 31,
                                                           UNDERLYING UNEXERCISED OPTIONS         1996($)
                                                              AT DECEMBER 31, 1996(#)           EXERCISABLE/
NAME                                                        EXERCISABLE/UNEXERCISABLE(1)      UNEXERCISABLE(2)
---------------------------------------------------------  ------------------------------  ----------------------
<S>                                                        <C>                             <C>
Louis G. Lange, M.D., Ph.D...............................              195,000/0                   890,350/0
Kathleen A. Stafford.....................................               39,500/0                   165,505/0
Michael M. Wick, M.D., Ph.D..............................               60,000/0                   251,400/0
Andrew A. Wolff, M.D.....................................               52,500/0                   219,975/0
George F. Schreiner, M.D., Ph.D..........................               68,025/0                   337,237/0
</TABLE>
 
------------------------------
 
(1) As of December 31, 1996, of the 195,000, 39,500, 60,000, 52,500 and 68,025
    option shares held by Louis G. Lange, M.D., Ph.D., Kathleen A. Stafford,
    Michael M. Wick, M.D., Ph.D., Andrew A. Wolff, M.D. and George F. Schreiner,
    M.D., Ph.D., 125,750, 27,200, 47,650, 40,175 and 33,383 option shares,
    respectively, were unvested and subject to repurchase by the Company, if
    exercised.
 
(2) Based on the fair market value of the Company's Common Stock at December 31,
    1996 ($6.69) minus the exercise price of the options.
 
                                       38
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS
 
    The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of February 10, 1997 by: (i) each
stockholder who is known by the Company to own beneficially more than 5% of the
Common Stock; (ii) each Named Executive Officer of the Company; (iii) each
director of the Company; and (iv) all directors and executive officers of the
Company as a group.
 
<TABLE>
<CAPTION>
                                                                                                SHARES BENEFICIALLY
                                                                                                     OWNED(1)
                                                                                              -----------------------
                                                                                                          PERCENT OF
BENEFICIAL OWNER                                                                                NUMBER       TOTAL
--------------------------------------------------------------------------------------------  ----------  -----------
<S>                                                                                           <C>         <C>
Zesiger Capital Group, LLC (2) .............................................................     649,800       10.50%
  320 Park Avenue
  New York, NY 10022
 
Samuel D. Colella (3).......................................................................     603,406        9.65
 
Entities affiliated with Institutional Venture Management V., L.P. (4) .....................     586,406        9.41
  3000 Sand Hill Road
  Building 2, Suite 290
  Menlo Park, CA 94025
 
Entities affiliated with Delphi Ventures II, L.P. (5) ......................................     367,979        5.93
  3000 Sand Hill Road
  Building 1, Suite 135
  Menlo Park, CA 94025
 
Entities affiliated with BankAmerica Ventures (6) ..........................................     367,186        5.93
  950 Tower Lane, Suite 700
  Foster City, CA 94404
 
Entities affiliated with Asset Management Associates, 1989, L.P. (7) .......................     314,398        5.07
  2275 East Bayshore Road, Suite 150
  Palo Alto, CA 94303
 
Louis G. Lange, M.D., Ph.D. (8).............................................................     308,077        4.83
 
Kathleen A. Stafford (9)....................................................................      63,250        1.02
 
Michael M. Wick, M.D., Ph.D. (10)...........................................................      62,539        1.00
 
Thomas L. Gutshall (11).....................................................................      59,339       *
 
Andrew A. Wolff, M.D. (12)..................................................................      52,500       *
 
Isaac Stein (13)............................................................................      40,999       *
 
J. Leighton Read, M.D. (14).................................................................      23,221       *
 
Costa G. Sevastopoulos, Ph.D. (15)..........................................................      21,292       *
 
Barbara J. McNeil, M.D., Ph.D. (16).........................................................      18,499       *
 
George F. Schreiner, M.D., Ph.D. (17).......................................................      35,107       *
 
All directors and executive officers as a group (10 persons) (18)...........................   1,253,102       18.68
</TABLE>
 
------------------------------
 
*   Represents beneficial ownership of less than 1%.
 
(1) This table is based upon information supplied by officers, directors and
    principal stockholders and Schedules 13D and 13G, if any, filed with the
    Commission. Beneficial ownership is determined in accordance with the rules
    of the Commission and generally includes voting or investment power with
    respect to securities. Beneficial ownership also includes shares of stock
    subject to options and warrants currently exercisable or convertible, or
    exercisable or convertible within 60 days of the date of
 
                                       39
<PAGE>
    this table. Except as indicated by footnote, and subject to community
    property laws where applicable, to the knowledge of the Company, all persons
    named in the table above have sole voting and investment power with respect
    to all shares of Common Stock, shown as beneficially owned by them.
    Percentage of beneficial ownership is based on 6,188,778 shares of Common
    Stock outstanding as of February 10, 1997.
 
(2) Zesiger Capital Group, LLC has dispositive power pursuant to authority
    granted by its investment clients. Zesiger Capital Group, LLC disclaims
    beneficial ownership of all such shares.
 
(3) Includes 17,000 shares issuable upon the exercise of options, 15,777 of
    which would be subject to repurchase by the Company as of April 11, 1997, if
    issued. Also includes the shares identified in footnote (4) below. Mr.
    Colella is a general partner of IVM, the general partner of IVP. Mr. Colella
    disclaims beneficial ownership of the shares listed in footnote (4), except
    to the extent of his pecuniary interests therein.
 
(4) Consists of 9,578 shares held by Institutional Ventures Management V, L.P.
    ("IVM"), 531,828 shares held by Institutional Venture Partners V, L.P.
    ("IVP"), 775 shares issuable upon the exercise of outstanding warrants held
    by IVM exercisable within 60 days of February 10, 1997 and 44,225 shares
    issuable upon the exercise of outstanding warrants held by IVP exercisable
    within 60 days of February 10, 1997. Mr. Colella, a director of the Company,
    is a general partner of IVM. IVM is the general partner of IVP. Mr. Colella
    disclaims beneficial ownership of the shares held by IVM and IVP, except to
    the extent of his pecuniary interests therein.
 
(5) Consists of 1,904 shares held by Delphi BioInvestments II, L.P.
    ("BioInvestments"), 353,326 shares held by Delphi Ventures II, L.P.
    ("Ventures"), 64 shares issuable upon the exercise of an outstanding warrant
    held by BioInvestments exercisable within 60 days of February 10, 1997 and
    12,685 shares issuable upon the exercise of an outstanding warrant held by
    Ventures exercisable within 60 days of February 10, 1997. Dr. Sevastopoulos,
    a director of the Company, is a limited partner of Delphi Management
    Partners II, which is the general partner of BioInvestments and Ventures.
    Dr. Sevastopoulos disclaims beneficial ownership of the shares held by
    BioInvestments and Ventures, except to the extent of his pecuniary interests
    therein.
 
(6) Consists of 30,468 shares held by BA Venture Partners II, 274,218 shares
    held by BankAmerica Ventures and 62,500 shares held by Bank of America
    NT&SA.
 
(7) Consists of 267,828 shares held by Asset Management Associates 1989, L.P.
    ("AMA"), 37,070 shares held by Asset Management Partners and 9,500 shares
    issuable upon the exercise of an outstanding warrant held by AMA exercisable
    within 60 days of February 10, 1997.
 
(8) Includes 195,000 shares issuable upon the exercise of options, 117,533 of
    which would be subject to repurchase by the Company as of April 11, 1997, if
    issued. Also includes 7,500 shares held in the Louis Lange Family Trust. Dr.
    Lange disclaims beneficial ownership of the shares held in the Louis Lange
    Family Trust, except to the extent of his pecuniary interests therein.
 
(9) Includes 39,500 shares issuable upon the exercise of options, 25,600 of
    which would be subject to repurchase by the Company as of April 11, 1997, if
    issued and 2,500 shares issuable upon the exercise of an outstanding warrant
    exercisable within 60 days of February 10, 1997.
 
(10) Includes 60,000 shares issuable upon the exercise of options, 45,050 of
    which would be subject to repurchase by the Company as of April 11, 1997, if
    issued.
 
(11) Includes 27,714 shares issuable upon the exercise of options, 15,805 of
    which would be subject to repurchase by the Company as of April 11, 1997, if
    issued. Also includes 4,125 shares held in the Gutshall Family Trust and 500
    shares issuable upon the exercise of an outstanding warrant held in the
    Gutshall Family Trust exercisable within 60 days of February 10, 1997.
 
(12) Consists of 52,500 shares issuable upon the exercise of options, 38,125 of
    which would be subject to repurchase by the Company as of April 11, 1997, if
    issued.
 
(13) Includes 26,000 shares issuable upon the exercise of options, 25,638 of
    which would be subject to repurchase by the Company as of April 11, 1997, if
    issued. Also includes 4,375 shares held in the Stein 1995 Revocable Trust
    and 625 shares issuable upon the exercise of an outstanding warrant held in
    the Stein 1995 Revocable Trust exercisable within 60 days of February 10,
    1997.
 
(14) Includes 15,500 shares issuable upon the exercise of options, 15,402 of
    which would be subject to repurchase by the Company as of April 11, 1997, if
    issued.
 
(15) Includes 21,000 shares issuable upon the exercise of options, 20,638 of
    which would be subject to repurchase by the Company as of April 11, 1997, if
    issued.
 
(16) Includes 16,000 shares issuable upon the exercise of options, 15,638 of
    which would be subject to repurchase by the Company as of April 11, 1997, if
    issued.
 
(17) Consists of 35,107 shares issuable upon the exercise of vested options. In
    connection with the termination of Dr. Schreiner's employment in January
    1997, his remaining outstanding options ceased to vest. Dr. Schreiner has
    until April 7, 1997 to exercise his vested options.
 
(18) Includes 518,839 shares issuable upon the exercise of options and warrants
    held by all directors and executive officers that are exercisable within 60
    days from February 10, 1997, 335,206 of which would be subject to repurchase
    by the Company as of April 11, 1997, if issued. See footnotes (3) and
    (8)-(16).
 
                                       40
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
PRIVATE PLACEMENT TRANSACTIONS
 
    All of the Preferred Stock issued in the Company's private placement
transactions (collectively, the "Private Placement Transactions") converted into
Common Stock on a 1-for-10 basis upon the closing of the Company's initial
public offering of Common Stock. The price per share and number of shares
presented herein reflect the 1-for-10 reverse stock split of the Company's
Common Stock effected in October 1996.
 
    From January 1, 1996 through December 31, 1996, the Company issued in
Private Placement Transactions an aggregate of 653,592 shares of Series G
Preferred Stock and warrants to purchase an aggregate of 980,392 shares of
Common Stock at a purchase price of $20.00 per unit (with each unit consisting
of one share of Series G Preferred Stock and one warrant to purchase 1.50 shares
of Common Stock at an exercise price of $2.50 per share). The following table
summarizes the purchase of such shares and warrants by executive officers,
directors and 5% stockholders of the Company and persons and entities associated
with them:
 
<TABLE>
<CAPTION>
                                                                       SERIES G          WARRANTS TO
                                                                       PREFERRED       PURCHASE COMMON
INVESTOR                                                               STOCK(#)           STOCK(#)
-----------------------------------------------------------------  -----------------  -----------------
<S>                                                                <C>                <C>
DIRECTORS AND EXECUTIVE OFFICERS
 
Louis G. Lange, M.D., Ph.D.......................................          1,250              1,875
Kathleen A. Stafford.............................................          2,500              3,750
Michael M. Wick, M.D., Ph.D......................................          1,250              1,875
Thomas L. Gutshall (1)...........................................          1,250              1,875
Isaac Stein (2)..................................................          1,250              1,875
 
ENTITIES AFFILIATED WITH DIRECTORS
Entities affiliated with Institutional Venture
  Management V, L.P. (3).........................................         45,000             67,500
Entities affiliated with Delphi Ventures II, L.P. (4)............         26,700             40,050
 
OTHER 5% STOCKHOLDERS
Zesiger Capital Group, LLC.......................................        150,000            181,716
Entities affiliated with BankAmerica Ventures....................        150,000            225,000
Entities affiliated with Asset Management Associates, 1989,
  L.P............................................................         38,350             57,525
</TABLE>
 
------------------------------
 
(1) Includes shares and warrants held by the Gutshall Family Trust.
 
(2) Includes shares and warrants held by the Stein 1995 Revocable Trust.
 
(3) Mr. Colella, a director of the Company, is a general partner of
    Institutional Ventures Management V, L.P., the general partner of
    Institutional Venture Partners V, L.P. He disclaims beneficial ownership of
    the shares held by those entities, except to the extent of his pecuniary
    interests therein.
 
(4) Dr. Sevastopoulos, a director of the Company, is a limited partner of Delphi
    Management Partners II, which is the general partner of Delphi Ventures II,
    L.P. He disclaims beneficial ownership of the shares held by those entities,
    except to the extent of his pecuniary interests therein.
 
LOANS
 
    The Company has provided Louis G. Lange, M.D., Ph.D., Chairman of the Board
of Directors and Chief Executive Officer, with several loans. In August 1992,
the Company provided a loan in the principal amount of $500,000 at an annual
interest rate of 7.0%, pursuant to a promissory note secured by a deed of trust
on Dr. Lange's residence (the "1992 Note"). In June 1993, the Company provided a
loan in the principal amount of $25,000, at an annual interest rate of 5.33%,
pursuant to a promissory note secured by
 
                                       41
<PAGE>
a stock pledge of 2,500 shares of Common Stock held by Dr. Lange (the "1993
Note"). In June 1995, in connection with the exercise of an option to purchase
Common Stock, the Company provided a loan in the principal amount of $37,500, at
an annual interest rate of 7.31%, pursuant to a promissory note secured by a
pledge of 15,000 shares of Common Stock held by Dr. Lange (the "1995 Note"). In
August 1996, the Company provided a loan to Dr. Lange in the principal amount of
$25,000, at an annual interest rate of 6.84%, pursuant to a promissory note
secured by a pledge of 2,500 shares of Common Stock held by Dr. Lange (the "1996
Note").
 
    In September 1996, the Company amended all four notes. Under the terms of
each amended note, the loans bear interest at the rate of 6.53% compounded
semi-annually and the outstanding principal amount is due on the earliest of
December 31, 2001, the termination of employment or a change in control. At the
same time, the Company forgave all interest due on the four loans as of December
31, 1995 ($92,880). In addition, the Company will pay Dr. Lange an amount
necessary to compensate him for any taxes that he may incur due to the interest
forgiveness as well as the following amounts for mortgage assistance: $50,000 in
1997, $40,000 in 1998, $30,000 in 1999, $20,000 in 2000 and $10,000 in 2001. The
forgiveness of the accrued interest on the notes to Dr. Lange was accounted for
as compensation expense in the period in which the interest was deemed to have
been forgiven.
 
    The largest aggregate principal amount outstanding on the four notes in 1996
was $587,500. Upon the closing of the Company's initial public offering, Dr.
Lange sold 23,039 shares of Common Stock at the initial public offering price of
$8.00 per share to the Company to satisfy $150,000 of the 1992 Note and certain
tax obligations arising from such sale. In connection with the stock sale, the
Company amended and restated the stock pledge agreements executed in connection
with the 1993 Note, 1995 Note and 1996 Note. Under the terms of an Amended and
Restated Stock Pledge Agreement, the 1993 Note, 1995 Note and 1996 Note are
secured by a stock pledge of 13,750 shares of Common Stock held by Dr. Lange. As
of March 15, 1997, an aggregate principal amount of $437,500 remained
outstanding on the four notes.
 
    In connection with the 1992 Note, the Company entered into a letter
agreement of Credit Terms and Conditions with Imperial Bank, dated August 11,
1992, pursuant to which Imperial Bank provided a loan to the Company in the
principal amount of $500,000, at an annual interest rate equal to the greater of
2.0% per year in excess of Imperial Bank's prime lending rate or $250 (the
"Imperial Loan"). The loan was guaranteed by Institutional Venture Partners V,
L.P. ("IVP") pursuant to a Continuing Guarantee dated August 11, 1992 (the "IVP
Guarantee"). Mr. Colella, a director of the Company, is a General Partner of
IVP. In consideration for the IVP Guarantee, Dr. Lange executed a Guaranty and
Pledge Agreement dated August 18, 1992 in which he provided a guarantee of
reimbursement and pledged shares in favor of IVP. The Company paid off the
Imperial Loan in September 1996.
 
    In June 1995, in connection with the exercise of an option to purchase
Common Stock, the Company provided a loan to Thomas L. Gutshall, a director of
the Company who then served as President and Chief Operating Officer, in the
principal amount of $62,500, at an annual interest rate of 7.31%, pursuant to a
promissory note secured by a pledge of 25,000 shares of Common Stock held by Mr.
Gutshall. In connection with a Separation and Consulting Agreement effective as
of September 2, 1996, the Company amended the note to provide that the loan
bears interest at the rate of 6.53% compounded semi-annually and the outstanding
principal amount is due on the earliest of December 31, 2001, the voluntary
termination of association or a change in control. The largest aggregate
principal amount outstanding on the note in 1996 and the aggregate principal
amount outstanding on the note as of March 15, 1997 was $62,500.
 
    In November 1992, the Company provided a loan to George F. Schreiner, M.D.,
Ph.D., who served as Vice President, Medical Science and Preclinical Research
from January 1993 through January 1997, in the principal amount of $75,000, at
an annual interest rate of 6.5%, pursuant to a promissory note secured by a deed
of trust on Dr. Schreiner's residence. In September 1996, the Company amended
the note. Under the terms of the amended note, the loan bears interest at the
rate of 6.53% compounded semi-annually and
 
                                       42
<PAGE>
the outstanding principal amount is due on the earliest of December 31, 2001,
the termination of employment or a change in control. The largest aggregate
principal amount outstanding in 1996 was $75,000. In January 1997, Dr. Schreiner
resigned from the Company. Dr. Schreiner is currently in the process of paying
off the loan.
 
OTHER TRANSACTIONS/RELATIONSHIPS
 
    In October 1996, the Company entered into indemnification agreements with
its directors and officers for the indemnification of, and advancement of
expenses to, such persons to the full extent permitted by law. The Company
intends to execute such agreements with its future directors and officers.
 
                                       43
<PAGE>
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
    (a) (1) Index to Financial Statements and Report of Independent Auditors
 
    The Financial Statements required by this item are submitted in a separate
section beginning on page F-1 of this report.
 
<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                             ---------
<S>                                                                                                          <C>
Report of Ernst & Young LLP, Independent Auditors..........................................................  F-1
Consolidated Balance Sheets................................................................................  F-2
Consolidated Statements of Operations......................................................................  F-3
Consolidated Statement of Stockholders' Equity.............................................................  F-4
Consolidated Statements of Cash Flows......................................................................  F-7
Notes to Consolidated Financial Statements.................................................................  F-9
</TABLE>
 
    (a) (2) Index to Financial Statements Schedules
 
    All financial statement schedules are omitted because they are not
applicable, or the information is included in the financial statements or notes
thereto.
 
    (a) (3) Exhibits:
 
<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER
-----------
<C>          <S>
      3.1+   Amended and Restated Certificate of Incorporation of the Registrant.
 
      3.2+   Restated Bylaws of the Registrant.
 
      4.1+   Reference is made to Exhibits 3.1 and 3.2.
 
      4.2+   Specimen Common Stock Certificate.
 
     10.1+   1992 Stock Option Plan, as amended.*
 
     10.2+   1994 Equity Incentive Plan, as amended.*
 
     10.3+   Non-Employee Directors' Stock Option Plan, as amended.
 
     10.4+   Form of Incentive Stock Option Grant.*
 
     10.5+   Form of Non-Incentive Stock Option Grant.*
 
     10.6++  Form of Non-Statutory Stock Option Grant under Non-Employee Directors' Stock Option Plan.
 
     10.7+   Employee Stock Purchase Plan.*
 
     10.8+   Amended and Restated Promissory Note for $500,000 between Registrant and Louis G. Lange, M.D., Ph.D.,
               effective as of September 23, 1996.*
 
     10.9+   Amended and Restated Promissory Note for $37,500 between Registrant and Louis G. Lange, M.D., Ph.D.,
               effective as of September 23, 1996.*
 
     10.10+  Amended and Restated Promissory Note for $25,000 between Registrant and Louis G. Lange, M.D., Ph.D.,
               effective as of September 23, 1996.*
 
     10.11+  Amended and Restated Promissory Note for $25,000 between Registrant and Louis G. Lange, M.D., Ph.D.,
               effective as of September 23, 1996.*
</TABLE>
 
                                       44
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER
-----------
<C>          <S>
     10.12+  Amended and Restated Promissory Note between Registrant and George F. Schreiner, M.D., Ph.D., effective
               as of September 23, 1996.*
 
     10.13+  Amended and Restated Promissory Note between Registrant and Thomas L. Gutshall, effective as of
               September 23, 1996.*
 
     10.14+  Separation and Consulting Agreement between Registrant and Thomas L. Gutshall, effective as of September
               2, 1996.
 
     10.15+  Form of Indemnification Agreement between Registrant and its directors and officers.*
 
     10.16+  Amended and Restated Investor Rights Agreement between Registrant and the stockholders named therein,
               dated May 29, 1996.
 
     10.17+  Form of Series A Preferred Stock Warrant, and amendment thereto.
 
     10.18+  Amended and Restated Series B Preferred Stock Warrant to Genta Incorporated.
 
     10.19+  Form of Series D Preferred Stock Warrant to Alex Brown & Sons Incorporated.
 
     10.20+  Form of Amended and Restated Series D Preferred Stock Warrant.
 
     10.21+  Form of Series E Preferred Stock Warrant.
 
     10.22+  Series E Preferred Stock Warrant to Cooley Godward LLP.
 
     10.23+  Series E Preferred Stock Warrant to Syntex (U.S.A.) Inc.
 
     10.24+  Form of Common Stock Warrant exercisable immediately, dated September 27, 1996.
 
     10.25+  Form of Common Stock Warrant, dated September 17, 1996.
 
     10.26+  License Agreement between Registrant and University of Florida Research Foundation, Inc., dated June 27,
               1994.**
 
     10.27+  Research Agreement between Registrant and University of Florida, dated June 27, 1994.**
 
     10.28+  License Agreement between Registrant and Syntex (U.S.A.) Inc., dated March 27,1996.**
 
     10.29+  License Agreement between Registrant and Bayer A.G., dated May 7, 1996.**
 
     10.30+  Lease Agreement between Registrant and Matadero Creek, dated August 6, 1993 and addendum thereto; Letter
               Amendment to Lease Agreement, dated June 30, 1994 and Second Amendment to Lease Agreement, dated June
               30, 1994.
 
     10.31+  Master Lease Agreement between Registrant and Hambrecht & Quist Guaranty Finance, LLC, dated September
               27, 1996.
 
     10.32+  Finance Agreement between Registrant and Hambrecht & Quist Guaranty Finance, LLC, dated September 27,
               1996.
 
     10.33+  Business Loan Agreement between Registrant and Hambrecht & Quist Guaranty Finance, LLC, dated September
               27, 1996.
 
     10.34+  Business Loan Agreement between Registrant and Hambrecht & Quist Transition Capital, LLC, dated
               September 27, 1996.
 
     10.35+  Promissory Note between Registrant and Hambrecht & Quist Guaranty Finance, LLC, dated September 27,
               1996.
 
     10.36+  Promissory Note between Registrant and Hambrecht & Quist Transition Capital, LLC, dated September 27,
               1996.
 
     10.37+  Security Agreement between Registrant and Hambrecht & Quist Guaranty Finance, LLC, dated September 27,
               1996.
</TABLE>
 
                                       45
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER
-----------
<C>          <S>
     10.38+  Security Agreement between Registrant and Hambrecht & Quist Transition Capital, LLC, dated September 27,
               1996.
 
     11.1    Statement re: computation of net loss per share.
 
     23.1    Consent of Ernst & Young LLP, Independent Auditors.
 
     24.1    Power of Attorney (included on page 47).
 
     27.1    Financial Data Schedule.
</TABLE>
 
------------------------
 
 +  Incorporated by reference to Exhibits filed with the Registrant's
    Registration Statement on Form S-1, No. 333-12675, as amended, which became
    effective November 19, 1996.
 
 ++  Incorporated by reference to Exhibits filed with the Registrant's
    Registration Statement on Form S-8, No. 333-19389, which became effective
    January 8, 1997.
 
 *  Management contract or compensatory plan or arrangement.
 
**  Confidential treatment has previously been granted for portions of this
    exhibit.
 
(b) The Registrant filed no reports on Form 8-K during the last quarter of the
    fiscal year ended December 31, 1996.
 
(c) See Exhibits listed under Item 14(a)(3).
 
(d) The financial statement schedules required by this Item are listed under
    14(a)(2).
 
                                       46
<PAGE>
                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K to
be signed on its behalf, by the undersigned, thereunto duly authorized, in the
City of Palo Alto, County of Santa Clara, State of California, on March 27,
1997.
 
                                CV THERAPEUTICS, INC.
 
                                By:       /s/ LOUIS G. LANGE, M.D., PH.D.
                                     -----------------------------------------
                                            Louis G. Lange, M.D., Ph.D.
                                              CHAIRMAN OF THE BOARD OF
                                              CHIEF EXECUTIVE OFFICER
 
                               POWER OF ATTORNEY
 
    KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Louis G. Lange, M.D., Ph.D. and Kathleen A
Stafford, or any of them, his or her attorney-in-fact, each with the power of
substitution, for him or her in any and all capacities, to sign any amendments
to this Report, and to file the same, with exhibits thereto and other documents
in connections therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his or her
substitute or substitutes, may do or cause to be done by virtue hereof.
 
    PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE
CAPACITIES AND ON THE DATES INDICATED.
 
<TABLE>
<CAPTION>
          SIGNATURE                       TITLE                    DATE
------------------------------  --------------------------  -------------------
<C>                             <S>                         <C>
 
  /s/ LOUIS G. LANGE, M.D.,     Chairman of the Board &
            PH.D.                 Chief Executive Officer
------------------------------    (Principal Executive        March 27, 1997
 Louis G. Lange, M.D., Ph.D.      Officer)
 
   /s/ KATHLEEN A. STAFFORD     Chief Financial Officer
------------------------------    (Principal Financial and    March 27, 1997
     Kathleen A. Stafford         Accounting Officer)
 
    /s/ SAMUEL D. COLELLA
------------------------------  Director                      March 27, 1997
      Samuel D. Colella
 
    /s/ THOMAS L. GUTSHALL
------------------------------  Director                      March 27, 1997
      Thomas L. Gutshall
 
 /s/ BARBARA J. MCNEIL, M.D.,
            PH.D.
------------------------------  Director                      March 27, 1997
Barbara J. McNeil, M.D., Ph.D.
</TABLE>
 
                                       47
<PAGE>
<TABLE>
<CAPTION>
          SIGNATURE                       TITLE                    DATE
------------------------------  --------------------------  -------------------
<C>                             <S>                         <C>
 /s/ COSTA G. SEVASTOPOULOS,
            PH.D.
------------------------------  Director                      March 27, 1997
Costa G. Sevastopoulos, Ph.D.
 
  /s/ J. LEIGHTON READ, M.D.
------------------------------  Director                      March 27, 1997
    J. Leighton Read, M.D.
 
       /s/ ISAAC STEIN
------------------------------  Director                      March 27, 1997
         Isaac Stein
</TABLE>
 
                                       48
<PAGE>
               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
 
The Board of Directors and Shareholders
CV Therapeutics, Inc.
 
    We have audited the accompanying consolidated balance sheets of CV
Therapeutics, Inc. (a development stage company) as of December 31, 1996 and
1995, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 1996, and for the period from inception (December 11, 1990) to December 31,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
CV Therapeutics, Inc. (a development stage company) at December 31, 1996 and
1995, and the consolidated results of its operations and its cash flows for each
of the three years in the period ended December 31, 1996, and for the period
from inception (December 11, 1990) to December 31, 1996 in conformity with
generally accepted accounting principles.
 
                                          /s/ ERNST & YOUNG LLP
 
Palo Alto, California
March 4, 1997
 
                                      F-1
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
                          CONSOLIDATED BALANCE SHEETS
 
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31,
                                                                                            ----------------------
                                                                                               1996        1995
                                                                                            ----------  ----------
<S>                                                                                         <C>         <C>
                                                      ASSETS
Current assets:
  Cash and cash equivalents...............................................................  $   19,575  $    5,569
  Short-term investments..................................................................       1,993          --
  Other current assets....................................................................         454         221
                                                                                            ----------  ----------
Total current assets......................................................................      22,022       5,790
Notes receivable from officers and employees..............................................         475         625
Property and equipment, net...............................................................       3,072       4,120
Intangible and other assets, net of accumulated amortization of $117 and $60 at December
  31, 1996 and 1995, respectively.........................................................         570         913
                                                                                            ----------  ----------
                                                                                            $   26,139  $   11,448
                                                                                            ----------  ----------
                                                                                            ----------  ----------
                                       LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable........................................................................  $      405  $      405
  Accrued liabilities.....................................................................       1,304       1,549
  Current portion of long-term debt.......................................................          15       3,341
  Current portion of capital lease obligation.............................................          20         224
                                                                                            ----------  ----------
Total current liabilities.................................................................       1,744       5,519
Long-term portion of long-term debt.......................................................       5,000       3,250
Long-term portion of capital lease obligation.............................................          --         152
Accrued rent..............................................................................         719         723
Commitments
Stockholders' equity:
  Preferred stock, $0.001 par value, 5,000,000 shares authorized, none issued and
    outstanding...........................................................................          --          --
  Convertible preferred stock, $0.001 par value, 42,000,000 preferred shares authorized,
    issuable in series; 25,471,045 convertible preferred shares issued and outstanding at
    December 31,1995, at amounts paid in; aggregate liquidation preference of $37,516 at
    December 31, 1995.....................................................................          --      36,388
  Common stock, $0.001 par value, 30,000,000 shares authorized; 6,184,771 and 368,081
    shares issued and outstanding at December 31, 1996 and 1995, respectively, less
    121,039 and 95,000 shares held in treasury at December 31, 1996 and 1995,
    respectively; at amounts paid in......................................................      65,414         258
  Warrants to purchase common stock.......................................................       1,225         544
  Notes receivable issued for stock.......................................................        (171)       (125)
  Deferred compensation...................................................................      (2,166)         --
  Deficit accumulated during the development stage........................................     (45,626)    (35,261)
                                                                                            ----------  ----------
Total stockholders' equity................................................................      18,676       1,804
                                                                                            ----------  ----------
                                                                                            $   26,139  $   11,448
                                                                                            ----------  ----------
                                                                                            ----------  ----------
</TABLE>
 
                            See accompanying notes.
 
                                      F-2
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                                                    INCEPTION
                                                                YEAR ENDED DECEMBER 31,        (DECEMBER 11, 1990)
                                                           ----------------------------------          TO
                                                              1996        1995        1994      DECEMBER 31, 1996
                                                           ----------  ----------  ----------  -------------------
<S>                                                        <C>         <C>         <C>         <C>
License revenue..........................................  $      250  $       --  $       --      $       250
Operating expenses:
  Research and development...............................       7,141      12,856       8,823           34,718
  General and administrative.............................       2,917       3,402       2,802           10,497
                                                           ----------  ----------  ----------         --------
Total operating expenses.................................      10,058      16,258      11,625           45,215
                                                           ----------  ----------  ----------         --------
Loss from operations.....................................      (9,808)    (16,258)    (11,625)         (44,965)
Interest income..........................................         587         416         526            1,755
Interest expense.........................................      (1,144)       (882)       (268)          (2,393)
                                                           ----------  ----------  ----------         --------
Net loss.................................................  $  (10,365) $  (16,724) $  (11,367)     $   (45,603)
                                                           ----------  ----------  ----------         --------
                                                           ----------  ----------  ----------         --------
Net loss per share.......................................  $    (5.44)
                                                           ----------
                                                           ----------
Shares used in computing net loss per share..............       1,906
                                                           ----------
                                                           ----------
Pro forma net loss per share.............................              $    (4.33)
                                                                       ----------
                                                                       ----------
Shares used in computing pro forma net loss per share....                   3,861
                                                                       ----------
                                                                       ----------
</TABLE>
 
                            See accompanying notes.
 
                                      F-3
<PAGE>
                             CV THERAPEUTICS, INC.
 
                         (A DEVELOPMENT STAGE COMPANY)
 
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
 
         PERIOD FROM INCEPTION (DECEMBER 11, 1990) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
                                                              CONVERTIBLE PREFERRED                          WARRANTS TO
                                                                      STOCK               COMMON STOCK        PURCHASE
                                                              ---------------------  ----------------------   PREFERRED
                                                                SHARES     AMOUNT     SHARES      AMOUNT        STOCK
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)            ----------  ---------  ---------  -----------  -----------
<S>                                                           <C>         <C>        <C>        <C>          <C>
Issuance of common stock to founders at $0.01 per share in
  January 1991 for cash.....................................          --  $      --    250,000   $       2    $      --
Issuance of common stock to investors and consultants at
  $0.60 per share in April 1992 for cash....................          --         --     28,500          17           --
Issuance of Series A convertible preferred stock at $0.80
  per share to investors in October 1992 for cash and
  conversion of bridge loans of $1,198, net of $2 of
  issuance costs............................................   7,746,973      6,195         --          --           --
Issuance of common stock to investors at $0.60 per share in
  October and November 1992 for cash and conversion of
  bridge loans of $5........................................          --         --     12,036           7           --
Repurchase of the Company's common stock from investors at
  $0.60 per share in November 1992 for cash.................          --         --    (40,000)         --           --
Repurchase of the Company's common stock at $0.60 per share
  in November 1992 in exchange for a warrant to purchase
  250,000 shares of Series A preferred stock at $0.80 per
  share.....................................................          --         --    (25,000)        (15)          15
Net loss....................................................          --         --         --          --           --
                                                              ----------  ---------  ---------  -----------  -----------
Balances at December 31, 1992...............................   7,746,973      6,195    225,536          11           15
Issuance of common stock to investors at approximately $0.80
  per share in April 1993 for cash, net of repurchase.......          --         --     10,938           9           --
Sale of warrant in April 1993 to Genta to purchase 1,000,000
  shares of Series B preferred stock at $2.50 per share, for
  cash......................................................          --         --         --          --          480
Issuance of Series C convertible preferred stock at $1.25
  per share to investors in July 1993 for cash, net of $34
  of issuance costs.........................................   5,505,865      6,848         --          --           --
Notes receivable from officers for exercise of certain stock
  options...................................................          --         --         --          --           --
Net loss....................................................          --         --         --          --           --
                                                              ----------  ---------  ---------  -----------  -----------
Balances at December 31, 1993 (carried forward).............  13,252,838  $  13,043    236,474   $      20    $     495
 
<CAPTION>
                                                                                                DEFICIT
                                                                                              ACCUMULATED
                                                                  NOTES                        DURING THE       TOTAL
 
                                                               RECEIVABLE       DEFERRED      DEVELOPMENT   STOCKHOLDERS'
 
                                                              FROM OFFICERS   COMPENSATION       STAGE         EQUITY
 
                                                              -------------  ---------------  ------------  -------------
 
<S>                                                           <C>            <C>              <C>           <C>
Issuance of common stock to founders at $0.01 per share in
  January 1991 for cash.....................................    $      --       $      --      $       --     $       2
 
Issuance of common stock to investors and consultants at
  $0.60 per share in April 1992 for cash....................           --              --              --            17
 
Issuance of Series A convertible preferred stock at $0.80
  per share to investors in October 1992 for cash and
  conversion of bridge loans of $1,198, net of $2 of
  issuance costs............................................           --              --              --         6,195
 
Issuance of common stock to investors at $0.60 per share in
  October and November 1992 for cash and conversion of
  bridge loans of $5........................................           --              --              --             7
 
Repurchase of the Company's common stock from investors at
  $0.60 per share in November 1992 for cash.................           --              --             (23)          (23)
 
Repurchase of the Company's common stock at $0.60 per share
  in November 1992 in exchange for a warrant to purchase
  250,000 shares of Series A preferred stock at $0.80 per
  share.....................................................           --              --              --            --
 
Net loss....................................................           --              --          (1,630)       (1,630)
 
                                                                    -----         -------     ------------  -------------
 
Balances at December 31, 1992...............................           --              --          (1,653)        4,568
 
Issuance of common stock to investors at approximately $0.80
  per share in April 1993 for cash, net of repurchase.......           --              --              --             9
 
Sale of warrant in April 1993 to Genta to purchase 1,000,000
  shares of Series B preferred stock at $2.50 per share, for
  cash......................................................           --              --              --           480
 
Issuance of Series C convertible preferred stock at $1.25
  per share to investors in July 1993 for cash, net of $34
  of issuance costs.........................................           --              --              --         6,848
 
Notes receivable from officers for exercise of certain stock
  options...................................................          (25)             --              --           (25)
 
Net loss....................................................           --              --          (5,517)       (5,517)
 
                                                                    -----         -------     ------------  -------------
 
Balances at December 31, 1993 (carried forward).............    $     (25)      $      --      $   (7,170)    $   6,363
 
</TABLE>
 
                                      F-4
<PAGE>
                             CV THERAPEUTICS, INC.
 
                         (A DEVELOPMENT STAGE COMPANY)
 
           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)
 
         PERIOD FROM INCEPTION (DECEMBER 11, 1990) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
                                                              CONVERTIBLE PREFERRED                          WARRANTS TO
                                                                      STOCK               COMMON STOCK        PURCHASE
                                                              ---------------------  ----------------------   PREFERRED
                                                                SHARES     AMOUNT     SHARES      AMOUNT        STOCK
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)            ----------  ---------  ---------  -----------  -----------
<S>                                                           <C>         <C>        <C>        <C>          <C>
Balances at December 31, 1993 (brought forward).............  13,252,838  $  13,043    236,474   $      20    $     495
Exercise of stock options at $0.80, $2.00 and $2.50 per
  share during the year for cash............................          --         --     17,723          17           --
Issuance of Series D preferred stock at $2.00 per share to
  investors in March and April 1994 for cash, net of $1,045
  of issuance costs.........................................   8,296,607     15,548         --          --           --
Net loss....................................................          --         --         --          --           --
                                                              ----------  ---------  ---------  -----------  -----------
Balances at December 31, 1994...............................  21,549,445     28,591    254,197          37          495
Exercise of stock options at $0.80, $2.00 and $2.50 per
  share during the year for cash............................          --         --    143,884         296           --
Issuance of units consisting of one share of Series E
  preferred stock and one warrant to purchase half of one
  share of Series E preferred stock at $2.00 per share. In
  October and November 1995, 3,921,600 units were issued at
  $2.00 per unit for cash, net of $46 of issuance costs.....   3,921,600      7,797         --          --           --
Issuance of warrant in December 1995 to the Company's
  counsel to purchase 25,000 units consisting of one share
  of Series E preferred stock and one warrant to purchase
  half of one share of Series E preferred stock at $2.00 per
  share at $0.05 per unit for legal services rendered.......          --         --         --          --           49
Repurchase of the Company's common stock from investors at
  $2.50 per share in December 1995 in exchange for
  cancellation of a promissory note.........................          --         --    (30,000)        (75)          --
Notes receivable issued to officers for exercise of certain
  stock options.............................................          --         --         --          --           --
Net loss....................................................          --         --         --          --           --
                                                              ----------  ---------  ---------  -----------  -----------
Balances at December 31, 1995 (carried forward).............  25,471,045  $  36,388    368,081   $     258    $     544
 
<CAPTION>
                                                                                                DEFICIT
                                                                                              ACCUMULATED
                                                                  NOTES                        DURING THE       TOTAL
 
                                                               RECEIVABLE       DEFERRED      DEVELOPMENT   STOCKHOLDERS'
 
                                                              FROM OFFICERS   COMPENSATION       STAGE         EQUITY
 
                                                              -------------  ---------------  ------------  -------------
 
<S>                                                           <C>            <C>              <C>           <C>
Balances at December 31, 1993 (brought forward).............    $     (25)      $      --      $   (7,170)    $   6,363
 
Exercise of stock options at $0.80, $2.00 and $2.50 per
  share during the year for cash............................           --              --              --            17
 
Issuance of Series D preferred stock at $2.00 per share to
  investors in March and April 1994 for cash, net of $1,045
  of issuance costs.........................................           --              --              --        15,548
 
Net loss....................................................           --              --         (11,367)      (11,367)
 
                                                                    -----         -------     ------------  -------------
 
Balances at December 31, 1994...............................          (25)             --         (18,537)       10,561
 
Exercise of stock options at $0.80, $2.00 and $2.50 per
  share during the year for cash............................           --              --              --           296
 
Issuance of units consisting of one share of Series E
  preferred stock and one warrant to purchase half of one
  share of Series E preferred stock at $2.00 per share. In
  October and November 1995, 3,921,600 units were issued at
  $2.00 per unit for cash, net of $46 of issuance costs.....           --              --              --         7,797
 
Issuance of warrant in December 1995 to the Company's
  counsel to purchase 25,000 units consisting of one share
  of Series E preferred stock and one warrant to purchase
  half of one share of Series E preferred stock at $2.00 per
  share at $0.05 per unit for legal services rendered.......           --              --              --            49
 
Repurchase of the Company's common stock from investors at
  $2.50 per share in December 1995 in exchange for
  cancellation of a promissory note.........................           --              --              --           (75)
 
Notes receivable issued to officers for exercise of certain
  stock options.............................................         (100)             --              --          (100)
 
Net loss....................................................           --              --         (16,724)      (16,724)
 
                                                                    -----         -------     ------------  -------------
 
Balances at December 31, 1995 (carried forward).............    $    (125)      $      --      $  (35,261)    $   1,804
 
</TABLE>
 
                                      F-5
<PAGE>
                             CV THERAPEUTICS, INC.
 
                         (A DEVELOPMENT STAGE COMPANY)
 
           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)
 
         PERIOD FROM INCEPTION (DECEMBER 11, 1990) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
                                                              CONVERTIBLE PREFERRED                          WARRANTS TO
                                                                      STOCK               COMMON STOCK        PURCHASE
                                                              ---------------------  ----------------------   PREFERRED
                                                                SHARES     AMOUNT     SHARES      AMOUNT        STOCK
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)            ----------  ---------  ---------  -----------  -----------
<S>                                                           <C>         <C>        <C>        <C>          <C>
Balances at December 31, 1995 (brought forward).............  25,471,045  $  36,388    368,081   $     258    $     544
Issuance of units consisting of one share of Series E
  preferred stock and one warrant to purchase one-half of
  one share of Series E preferred stock for $2.00 per share.
  In March, 1996 375,000 units were sold at $2.00 per unit
  in consideration for an up-front license fee owed to
  Syntex (U.S.A.) Inc.......................................     375,000        750         --          --           --
Issuance of units consisting of one share of Series G
  convertible preferred stock and one warrant to purchase
  0.15 of one share of common stock at $20.00 per share. In
  March and May 1996, 6,535,970 units were sold for $2.00
  per unit in cash, net of $80 of issuance cost.............   6,535,970     12,992         --          --           --
Exercise of stock options at prices ranging from $0.80 to
  $2.50 per share for cash and notes........................          --         --     70,544         124           --
Exercise of warrants to purchase common stock...............          --         --    783,984         879           --
Issuance of common stock in November 1996 for cash in
  connection with IPO, net of issuance costs of $2,100......          --         --  1,750,000      11,900           --
Convertible preferred stock converted to common stock upon
  the initial public offering in November 1996..............  (32,382,015)   (50,130) 3,238,201     50,130           --
Value ascribed to warrant as a result of change in terms of
  the warrant, causing a new measurement date for accounting
  purposes..................................................          --         --         --          --          160
Warrant issued in connection with debt financing in
  September 1996............................................          --         --         --          --          521
Repurchase of the Company's common stock from investors at
  $2.50 per share in November and December 1996.............          --         --    (26,039)       (199)          --
Notes receivable from officers for exercise of certain stock
  options in April and August 1996..........................          --         --         --          --           --
Deferred compensation related to grants of certain stock
  options...................................................          --         --         --       2,322           --
Amortization of deferred compensation.......................          --         --         --          --           --
Net loss....................................................          --         --         --          --           --
                                                              ----------  ---------  ---------  -----------  -----------
Balances at December 31, 1996...............................          --  $      --  6,184,771   $  65,414    $   1,225
                                                              ----------  ---------  ---------  -----------  -----------
                                                              ----------  ---------  ---------  -----------  -----------
 
<CAPTION>
                                                                                                DEFICIT
                                                                                              ACCUMULATED
                                                                  NOTES                        DURING THE       TOTAL
 
                                                               RECEIVABLE       DEFERRED      DEVELOPMENT   STOCKHOLDERS'
 
                                                              FROM OFFICERS   COMPENSATION       STAGE         EQUITY
 
                                                              -------------  ---------------  ------------  -------------
 
<S>                                                           <C>            <C>              <C>           <C>
Balances at December 31, 1995 (brought forward).............    $    (125)      $      --      $  (35,261)    $   1,804
 
Issuance of units consisting of one share of Series E
  preferred stock and one warrant to purchase one-half of
  one share of Series E preferred stock for $2.00 per share.
  In March, 1996 375,000 units were sold at $2.00 per unit
  in consideration for an up-front license fee owed to
  Syntex (U.S.A.) Inc.......................................           --              --              --           750
 
Issuance of units consisting of one share of Series G
  convertible preferred stock and one warrant to purchase
  0.15 of one share of common stock at $20.00 per share. In
  March and May 1996, 6,535,970 units were sold for $2.00
  per unit in cash, net of $80 of issuance cost.............           --              --              --        12,992
 
Exercise of stock options at prices ranging from $0.80 to
  $2.50 per share for cash and notes........................           --              --              --           124
 
Exercise of warrants to purchase common stock...............           --              --              --           879
 
Issuance of common stock in November 1996 for cash in
  connection with IPO, net of issuance costs of $2,100......           --              --              --        11,900
 
Convertible preferred stock converted to common stock upon
  the initial public offering in November 1996..............           --              --              --            --
 
Value ascribed to warrant as a result of change in terms of
  the warrant, causing a new measurement date for accounting
  purposes..................................................           --              --              --           160
 
Warrant issued in connection with debt financing in
  September 1996............................................           --              --              --           521
 
Repurchase of the Company's common stock from investors at
  $2.50 per share in November and December 1996.............           --              --              --          (199)
 
Notes receivable from officers for exercise of certain stock
  options in April and August 1996..........................          (46)             --              --           (46)
 
Deferred compensation related to grants of certain stock
  options...................................................           --          (2,322)             --            --
 
Amortization of deferred compensation.......................           --             156              --           156
 
Net loss....................................................           --              --         (10,365)      (10,365)
 
                                                                    -----         -------     ------------  -------------
 
Balances at December 31, 1996...............................    $    (171)      $  (2,166)     $  (45,626)    $  18,676
 
                                                                    -----         -------     ------------  -------------
 
                                                                    -----         -------     ------------  -------------
 
</TABLE>
 
                            See accompanying notes.
 
                                      F-6
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                               INCEPTION (DECEMBER
                                                                                                    11, 1990)
                                                                YEAR ENDED DECEMBER 31,                TO
                                                              1996        1995        1994      DECEMBER 31, 1996
                                                           ----------  ----------  ----------  -------------------
<S>                                                        <C>         <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................................  $  (10,365) $  (16,724) $  (11,367)     $   (45,603)
Adjustments to reconcile net loss to net cash used in
  operating activities:
  Amortization of deferred compensation..................         156          --          --              156
    Depreciation and amortization........................       1,127       1,102         672            3,109
    Write off of warrant issued under capital lease......         160          --          --              160
    Forgiveness of notes receivable......................          --          25          25              200
    Issuance of stock warrant for legal services
      received...........................................          --          49          --               49
    Issuance of preferred stock and warrant for payment
      of license fee.....................................         750          --          --              750
    Change in assets and liabilities:
      Other current assets...............................         556          45          19              335
      Intangible and other assets........................        (461)         24        (739)          (1,434)
      Accounts payable...................................          --         200         157              405
      Accrued liabilities................................        (245)        818         417            1,304
      Accrued rent.......................................          (4)        206         517              719
                                                           ----------  ----------  ----------         --------
Net cash used in operating activities....................      (8,326)    (14,255)    (10,299)         (39,850)
                                                           ----------  ----------  ----------         --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of short-term investments.......................      (1,993)     (1,202)    (51,900)         (55,095)
Maturity of short-term investments.......................          --       7,203      45,899           53,102
Capital expenditures.....................................         (64)       (719)     (4,062)          (5,350)
Notes receivable from officers and employees.............         104          --          --             (721)
                                                           ----------  ----------  ----------         --------
Net cash provided by (used in) investing activities......      (1,953)      5,282     (10,063)          (8,064)
                                                           ----------  ----------  ----------         --------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on capital lease obligation.....................        (356)       (186)       (150)            (736)
Borrowings under long-term debt..........................       5,000       4,148       3,571           13,219
Repayments of long-term debt.............................      (6,576)     (1,080)       (348)          (8,203)
Proceeds from issuances of common stock (and bridge loans
  subsequently converted into common stock), net of
  repurchases............................................      12,346         121          17           12,494
Proceeds from issuance of warrant........................         879          --          --            1,359
Proceeds from bridge loans...............................          --          --          --            1,198
Proceeds from issuance of convertible preferred stock....      12,992       7,797      15,548           48,182
Payments to stockholders to repurchase the Company's
  common stock...........................................          --          --          --              (24)
                                                           ----------  ----------  ----------         --------
Net cash provided by financing activities................      24,285      10,800      18,638           67,489
                                                           ----------  ----------  ----------         --------
Net (decrease) increase in cash and cash equivalents.....      14,006       1,827      (1,724)          19,575
Cash and cash equivalents at beginning of period.........       5,569       3,742       5,466               --
                                                           ----------  ----------  ----------         --------
Cash and cash equivalents at end of period...............  $   19,575  $    5,569  $    3,742      $    19,575
                                                           ----------  ----------  ----------         --------
                                                           ----------  ----------  ----------         --------
</TABLE>
 
                                      F-7
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                               INCEPTION (DECEMBER
                                                                                                    11, 1990)
                                                                YEAR ENDED DECEMBER 31,                TO
                                                              1996        1995        1994      DECEMBER 31, 1996
                                                           ----------  ----------  ----------  -------------------
<S>                                                        <C>         <C>         <C>         <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest...................................  $      912  $      883  $      287      $     2,115
                                                           ----------  ----------  ----------         --------
                                                           ----------  ----------  ----------         --------
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:
Conversion of bridge loans into Series A convertible
  preferred stock........................................  $       --  $       --  $       --      $     1,198
                                                           ----------  ----------  ----------         --------
                                                           ----------  ----------  ----------         --------
Conversion of bridge loans into common stock.............  $       --  $       --  $       --      $         5
                                                           ----------  ----------  ----------         --------
                                                           ----------  ----------  ----------         --------
Acquisition of property and equipment under capital
  leases.................................................  $       --  $       --  $       73      $       756
                                                           ----------  ----------  ----------         --------
                                                           ----------  ----------  ----------         --------
Notes receivable from officers in connection with
  exercise of certain stock options......................  $      171  $      100  $       --      $       296
                                                           ----------  ----------  ----------         --------
                                                           ----------  ----------  ----------         --------
Issuance of warrants in connection with debt financing...  $      681  $       --  $       --      $       681
                                                           ----------  ----------  ----------         --------
                                                           ----------  ----------  ----------         --------
</TABLE>
 
                            See accompanying notes.
 
                                      F-8
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
THE COMPANY
 
    CV Therapeutics, Inc. (the "Company"), a development stage biopharmaceutical
company, was incorporated in the State of Delaware on December 11, 1990, to
focus exclusively on the application of molecular cardiology to the discovery,
development and commercialization of novel, small molecule drugs for the
treatment of chronic cardiovascular diseases. The Company's primary activities
since incorporation have been establishing its offices and research facilities,
recruiting personnel, conducting research and development, performing business
and financial planning and raising capital.
 
    In September 1996, the board of directors of the Company authorized a
1-for-10 reverse stock split, in which ten shares of common stock were exchanged
for one share of common stock. The stock split was effected following
stockholder approval on October 29, 1996. As of the closing of its initial
public offering in November 1996, the Company is authorized to issue 5,000,000
shares of $0.001 par value preferred stock and 30,000,000 shares of $0.001 par
value common stock. All par value, share and per share amounts, as well as the
dividend and liquidation preferences for preferred stock, included in the
accompanying financial statements have been retroactively adjusted to reflect
the reverse stock split (see Note 8 of Notes to Consolidated Financial
Statements).
 
PRINCIPLES OF CONSOLIDATION
 
    The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, CV Therapeutics International, which was
incorporated in December 1993 in the Cayman Islands. All significant
intercompany balances have been eliminated.
 
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.
 
RESEARCH AND DEVELOPMENT
 
    Research and development expenses consist of costs incurred for independent
research and development. These costs include direct and research-related
overhead expenses.
 
CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
 
    The Company considers all highly liquid investments with a maturity from
date of purchase of three months or less to be cash equivalents. Cash
equivalents consist primarily of money market funds. All other liquid
investments are classified as short-term investments. Short-term investments at
December 31, 1996 consist of U.S. government bonds. The Company limits its
concentration of risk by diversifying its investments among a variety of
issuers.
 
    Management determines the appropriate classification of investment
securities at the time of purchase and reevaluates such designation as of each
balance sheet date. At December 31, 1996 and 1995, all investment securities are
designated as available-for-sale. Available-for-sale securities are carried at
fair value, with the unrealized gains and losses reported in stockholders'
equity. The amortized cost of debt
 
                                      F-9
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
securities in this category is adjusted for amortization of premiums and
accretion of discounts to maturity. Such amortization is included in interest
income.
 
    The cost of securities sold is based on the specific identification method.
Interest and dividends on securities classified as available-for-sale are
included in interest income.
 
    Realized gains and losses and declines in value judged to be other than
temporary for available-for-sale securities are included in the statement of
operations. There have been no such transactions through December 31, 1996.
 
DEPRECIATION AND AMORTIZATION
 
    Property and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation is provided using the straight-line method over the
estimated useful lives of the respective assets, generally three to five years.
Leasehold improvements are amortized over the lesser of the lease term or the
estimated useful lives of the related assets, generally two to three years.
Organization costs are amortized over a period of five years.
 
REVENUE RECOGNITION
 
    Revenues related to license agreements with noncancelable, nonrefundable
terms and no significant future obligations are recognized upon execution of the
agreements. Milestone payments will be recognized pursuant to collaborative
agreements upon the achievement of specified milestones.
 
NET LOSS PER SHARE
 
    Except as noted below, net loss per share is computed using the weighted
average number of common shares outstanding. Common equivalent shares are
excluded from the computation as their effect is antidilutive, except that,
pursuant to the Securities and Exchange Commission ("SEC") Staff Accounting
Bulletins, common and common equivalent shares issued during the 12-month period
prior to the initial filing of the Company's Registration Statement on Form S-1
at prices below the assumed public offering price have been included in the
calculation as if they were outstanding for all periods presented through
September 30, 1996 (using the treasury stock method for stock options).
 
    Net loss per share information is as follows:
 
<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER
                                                                              31,
                                                                      --------------------
                                                                        1995       1994
                                                                      ---------  ---------
                                                                         (IN THOUSANDS,
                                                                        EXCEPT PER SHARE
                                                                            AMOUNTS)
<S>                                                                   <C>        <C>
Net loss per share..................................................  $  (10.20) $   (7.32)
                                                                      ---------  ---------
                                                                      ---------  ---------
Shares used in computing net loss per share.........................      1,640      1,553
                                                                      ---------  ---------
                                                                      ---------  ---------
</TABLE>
 
    Pro forma per share data is provided to show the calculation on a consistent
basis for the periods presented. It has been computed as described above, and
also gives retroactive effect from the date of issuance to the conversion of
preferred stock which automatically converted to common stock upon the closing
of the Company's initial public offering.
 
                                      F-10
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    Pro forma net loss per share information not provided on the statement of
operations is as follows:
 
<TABLE>
<CAPTION>
                                                                                YEAR ENDED
                                                                             DECEMBER 31, 1996
                                                                             -----------------
                                                                              (IN THOUSANDS,
                                                                                EXCEPT PER
                                                                              SHARE AMOUNTS)
<S>                                                                          <C>
Pro forma net loss per share...............................................      $   (2.25)
                                                                                    ------
                                                                                    ------
Shares used in computing pro forma net loss per share......................          4,599
                                                                                    ------
                                                                                    ------
</TABLE>
 
STOCK-BASED COMPENSATION
 
    In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). Under SFAS 123, stock-based compensation expense is
measured using either the intrinsic-value method as prescribed by Accounting
Principle Board Opinion No. 25 ("APB 25") or the fair-value method described in
SFAS 123. In 1996, the Company implemented SFAS 123 using the intrinsic-value
method. (See Note 8 of Notes to Consolidated Financial Statements).
 
2. LICENSE AND COLLABORATION AGREEMENTS
 
GENTA INCORPORATED
 
    In January 1993, the Company, along with Genta Incorporated (collectively
referred to as "Licensees"), entered into a worldwide license agreement with the
Board of Trustees of the Leland Stanford Junior University ("Stanford"). Under
the terms of the agreement, Stanford granted the Licensees rights with respect
to certain patents to make, use and sell products for the treatment of coronary
restenosis and other vascular and associated human conditions. In consideration
for these patent rights, the Licensees paid a $100,000 licensing fee upon
signing the agreement. The Licensees provided for certain nonrefundable annual
royalties and nonrefundable milestone royalties over the term of the agreement,
and royalties on net sales of licensed products.
 
    On June 28, 1996, the Company and Stanford agreed upon the terms pursuant to
which the January 1993 license agreement referred to above was terminated.
 
GENTA/GENTA JAGO TECHNOLOGIES B.V.
 
    On April 9, 1993, the Company entered into a five-year research and
development collaboration with Genta Incorporated ("Genta") and Genta Jago
Technologies B.V. ("GJT") to design, develop and commercialize certain products
utilizing the technology which is the subject of the Stanford license agreement
described above. The agreement obligated the Company, Genta and GJT to jointly
fund certain research costs.
 
    In connection with this agreement, Genta acquired a warrant to purchase
100,000 shares of the Company's common stock at $25.00 per share. The purchase
price for the warrant was $4.80 per underlying share or $480,000. The warrant is
exercisable immediately and expires on April 7, 2003.
 
                                      F-11
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
2. LICENSE AND COLLABORATION AGREEMENTS (CONTINUED)
    As stated above, in June 1996, the Company and Stanford agreed upon the
terms pursuant to which the license terminated and, consequently, there are no
further obligations to perform under this collaboration agreement. Although the
agreements with Genta and GJT have not been terminated, the Company believes
that neither party is currently pursuing the collaborative research.
 
UNIVERSITY OF FLORIDA RESEARCH FOUNDATION, INC.
 
    In June 1994, the Company entered into a license agreement with the
University of Florida Research Foundation, Inc. ("UFRFI") under which the
Company received exclusive worldwide rights with respect to certain patents to
develop adenosine A(1) receptor antagonists and agonists for the detection,
prevention and treatment of human and animal diseases. In consideration for the
license, the Company paid UFRFI an initial license fee and is obligated to pay
royalties based on net sales of products which utilize the licensed technology.
 
    Pursuant to the agreement, the Company must exercise commercially reasonable
efforts to develop and commercialize one or more products covered by the
licensed technology and is obligated to meet milestones in completing certain
preclinical work. In the event the Company fails to reach those milestones,
UFRFI may convert the exclusive license into a non-exclusive license. As part of
the license agreement with UFRFI, the Company entered into a research agreement
with the University of Florida.
 
SYNTEX (U.S.A.) INC.
 
    In March 1996, the Company entered a license agreement with Syntex (U.S.A.)
Inc. ("Syntex"), which is an indirect subsidiary of Roche Holding Limited,
pursuant to which the Company was granted an exclusive license in certain
territories under Syntex patents and know-how for the sale of products
incorporating the licensed technology, in exchange for an up front license fee,
milestone payments and royalties. In consideration for the up front license fee
of $750,000, the Company issued to Syntex 37,500 shares of the Company's common
stock and a five year warrant to purchase 18,750 shares of the Company's common
stock at $20.00 per share. The license fee is included in research and
development expenses in 1996.
 
BAYER AG
 
    On May 7, 1996, the Company entered a license agreement with Bayer AG in the
area of inflammatory diseases. Pursuant to this agreement, the Company has
granted Bayer AG an exclusive worldwide license under the Company's patents and
know-how to research, develop and market products incorporating the licensed
technology. In exchange for the license, the Company received a $250,000 up
front non-refundable license fee and is entitled to receive milestone payments
and royalties in the future. The entire $250,000 has been included in revenue in
1996.
 
                                      F-12
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
3. INVESTMENTS
 
    The following is a summary of available-for-sale securities:
 
<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                                     ESTIMATED FAIR VALUE
                                                                     --------------------
                                                                       1996       1995
                                                                     ---------  ---------
                                                                        (IN THOUSANDS)
<S>                                                                  <C>        <C>
Cash equivalents:
  Money market funds...............................................  $  18,358  $   5,701
  Commercial paper.................................................        990         --
                                                                     ---------  ---------
                                                                        19,348      5,701
Short-term investments:
  U. S. government bonds...........................................      1,993         --
                                                                     ---------  ---------
                                                                     $  21,341  $   5,701
                                                                     ---------  ---------
                                                                     ---------  ---------
</TABLE>
 
    As of December 31, 1996 and 1995, the difference between the fair value and
the amortized cost of available-for-sale securities was insignificant.
 
    As of December 31, 1996 the average contractual maturity was approximately
three months, with no single investment's maturity exceeding one year. Excluded
from short-term investments above was $713,000 of certificates of deposit at
December 31, 1995 held as collateral against loans and which is included in
"Intangibles and other assets" on the balance sheet.
 
4. PROPERTY AND EQUIPMENT
 
    Property and equipment consist of the following:
 
<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                                     --------------------
                                                                       1996       1995
                                                                     ---------  ---------
                                                                        (IN THOUSANDS)
<S>                                                                  <C>        <C>
Machinery and equipment............................................  $   2,415  $   2,407
Furniture and fixtures.............................................        570        556
Leasehold improvements.............................................      3,063      3,064
                                                                     ---------  ---------
                                                                         6,048      6,027
Less accumulated depreciation and amortization.....................     (2,976)    (1,907)
                                                                     ---------  ---------
                                                                     $   3,072  $   4,120
                                                                     ---------  ---------
                                                                     ---------  ---------
</TABLE>
 
                                      F-13
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
4. PROPERTY AND EQUIPMENT (CONTINUED)
 
    Property and equipment include $73,000 and $756,000 recorded under capital
leases at December 31, 1996 and 1995, respectively. Accumulated amortization
related to leased assets totaled $63,000 and $500,000 at December 31, 1996 and
1995, respectively.
 
5. LONG-TERM DEBT
 
    Long-term debt consists of the following:
 
<TABLE>
<CAPTION>
                                                                           DECEMBER 31,
                                                                       --------------------
                                                                         1996       1995
                                                                       ---------  ---------
                                                                          (IN THOUSANDS)
<S>                                                                    <C>        <C>
Corporate loan at 9.0%, principal and interest due January 1, 1997,
  subject to the Company's right of payment deferral.................  $   2,000  $      --
Corporate loan at 9.0%, principal payments in equal installments
  monthly beginning April 1, 1998 through September 1, 1999. Interest
  due monthly, subject to the Company's rights of payment deferral...      3,000         --
Corporate term loan at 15.03%, interest only until December 31, 1995,
  followed by monthly installments through December 31, 1997.........         --      4,000
Bank term loan at prime, plus 3.0%, which is subject to periodic
  reset, due in monthly installments through December 31, 1997.......         --      1,143
Bank term loan at prime, plus 2.5%, which is subject to periodic
  reset, due in monthly installments through December 31, 1997.......         --      1,226
Bank note at prime, plus 2%, which is subject to periodic reset, due
  in quarterly installments through June 30, 1997....................         --        150
Other................................................................         15         72
                                                                       ---------  ---------
                                                                           5,015      6,591
Less current portion.................................................        (15)    (3,341)
                                                                       ---------  ---------
Long-term portion....................................................  $   5,000  $   3,250
                                                                       ---------  ---------
                                                                       ---------  ---------
</TABLE>
 
    The indebtedness to financiers are secured by interests in equipment,
furniture and fixtures and intellectual property rights.
 
    The carrying value of the Company's loans approximates fair value at
December 31, 1996 and 1995. The fair value of the Company's loans was estimated
using discounted cash flow analysis, based on the incremental borrowing rates
currently available to the Company for borrowings with similar terms and
maturity.
 
    On September 27, 1996, the Company completed a refinancing of its existing
debt obligations with $5.0 million of debt financing from entities associated
with Hambrecht & Quist Group (the H&Q Debt Financings). The H&Q Debt Financings
consist of a $3.0 million term loan which bears interest at the rate of 9.0% per
annum, secured by all of the assets of the Company, and has a final maturity in
September 1999, and a $2.0 million term loan, which bears interest at 9.0% per
annum and is due January 1, 1997.
 
                                      F-14
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
5. LONG-TERM DEBT (CONTINUED)
    On January 1, 1997, the Company converted the $2.0 million term loan from
Hambrecht & Quist Group to an equipment lease which bears an interest rate of
9.0% per annum and has a final maturity in September 1999. Future minimum lease
payments will total $1.0 million in 1997, $0.8 million in 1998 and $0.6 million
in 1999.
 
6. LEASES
 
    The Company leases certain equipment and furniture under noncancelable
capital leases. The Company leases its facilities under noncancelable operating
leases. The facilities lease expires February 2002 and includes an option to
renew the lease for an additional five years. In October 1995, the Company
entered into a noncancelable sublease agreement whereby it leased additional
space to two separate companies for eight months and 17 months, respectively.
Aggregate future minimum rentals to be received as of December 31, 1996 totaled
$429,000.
 
    Following is a schedule of future minimum lease payments at December 31,
1996, net of sublease rentals in 1997 and 1998:
 
<TABLE>
<CAPTION>
                                                                            OPERATING     CAPITAL
                                                                             LEASES       LEASES
                                                                           -----------  -----------
                                                                                (IN THOUSANDS)
<S>                                                                        <C>          <C>
Year ending December 31,
  1997...................................................................   $     799    $      21
  1998...................................................................       1,125           --
  1999...................................................................       1,244           --
  2000...................................................................       1,254           --
  2001...................................................................       1,284           --
Thereafter...............................................................         215           --
                                                                           -----------         ---
Total minimum payments required..........................................   $   5,921    $      21
                                                                           -----------
                                                                           -----------
Less amount representing interest........................................                       (1)
                                                                                               ---
Present value of future lease payments...................................                       20
Less current portion.....................................................                      (20)
                                                                                               ---
Noncurrent portion.......................................................                $      --
                                                                                               ---
                                                                                               ---
</TABLE>
 
    Rent expense, net of sublease rentals, for the years ended December 31,
1996, 1995, 1994 and inception (December 11, 1990) to December 31, 1996 was
approximately $391,000, $578,000, $840,000 and $2,044,000 , respectively.
 
7. RELATED PARTY TRANSACTIONS
 
    From 1992 through 1996, the Company issued loans to certain of the Company's
officers and employees related to relocation, purchases of stock and other
purposes of which loans aggregating $646,000 and $750,000 were outstanding at
December 31, 1996 and 1995, respectively. These loans bear interest at 6.50% to
6.53% per annum. The amounts are repayable from December 31, 1997 to June 8,
2005. As of December 31, 1996 loans for $475,000 are secured by personal
residences, and loans for the remaining $171,000 are secured by the individuals'
common stock. As of December 31, 1996 and 1995,
 
                                      F-15
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
7. RELATED PARTY TRANSACTIONS (CONTINUED)
loans for $171,000 and $125,000 related to the purchase of common stock and have
been included in stockholders' equity. The Company forgave $109,000 and $40,200
of accrued interest in the year ended December 31, 1996 and 1995, respectively,
on several of these notes. The forgiveness was accounted for as compensation
expense to the related employees in the period in which the interest was deemed
to have been forgiven.
 
8. STOCKHOLDERS' EQUITY
 
COMMON STOCK
 
    In September 1996, the board of directors authorized management of the
Company to file a registration statement with the SEC permitting the Company to
sell shares of its common stock to the public. On November 19, 1996, the Company
sold 1,750,000 shares of its common stock at $8.00 per share in an initial
public offering with net proceeds to the Company of $13,020,000.
 
EMPLOYEE STOCK PURCHASE PLAN
 
    In September 1996, the board of directors adopted the Employee Stock
Purchase Plan covering an aggregate of 150,000 shares of the Company's common
stock. Under the Plan, the board of directors may authorize participation by
eligible employees, including officers, in periodic offerings. Employees of the
Company or an affiliate of the Company are eligible to participate if they are
employed for at least 20 hours per week and more than five months per year. The
Plan permits eligible employees to purchase common stock through payroll
deductions, which may not exceed 15 percent of any employee's compensation, at a
price not less than the lesser of an amount equal to 85 percent of the fair
market value of the Company's common stock during the offering period or an
amount equal to 85 percent of the fair market value of the Company's common
stock on the purchase date. Employees may end their participation in the
offering at any time during the offering period, and participation ends
automatically on termination of employment with the Company. The board of
directors has not currently authorized an offering under the Employee Stock
Purchase Plan.
 
1992 STOCK OPTION PLAN
 
    The Company has reserved 345,000 common shares for issuance under its
amended and restated 1992 Stock Option Plan which provides for common stock
options to be granted to employees (including consultants, officers, and
directors). The exercise price of each incentive stock option shall be not less
than the 100% of the fair value of the stock subject to the option on the date
the option is granted. The exercise price of each nonstatutory stock option
shall be not less than 85% of the fair value of the stock subject to the option
on the date the option is granted. All options are to have a term not greater
than 10 years from the date of grant. Options are exercisable upon vesting,
which is generally ratable over a five-year period, unless otherwise approved by
the board of directors. Options may include provisions allowing exercise of any
part or all of the options prior to full vesting. Any unvested shares shall be
subject to a repurchase right in favor of the Company or to any other
restriction the board of directors determines to be appropriate. The board of
directors will not grant additional options under the 1992 Stock Option Plan.
 
                                      F-16
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
8. STOCKHOLDERS' EQUITY (CONTINUED)
1994 EQUITY INCENTIVE PLAN
 
    The Company has reserved 800,000 common shares for issuance under its
amended and restated 1994 Equity Incentive Plan which provides for common stock
options to be granted to employees of and consultants to the Company and its
affiliates. The Plan allows for the grant of incentive stock options,
nonstatutory stock options, stock bonuses, rights to purchase restricted stock
and stock appreciation rights. Options and rights granted under this plan expire
no later than 10 years from the date of grant. The exercise price of each
incentive stock option shall be not less than 100% of the fair value of the
stock subject to the option on the date the option is granted. The exercise
price of each nonstatutory option shall be not less than 85% of the fair value
of the stock subject to the option on the date the option is granted. The
vesting provisions of individual options may vary but in each case will provide
for vesting of at least 20% of the total number of shares subject to the option
per year. Options may include provisions allowing exercise of any part or all of
the options prior to full vesting. Any unvested shares shall be subject to a
repurchase right in favor of the Company or to any other restriction the board
of directors determines to be appropriate.
 
NON-EMPLOYEE DIRECTOR'S STOCK OPTION PLAN
 
    The Company's Non-Employee Director's Stock Option Plan was amended and
restated in 1996 to allow the granting of up to 250,000 shares of common stock
to directors of the Company who are not otherwise an employee of or consultant
to the Company or of any affiliate of the Company. Options granted under this
plan expire no later than 10 years from the date of grant. The exercise price of
each option shall be the fair value of the stock subject to such option on the
date such option is granted. The options generally vest in increments over a
period of three years from the date of grant.
 
    Outside of the Company's stock option plans, from May 1993 through June
1995, the Company granted options to purchase 85,500 shares of common stock to
employees and consultants. The exercise prices ranged from $0.80 to $2.50 per
share, which exercise prices represent the fair value of common stock at the
respective grant dates. The stock option terms vary between the individual
grants and were approved by the board of directors.
 
    As of December 31, 1996, the Company had a right to repurchase 7,528 shares
of common stock issued pursuant to options granted outside of, and pursuant to,
the Company's option plans described above.
 
                                      F-17
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
8. STOCKHOLDERS' EQUITY (CONTINUED)
    The following table summarizes option activity under all plans:
 
<TABLE>
<CAPTION>
                                                       OUTSTANDING OPTIONS
                              ----------------------------------------------------------------------
                              SHARES AVAILABLE    NUMBER OF                        WEIGHTED AVERAGE
                                  FOR GRANT        SHARES       PRICE PER SHARE     EXERCISE PRICE
                              -----------------  -----------  -------------------  -----------------
                                             (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                           <C>                <C>          <C>                  <C>
  Shares authorized.........            299          --          $          --            --
  Options granted...........           (184)            184      $  0.80-$0.88         $     .82
                                        ---             ---
Balance at December 31,
  1992......................            115             184      $  0.80-$0.88         $     .82
  Shares authorized.........             74          --          $          --            --
  Options granted...........           (123)            123      $  0.80-$1.30         $     .98
  Options canceled..........              9              (9)     $        0.80         $     .78
  Options exercised.........         --              --          $        0.80            --
                                        ---             ---
Balance at December 31,
  1993......................             75             298      $  0.80-$1.30         $     .88
  Shares authorized.........            238          --          $          --            --
  Options granted...........           (230)            230      $  2.00-$2.50         $    2.36
  Options canceled..........              9              (9)     $  0.80-$2.00         $     .89
  Options exercised.........         --                 (18)     $  0.80-$2.50         $     .94
                                        ---             ---
Balance at December 31,
  1994......................             92             501      $  0.80-$2.50         $    1.56
  Shares authorized.........            340          --          $          --            --
  Options granted...........           (393)            393      $        2.50         $    2.50
  Options canceled..........             37             (37)     $  0.80-$2.50         $    1.68
  Options exercised.........         --                (144)     $  0.80-$2.50         $    2.06
                                        ---             ---
Balance at December 31,
  1995......................             76             713      $  0.80-$2.50         $    1.97
  Shares authorized.........            529          --          $          --            --
  Options granted...........           (356)            356      $        2.50         $    2.50
  Options canceled..........            202            (202)     $  0.80-$2.50         $    2.21
  Options repurchased.......              3              (3)     $        2.50         $    2.50
  Options exercised.........         --                 (71)     $  0.80-$2.50         $    1.63
                                        ---             ---
Balance at December 31,
  1996......................            454             793      $  0.80-$2.50         $    2.17
                                        ---             ---
                                        ---             ---
</TABLE>
 
                                      F-18
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
8.  STOCKHOLDERS' EQUITY (CONTINUED)
 
    In March and June 1996, options to purchase a total of 8,835 and 40,505
shares, respectively, were granted at an exercise price of $2.50 per share.
Deferred compensation of $172,000 was recorded on these option grants based on
the deemed fair value of common stock of approximately $6.25. In September 1996,
the Company granted options to purchase a total of 296,500 shares at an exercise
price of $2.50 per share and additional deferred compensation of approximately
$2,150,000 was recorded based on the deemed fair value of common stock of
approximately $9.75.
 
    The following table summarizes information about stock options outstanding
at December 31, 1996:
 
<TABLE>
<CAPTION>
                                     OPTIONS OUTSTANDING & EXERCISABLE
                        -----------------------------------------------------------
                                             WEIGHTED AVERAGE
                                                 REMAINING
RANGE OF EXERCISE       NUMBER OF SHARES     CONTRACTUAL LIFE     WEIGHTED AVERAGE
PRICES                   (IN THOUSANDS)         (IN YEARS)         EXERCISE PRICE
----------------------  -----------------  ---------------------  -----------------
<S>                     <C>                <C>                    <C>
$.80 - $.88                       136                  6.6            $     .82
$1.30                              10                  7.7            $    1.30
$2.00                              22                  9.4            $    2.00
$2.50                             625                  9.5            $    2.50
                                                        --
                                  ---                                     -----
                                  793                  9.0            $    2.19
                                                        --
                                                        --
                                  ---                                     -----
                                  ---                                     -----
</TABLE>
 
PRO FORMA INFORMATION--STOCK-BASED COMPENSATION
 
    The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" and related interpretations in
accounting for its employee stock options because, as discussed below, the
alternative fair value accounting provided for under FASB Statement No. 123,
"Accounting for Stock-Based Compensation," requires use of option valuation
models that were not developed for use in valuing employee stock options. Under
APB 25, because the exercise price of the Company's employee stock options equal
the market value of the underlying stock on the grant, no compensation expense
is recognized.
 
    Pro forma information regarding net loss and loss per share is required by
FASB 123 for awards granted after December 31, 1994 as if the Company had
accounted for its stock-based awards to employees under the fair value method of
FASB 123. The fair value of the Company's stock-based awards to employees was
estimated using a Black-Scholes option pricing model (minimum value model for
awards prior to the Company's initial public offering). The Black-Scholes option
valuation model was developed for use in estimating the fair value of traded
options which have no vesting restrictions and are fully transferable. In
addition, the Black-Scholes model requires the input of highly subjective
assumptions including the expected stock price volatility. Because the Company's
stock-based awards to employees have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its stock-based awards to
 
                                      F-19
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
8.  STOCKHOLDERS' EQUITY (CONTINUED)
employees. The fair value of the Company's stock-based awards to employees was
estimated assuming no expected dividends and the following weighted-average
assumptions:
 
<TABLE>
<CAPTION>
                                                                                      OPTIONS
                                                                                --------------------
                                                                                  1996       1995
                                                                                ---------  ---------
<S>                                                                             <C>        <C>
Expected life (years).........................................................        5.1        4.5
Expected volatility...........................................................        .70        N/A
Risk-free interest rate.......................................................       6.4%        6.2%
</TABLE>
 
    For pro forma purposes, the estimated fair value of the Company's
stock-based awards to employees is amortized over the options' vesting period.
The Company's pro forma information follows (in thousands except for loss per
share information):
 
<TABLE>
<CAPTION>
                                                                          1996        1995
                                                                       ----------  ----------
<S>                                                <C>                 <C>         <C>
Net loss.........................................  As reported         $  (10,365) $  (16,724)
                                                                       ----------  ----------
                                                                       ----------  ----------
                                                   Pro forma           $  (10,771) $  (16,793)
                                                                       ----------  ----------
                                                                       ----------  ----------
Net loss per share...............................  As reported         $    (5.44) $    (4.33)
                                                                       ----------  ----------
                                                                       ----------  ----------
                                                   Pro forma           $    (5.65) $    (4.35)
                                                                       ----------  ----------
                                                                       ----------  ----------
</TABLE>
 
    Because FASB 123 is applicable only to awards granted subsequent to December
31, 1994, its pro forma effect will not be fully reflected until 1999.
 
    The weighted-average fair value of options granted at and below fair value
during 1996 and 1995 were:
 
<TABLE>
<CAPTION>
                                                                                 1996       1995
                                                                               ---------  ---------
<S>                                                                            <C>        <C>
Fair value at grant..........................................................  $    9.24  $    2.50
                                                                               ---------  ---------
                                                                               ---------  ---------
Below fair value at grant date...............................................  $    2.50  $      --
                                                                               ---------  ---------
                                                                               ---------  ---------
</TABLE>
 
WARRANTS
 
    In connection with the sale of Series A preferred stock, the Company
acquired 25,000 shares of its common stock from an investor for $0.60 per share
and issued a warrant to purchase 25,000 shares of the Company's common stock at
$8.00 per share. This warrant is exercisable immediately and expires on
September 8, 1997. As of December 31, 1996, 25,000 shares of common stock have
been reserved for the exercise of this warrant.
 
    In connection with the equipment lease entered into in 1993, the Company
issued a warrant to purchase 2,812 shares of the Company's common stock at $8.00
per share. This unexercised warrant expired at the time of the initial public
offering.
 
    In connection with the 1993 facility lease, the Company issued warrants to
purchase 3,000 shares of the Company's common stock at $12.50 per share. The
unexercised warrants expired in August 1996.
 
    In connection with the sale of Series D preferred stock, the Company issued
warrants to purchase 21,926 shares of the Company's common stock at $20.00 per
share. The warrants are exercisable
 
                                      F-20
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
8.  STOCKHOLDERS' EQUITY (CONTINUED)
immediately and expire on March 23, 1999. As of December 31, 1996, 21,926 shares
of common stock have been reserved for the exercise of the warrants.
 
    In connection with the corporate term loan obtained in April 1995, the
Company issued warrants to purchase 40,000 shares of the Company's common stock
at $25.00 per share. The warrant is exercisable immediately and expires on April
24, 2005. As of December 31, 1996, 40,000 shares of common stock have been
reserved for the exercise of the warrant. In June 1996, the warrant agreement
was amended to change the exercise price of the warrants from $25.00 per share
to $8.90 per share, in exchange for the elimination of certain loan covenants.
This change in terms resulted in a new measurement date for the warrants for
accounting purposes, and, therefore, a value of $160,000 has been recorded in
June 1996 based on the deemed fair value of the warrants at that date. The
warrant value was initially amortized over the remaining life of the loan.
However, on September 30, 1996, the Company repaid the remaining balance of the
loan and expensed the unamortized portion of the warrant value at that date.
 
    In connection with the sale of Series E preferred stock, the Company issued
warrants to purchase 196,078 shares of the Company's common stock at $20.00 per
share. The warrants are exercisable immediately and expire at the earlier of
September 7, 2000 or a merger, reorganization or sale of substantially all of
the assets of the Company. As of December 31, 1996, 196,078 shares of common
stock have been reserved for the exercise of the warrants.
 
    In 1995, the Company issued its corporate attorneys a warrant to purchase
2,500 units, each unit consisting of one share of the Company's common stock and
one warrant to purchase half of one share of the Company's common stock (1,250
shares) at $20.00 per share. The warrant was issued in lieu of payment for legal
services rendered totaling $48,750 and is separately disclosed in the statement
of stockholders' equity. The warrant is exercisable immediately and expires in
December 2000. Shares of common stock totaling 3,750 have been reserved for
issuance upon exercise of the warrant.
 
    In connection with the sale of Series G preferred stock in March and May
1996, the Company issued warrants to purchase 980,392 shares of common stock at
$2.50 per share. These warrants were exercised at the time of the initial public
offering.
 
    In September 1996, in connection the debt financing described in Note 5, the
Company issued five year warrants to purchase 84,500 shares of common stock at
an exercise price of $20.00 per share, and five year warrants to purchase 84,500
shares of common stock at an exercise price of $2.50 per share. These warrants
were valued at $521,000 based on the value of common stock on the date of the
transaction and based on the terms of the respective warrant agreements.
 
                                      F-21
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
8.  STOCKHOLDERS' EQUITY (CONTINUED)
    The following table summarizes the warrants outstanding as of December 31,
1996:
 
<TABLE>
<CAPTION>
                                                                           EXERCISE     NUMBER OF
DATE OF ISSUANCE                                                             PRICE      WARRANTS
------------------------------------------------------------------------  -----------  -----------
<S>                                                                       <C>          <C>
October 1992............................................................   $    8.00       25,000
April 1993..............................................................   $   25.00      100,000
March and April 1994....................................................   $   20.00       21,926
April 1995..............................................................   $    8.90       40,000
September and November 1995.............................................   $   20.00      196,078
December 1995...........................................................   $   20.00        3,750
March 1996..............................................................   $   20.00       18,750
September 1996..........................................................   $   20.00       84,500
September 1996..........................................................   $    2.50       84,500
                                                                                       -----------
Total...................................................................                  574,504
                                                                                       -----------
                                                                                       -----------
</TABLE>
 
9.  INCOME TAXES
 
    As of December 31, 1996, the Company had federal net operating loss
carryforwards of approximately $41,000,000. The Company also had Federal
research and development tax credit carryforwards of approximately $1,400,000.
The difference between the federal net operating loss carryforwards and the
accumulated deficit relates primarily to losses generated by the Company's
wholly owned subsidiary, CV Therapeutics, International. The net operating loss
and credit carryforwards will expire at various dates beginning on 2007 through
2011, if not utilized.
 
    Utilization of the net operating losses and credits may be subject to an
annual limitation due to the ownership change limitations provided by the
Internal Revenue Code of 1986 and similar state provisions. The annual
limitation may result in the expiration of net operating losses and credits
before utilization.
 
    Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
and the amount used for income tax purposes. Significant components of the
Company's deferred tax assets as of December 31 are as follows:
 
<TABLE>
<CAPTION>
                                                                           1996        1995
                                                                        ----------  ----------
                                                                            (IN THOUSANDS)
<S>                                                                     <C>         <C>
Net operating loss carryforward.......................................  $   14,500  $   11,600
Research credits (expiring 2007-2011).................................       2,000       1,700
Capitalized research and development..................................       1,500         800
Other, net............................................................         800         100
                                                                        ----------  ----------
Total deferred tax assets.............................................      18,800      14,200
Valuation allowance for deferred tax assets...........................     (18,800)    (14,200)
                                                                        ----------  ----------
Total.................................................................  $       --  $       --
                                                                        ----------  ----------
                                                                        ----------  ----------
</TABLE>
 
    The valuation allowance increased by $7,200,000, during the year ended
December 31, 1995.
 
                                      F-22
<PAGE>
                             CV THERAPEUTICS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
10.  SUBSEQUENT EVENTS (UNAUDITED)
 
    On March 7, 1997, the Company entered into two research collaboration and
license agreements, one with Biogen and one with Biogen's wholly owned
subsidiary, Biotech Manufacturing. The Biogen Agreements grant the Biogen
entities the exclusive worldwide rights to develop and commercialize CVT-124 and
any other adenosine A(1) antagonist owned by CVT for all indications. In
exchange for such rights to develop, manufacture and sell the technology, CVT
received an upfront payment of $16.0 million, including $5.0 million in cash, a
$7.0 million equity investment consisting of the purchase of 669,857 shares of
the Company's common stock at $10.45 per share, and advanced funding of a
milestone payment and funding under a credit facility totalling $4.0 million. In
addition, CVT may receive development milestones, equity investments, funding
under a general purpose loan facility and royalties from any future product
sales.
 
                                      F-23