<PAGE>

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

                         SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.   20549

                              ------------------------

                                      FORM 10-K

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

                  For the fiscal year ended December 31, 2000.

      |_|   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)

                Delaware                               43-1570294
        (State of Incorporation)          (I.R.S. Employer Identification No.)

                 3172 Porter Drive, Palo Alto, California 94304
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (650) 812-0585

        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 whether the Registrant (1) has filed all reports 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 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. |_|

      The aggregate market value of the Common Stock held by non-affiliates of
the Registrant, based upon the last sale price of the Common Stock reported on
the Nasdaq Stock Market was $697,508,998 as of February 28, 2001.

      The number of shares of Common Stock outstanding as of February 28, 2001
was 19,734,867.

                       DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the Registrant's Proxy Statement in connection with the
Registrant's Annual Meeting of Stockholders are incorporated herein by reference
into Part III of this report.

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<PAGE>

                                     PART I

Item 1. Business

Overview

      CV Therapeutics is a biopharmaceutical company engaged in the discovery
and development of new small molecule drugs to treat cardiovascular disease, the
leading cause of death in the United States. We currently are conducting
clinical trials for three of our drug candidates. Ranolazine, the first in a new
class of compounds known as partial fatty acid oxidation (pFOX) inhibitors, is
in Phase III clinical trials for the potential treatment of chronic angina.
CVT-510, an A1 adenosine receptor agonist, is in Phase II clinical trials for
the potential treatment of atrial arrhythmias. CVT-3146, an A2A adenosine
receptor agonist, is in Phase I clinical trials for the potential use as an
adjunctive pharmacologic agent in cardiac perfusion imaging studies. In
addition, we have several research and preclinical development programs designed
to bring additional drug candidates into human clinical testing.

Ranolazine for the potential treatment of chronic angina

      Ranolazine, a potential treatment for chronic angina, is currently in its
second Phase III trial. Angina is the heart pain, often quite debilitating, that
results from a shortage of oxygen-rich blood available to the heart relative to
the oxygen required for the amount of work the heart needs to do. For many
patients, this oxygen shortage occurs even when their hearts only need to do the
minimal work necessary to support routine activities such as climbing stairs or
carrying groceries from the car. Typically, this oxygen shortage is the result
of obstructions in the coronary arteries that prevent proper circulation of
oxygen-rich blood. According to the American Heart Association, there were
approximately 7.2 million patients in the United States in 1998 who suffered
from angina.

      The key to treating angina is to bring the heart's need for oxygen into
balance with its available supply. Current pharmaceutical therapies, such as
beta blockers, calcium channel blockers and long-acting nitrates, all achieve
this result by forcing a reduction in the demand for oxygen by a lowering in one
or more of heart rate, blood pressure or the strength of contraction of the
heart muscle. Patients on these therapies may be unable to tolerate further
reductions in the heart rate, blood pressure and the strength of contraction,
and therefore, current therapies may prove unsatisfactory.

      We believe ranolazine balances the oxygen supply/demand equation by
causing the heart to use oxygen more efficiently. In other words, ranolazine may
allow a diseased heart to do its work with a limited supply of oxygen. By
improving the heart's oxygen efficiency, ranolazine may be able to provide a
treatment for angina without forcing a reduction in the amount of work that the
heart can do. This may allow patients to reduce their angina without lowering
heart rate, blood pressure or cardiac contraction strength, an outcome not
currently available to patients.

      In August 1999, we announced initial results from the first of two planned
Phase III trials of ranolazine, our anti-anginal drug candidate. The results of
the trial, called Monotherapy Assessment of Ranolazine in Stable Angina, or
MARISA, indicated increases in patients' treadmill exercise duration compared to
placebo, the primary endpoint for this trial. These results were statistically
significant at the 99.5% or greater level, or what is commonly referred to as p
< 0.005. This means that, applying widely-used statistical methods, the chance
that these results could have occurred by accident is less than 1 in 200.

      We are currently conducting the second of the two planned Phase III
trials, called Combination Assessment of Ranolazine in Stable Angina, or CARISA.
Should results of this trial be consistent with the results we found in the
MARISA trial, we intend to file a New Drug Application (NDA) with the United
States Food and Drug Administration seeking approval to market ranolazine for
chronic angina.


                                       2
<PAGE>

      In January 2001 we announced that we completed enrollment of the
originally planned 462 patients in the CARISA trial and that we also planned on
enrolling an additional 186 patients based on the results of a blinded interim
assessment. This interim assessment, which was pre-specified in the protocol,
evaluated the statistical variance of the primary endpoint, treadmill times, in
a "blinded" fashion but did not assess the efficacy of ranolazine compared to
placebo. The protocol-specified interim assessment dictated enrollment of an
additional 186 patients.

      We have entered into a sales and marketing agreement with Innovex Inc., a
subsidiary of Quintiles Transnational Corp. Under this agreement, if the United
States Food & Drug Administration (FDA) approves ranolazine for sale in the
United States, Innovex will hire and train a dedicated sales force for
ranolazine and assist in funding marketing expenses for up to five years after
approval. We will receive 100% of the revenues from sales of ranolazine. In
turn, we will pay Innovex a fee that will not exceed 33% of those revenues in
the first two years, and that will decline to a maximum of 25% by the fourth and
fifth years. At the end of the five-year agreement, we can retain the sales
force built by Innovex.

      In addition, we have initiated a Phase II clinical trial of ranolazine in
patients with severe congestive heart failure (CHF). The goals of this study are
to provide data in support of an NDA filing for ranolazine in angina, and to
guide potential further development of ranolazine in patients with CHF.

CVT-510 for potential heart rate reduction during atrial arrhythmias

      CVT-510 is currently in phase II clinical trials for the potential acute
control of heart rate during atrial arrhythmias. When a patient experiences an
atrial arrhythmia, the heart beats too fast to accommodate effective pumping of
blood throughout the body. According to hospital audit reports, atrial
arrhythmias were involved in approximately 2.6 million hospital diagnoses in the
United States in 1997.

      Current therapies to control heart rate during these episodes may entail a
number of undesirable features. Digoxin may not work quickly enough. Beta
blockers and calcium channel blockers may reduce blood pressure in patients
whose blood pressure is already dangerously low due to the arrhythmia itself.
Finally, Adenocard(R), the branded name of adenosine, also reduces blood
pressure and may slow heart rate for too brief a time to be effective in
treating many arrhythmias.

      CVT-510 is a new small molecule drug that we believe may address the
shortcomings of current therapies. CVT-510 selectively stimulates the A1
adenosine receptor, which may slow heart rate. However, unlike Adenocard(R),
CVT-510 does not stimulate the A2 adenosine receptor, which may lower blood
pressure.

      In November 2000, at the annual meeting of the American Heart Association,
we announced results from a Phase II trial of CVT-510, indicating that CVT-510
terminated a kind of atrial arrhythmia known as paroxysmal supraventricular
tachycardia (PSVT), without adversely affecting blood pressure. Based on the
results of this trial, we intend to initiate a Phase III clinical trial of
CVT-510 in patients with PSVT. In addition, a Phase II trial of CVT-510 in
patients with atrial fibrillation is currently ongoing.

CVT-3146 for potential use as an adjunctive pharmacologic agent in cardiac
perfusion imaging studies

      CVT-3146 is currently in Phase I clinical trials for the potential use as
an adjunctive pharmacologic agent in cardiac perfusion imaging studies. Cardiac
perfusion imaging studies are used for the detection and characterization of
coronary artery disease by identifying areas of insufficient blood flow in the
heart. In 1997, approximately 5.2 million cardiac perfusion imaging studies were
performed in the United States, of which 1.8 million were conducted using an
adjunctive pharmacologic agent.

      In July 2000, we entered into a collaboration agreement with Fujisawa
Healthcare, Inc. (FHI) to develop and market CVT-3146 in North America. We will
be responsible for managing the CVT-3146 clinical development


                                       3
<PAGE>

program. FHI will be responsible for selling and marketing CVT-3146 in North
America and we will receive a royalty on sales of CVT-3146. In the United States
FHI currently markets Adenoscan(R), the market leading pharmacologic cardiac
stress-imaging agent.

Research and preclinical programs

      We also have a number of preclinical and research programs in the areas of
adenosine receptor research, cardiac metabolism, atherosclerosis and cell cycle
inhibition. In each of these programs, we are working to translate new molecular
mechanisms into new pharmacology that will ultimately offer new hope and help
for people with cardiovascular disease.

Cardiovascular Disease Background

      Cardiovascular disease is the leading cause of death in the United States,
claiming almost one million lives in 1998. The American Heart Association
estimated the total amount spent on cardiovascular medications in the United
States in 1998 at $14.8 billion.

      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 chemicals, such as
sodium, potassium and chloride, in the blood, and the lungs put oxygen in 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 factors such as heart rate and blood pressure, which in turn are
controlled by a variety of hormones such as adrenaline, angiotensin and
adenosine. These hormones 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 diseases, including atherosclerosis, which is the hardening
of the arteries, hypertension, which is high blood pressure, and others, may
cause permanent damage to the heart and blood vessels, leading to CHF, angina
and myocardial infarction, or heart attack. In 1998, in the United States, there
were 7.2 million patients with angina and 4.9 million patients with CHF. In
1997, there were 2.6 million hospital diagnoses of acute atrial arrhythmias in
the United States. More than 20 years ago, drugs such as nitrates, beta
blockers, calcium channel blockers and ACE inhibitors were developed to treat
cardiovascular diseases. These drugs have contributed to an increase in the
survival of patients who suffer from cardiovascular disease. However, these
drugs also can cause a variety of undesirable side effects, including fatigue,
depression, impotence, headaches, palpitations and edema. They also may lack
effectiveness in various segments of the cardiovascular market. Molecular
cardiology has provided new insight into the mechanisms underlying
cardiovascular diseases, thus creating the opportunity for improved therapies.

Business Strategy

      The key elements of our business strategy are as follows:

      Identify and develop new drugs for the treatment of cardiovascular
diseases-a single therapeutic area

      By being focused on one therapeutic area, cardiovascular disease, we
believe that we can be relatively efficient in our drug discovery, development
and commercialization efforts. Our concentrated focus on cardiovascular disease
may add to our efficiency, including in the following areas:

      o     Research-focus is on the molecular mechanisms of the cardiovascular
            system


                                       4
<PAGE>

      o     Regulatory-discussions are with the same FDA division

      o     Clinical investigators-investigators in one trial are candidates for
            future trials

      o     Consultants-thought leaders are tapped for numerous internal
            programs

      o     Clinical need-key employees are experienced in cardiovascular and/or
            clinical science

      o     Sales force efficiency-detailing is to the same cardiologists and
            other prescribing doctors

      Focus on small molecule drug candidates

      Small molecule therapeutics can frequently be administered orally on an
outpatient basis. By contrast, to date, "large molecule" therapeutics, such as
proteins or monoclonal antibodies, can very rarely be formulated to accommodate
oral outpatient administration. In addition, our emphasis on small molecule
therapeutics means that our drug candidates can be produced by conventional
pharmaceutical manufacturing methods, by using the outside production
capabilities of the established contract pharmaceutical manufacturing industry.

      Commercialize products, in part, through a concentrated marketing effort
targeted to cardiologists

      A focused commercialization effort can provide marketing cost
efficiencies. Patients that have severe cardiovascular conditions are generally
treated by cardiologists. In 1998, there were approximately 20,000 cardiologists
in the United States. Cardiologists are generally concentrated in metropolitan
communities near major medical centers. We believe that this relatively small
number of subspecialists is responsible for a significant portion of the patient
visits associated with prescriptions written for severe cardiovascular
conditions. These market dynamics make it possible to approach the sales of the
drugs in our pipeline with a focused sales force, like the one to be provided
for ranolazine through our sales and marketing services agreement with Innovex,
Inc.

      Participate in the sales and marketing in the United States of at least
some of the drugs we develop

      In the biopharmaceutical industry, a substantial percentage of the profits
generated from successful drug development are typically retained by the entity
directly involved in the sales and marketing of the drug. Licensing our drug
candidates to a third party who will complete development and provide sales and
marketing resources in exchange for a sales royalty may reduce some of our
risks. However, we believe that the risk-return tradeoff typically favors
developing and then marketing and selling products ourselves. Therefore, a key
element of our business strategy is to be involved, when practical, in the sales
and marketing of our products in the United States. Though we may eventually
become involved in direct sales and marketing activities in other parts of the
world, our initial direct efforts will be in the United States.

Product Portfolio

      We have the following portfolio of product candidates:

<TABLE>
<CAPTION>
                                                                        Development
Product            Target                   Indication(s)                  Status
-------            ------                   -------------               -----------
<S>         <C>                         <C>                              <C>
Ranolazine  Fatty acid oxidation        Angina                           Phase III
            inhibition
                                        Congestive heart failure         Phase II
CVT-510     A1 adenosine receptor in    Acute heart rate control during  Phase II
            the heart                   atrial arrhythmias
</TABLE>


                                       5
<PAGE>

<TABLE>
<S>         <C>                         <C>                              <C>
CVT-3146    A2A adenosine receptor in   Cardiac imaging                  Phase I
            the heart
Adentri TM                              Congestive heart failure         Preclinical
            A1 adenosine receptor in
            the kidney
CVT-2759    A1 adenosine receptor in    Chronic heart rate control       Preclinical
            the heart                   during atrial arrhythmias
CVT-3833    Fatty acid oxidation        Angina/CHF                       Preclinical
            inhibition
CVT-2584    Inhibition of cell cycle    Vascular stenosis                Preclinical
            enzyme CDK2
CVT-3634    Adenosine receptor          Vascular disease                 Preclinical
Cholesterol Tangier disease gene/HDL    Atherosclerosis                  Research
Transport   elevation
</TABLE>

      In the table, under the heading "Development Status," "Phase III"
indicates evaluation of clinical efficacy and safety within an expanded patient
population at geographically dispersed clinical trial sites. "Phase II"
indicates safety testing and initial efficacy testing in healthy volunteers
and/or a limited patient population. "Phase I" indicates initial safety testing
in healthy volunteers and a limited patient population. "Preclinical" indicates
lead compound selected for possible development which meets predetermined
criteria for potency, specificity, manufacturability, toxicity and pharmacologic
activity in animal and/or in vitro models. "Research" indicates lead candidate
being tested against predetermined criteria.

Ranolazine

      Ranolazine is a novel small molecule for the potential treatment of
angina. Research indicates that ranolazine may cause a partial shift in the
source of energy for the heart from fatty acid toward glucose, which is a more
oxygen efficient source of energy. We are developing ranolazine to potentially
treat angina because we believe ranolazine may significantly improve exercise
tolerance, the standard clinical measurement for angina treatment. However,
unlike current anti-anginal medicines, ranolazine may allow blood pressure and
heart rate to remain essentially unchanged, and as a result, may have an
improved tolerability profile compared to currently available therapies. We
licensed exclusive rights to ranolazine in the United States and specified
foreign territories for use in cardiovascular indications, including angina,
from Syntex (U.S.A.), Inc. in March 1996.

      Potential Indication-Angina

      Angina is heart pain. Angina sufferers often describe their pain as a
crushing, strangling and/or burning sensation in the chest. These attacks can
occur anytime or anywhere, but in most patients with angina, they are often
triggered by daily physical exertion or emotional stress.

      Angina is caused when the heart muscle does not get enough oxygen-carrying
blood to meet its need, generally because of obstructions in the coronary
arteries feeding blood to the heart. These obstructions typically are caused by
a buildup of cholesterol deposits in the coronary arteries. All the body's
organs and tissues need oxygen to extract energy from the foods we eat. The
heart also needs oxygen in order to fuel its mechanical work of pumping blood
throughout the body. Angina occurs when the blood supply cannot provide enough
oxygen to meet the heart muscle's demand.

      In the United States, approximately 7.2 million patients in 1998 had
angina. Based on published data, we estimate that over half of these patients
are currently being treated with multiple medications, including nitrates, beta
blockers and calcium channel blockers.

      Current Approaches to Angina Treatment

      Currently available drugs to treat angina include beta blockers, calcium
channel blockers and long-acting nitrates. These drugs treat angina by
decreasing the heart's demand for oxygen by reducing the work it is asked to


                                       6
<PAGE>

perform. These drugs work by lowering heart rate, blood pressure and/or the
strength of the heart's contraction. 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 may not provide relief of angina without unacceptable effects.

      pFOX Inhibition-A Potential New Approach by Ranolazine

      Cardiac metabolism is the process by which the heart extracts the energy
it needs to pump blood from either fat or glucose by combining them with oxygen.
Under normal conditions, cardiac metabolism uses both fat and glucose on a
roughly 60% fat and 40% glucose basis. If fatty acid oxidation, which is the
combination of fatty acids and oxygen into energy, is inhibited, cardiac
metabolism shifts to utilizing more glucose. Since the heart gets more energy
from a unit of oxygen combined with glucose than it does from that same unit of
oxygen combined with fat, causing a shift in cardiac metabolism from fat to
glucose should improve cardiac efficiency. However, a complete shift away from
metabolizing fatty acids could potentially lead to unwanted side effects.
Consequently, only a partial inhibition of fatty acid oxidation is likely to be
desirable.

      Research indicates that ranolazine may cause such a partial shift and may
be a partial fatty acid oxidation, or pFOX, inhibitor. Specifically, ranolazine
may cause a partial, and reversible, inhibition of fatty acid oxidation during
conditions of a shortage of oxygen. Inhibition of fatty acid oxidation results
in a shift to more glucose oxidation, which produces more energy per unit of
available oxygen. Such an improvement in cardiac efficiency could contribute to
a treatment for angina by reducing the imbalance between oxygen demand and
oxygen supply.

      As a pFOX inhibitor, ranolazine potentially operates via a completely
different pathway than the existing anti-anginal drugs. Ranolazine does not
appear to work by lowering heart rate or blood pressure to reduce oxygen demand.
Rather, ranolazine may affect cardiac metabolism, the process by which energy is
extracted from glucose and fatty acids by combining them with oxygen. Ranolazine
appears to improve the efficiency of cardiac metabolism by allowing the
otherwise limited supply of oxygen to produce more energy. This metabolic shift
toward glucose metabolism and away from fatty acid metabolism does not affect
heart rate, blood pressure or the contraction strength of the heart.
Consequently, patients taking ranolazine may be able to maintain these
hemodynamic measures at or near baseline levels, which they are unable to do if
they take any of the currently available anti-anginal medications.

      The following table sets forth the mechanisms and effects of ranolazine
and anti-anginal drugs.

                           Heart             Blood       Mechanism
                           Rate             Pressure

Ranolazine:                 --                 --        Improves oxygen
pFOX Inhibitor                                           metabolism

Beta                         9                 9         Decreased
Blockers                                                 pump function

Calcium                      9                 9         Decreased
Channel                                                  pump function,


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<PAGE>

Blockers                                                 vasodilation

Long-Acting                  8                 9         Vasodilation
Nitrates

      For the above table, the data and the reflected mechanism of action
indicated for ranolazine is based on clinical trials to date. Unlike beta
blockers, calcium channel blockers and long-acting nitrates, ranolazine has not
yet been approved by the FDA as safe or effective, and clinical trials are
currently underway to confirm this hypothesis.

Ranolazine Clinical Trial Status

      We are currently conducting a pivotal Phase III clinical trial,
Combination Assessment of Ranolazine in Stable Angina, or CARISA. The CARISA
trial is a randomized, double-blind, placebo controlled trial of ranolazine used
in combination with other anti-anginal drugs in approximately 648 patients.
Should results of this trial be consistent with the results we found in the
first Phase III trial, we intend to submit a New Drug Application, or NDA, to
the United States Food and Drug Administration, seeking approval to market
ranolazine for chronic angina.

      In January 2001, we announced that we completed enrollment of the
originally planned 462 patients in the CARISA trial and that we also planned on
enrolling an additional 186 patients based on the results of a blinded interim
assessment. This interim assessment, which was pre-specified in the protocol,
evaluated the statistical variance of the primary endpoint, treadmill times, in
a blinded fashion, but did not assess the efficacy of ranolazine compared to
placebo. The protocol-specified interim assessment dictated enrollment of an
additional 186 patients.

      In addition, we have recently initiated a Phase II clinical trial of
ranolazine in patients with congestive heart failure (CHF). This multicenter
trial is a randomized, double-blind placebo-controlled trial of orally
administered sustained release ranolazine in patients with New York Heart
Association Class III or IV CHF. The study is designed to evaluate the
pharmacokinetics, safety and tolerability of ranolazine in patients with severe
CHF, to support an NDA for ranolazine in chronic angina. In addition, we will
use this study to evaluate pilot efficacy endpoints in CHF, which will guide us
on how we may study ranolazine for the treatment of CHF in the future.

      In August 1999, we completed our Monotherapy Assessment of Ranolazine In
Stable Angina, or MARISA trial. MARISA was a randomized, double-blind,
placebo-controlled trial of a sustained release formulation of ranolazine used
in patients who were not receiving other anti-anginal drugs. Patients were
evaluated by treadmill exercise testing during treatment with placebo and each
of three doses of ranolazine, 500mg twice daily, 1000mg twice daily, and 1500mg
twice daily. The results of the trial are summarized below:

      o     The MARISA primary endpoint was treadmill exercise duration
            approximately 12 hours after the previous dose and just before the
            next dose. At this time, ranolazine plasma concentrations are at
            their lowest point during the dosing cycle, or at trough. Data from
            175 patients appear to show that compared to placebo, ranolazine
            taken twice a day increased exercise duration at trough plasma
            concentrations, at all three active doses studied. These results
            were statistically significant at the 99.5% or greater level, or
            what is commonly referred to as p < 0.005. This means that, applying
            widely used statistical methods, the chance that these results could
            have occurred by accident is less than 1 in 200.

      o     Key secondary endpoints, exercise time to onset of angina and
            exercise time to the electrocardiographic appearance of ischemia
            were increased at all three ranolazine doses studied


                                       8
<PAGE>

            compared to placebo. These results were statistically significant at
            the 99.5% or greater level, or p < 0.005.

      o     The lack of clinically relevant hemodynamic effects was consistent
            with results observed in prior clinical trials of a different
            formulation of ranolazine. While increases in exercise duration were
            observed, ranolazine had no clinically meaningful impact on heart
            rate or blood pressure, either at rest or following exercise.

      o     Adverse events, including dizziness, asthenia or weakness, and
            nausea, and the electrocardiographic changes observed in this trial,
            were consistent with those observed in prior trials of a different
            formulation of ranolazine. Adverse event frequency increased as dose
            increased.

      Three Phase II trials completed by Syntex prior to 1994 indicated that an
immediate release formulation of ranolazine increased, with p < 0.05, the
exercise duration of angina patients during exercise testing at peak dosage
levels, compared to placebo. This result was observed both when ranolazine was
given alone and in combination with beta blockers or calcium channel blockers.
In these trials, ranolazine was administered on a three times daily schedule. To
achieve a more commercially attractive product with a twice-daily dosing
schedule, Syntex developed a sustained release formulation of ranolazine, which
we are testing in our Phase III clinical trials. To date, ranolazine has been
tested in more than 2,300 patients and volunteers.

      Commercialization of Ranolazine

      In May 1999, we entered into a sales and marketing alliance with Innovex,
Inc., a subsidiary of Quintiles Transnational Corp. Under this agreement, if
ranolazine is approved for sale in the United States by the FDA, Innovex will
hire and train a dedicated sales force for ranolazine and assist in funding
marketing expenses for up to five years after launch. We will receive 100% of
the revenues of ranolazine, and we will pay Innovex a fee that will not exceed
33% of those revenues in the first two years that will decline to a maximum of
25% by the fourth and fifth years. Further, in exchange for giving us the option
to retain this trained sales force at the end of the contract, Innovex will
receive a royalty on sales of 7% in the sixth and 4% in the seventh years after
launch. Innovex provides sales and marketing services to the pharmaceutical
industry worldwide.

CVT-510

      We are developing CVT-510 for the potential acute control of heart rate
during atrial arrhythmias. Atrial arrhythmias are abnormally rapid heart rates,
and include the conditions of atrial fibrillation, atrial flutter and paroxysmal
supraventricular tachycardias (PSVT). CVT-510 is an A1 adenosine receptor
agonist which may act selectively on the conduction system of the heart to slow
electrical impulses. CVT-510 may offer a new approach to rapid and sustained
control of acute atrial arrhythmias by reducing heart rate without lowering
blood pressure. We have completed a Phase II trial of CVT-510 in patients with
PSVT and we are currently conducting a Phase II trial of CVT-510 in patients
with atrial fibrillation.

      Potential Indication-Acute Heart Rate Control During Atrial Arrhythmias

      Atrial arrhythmias occur when the atria of the heart beat rapidly, or
uncontrollably, sending multiple electrical impulses to the ventricles of the
heart. An excessive increase in ventricular rate reduces the heart's cardiac
output due to inadequate filling and emptying of the left ventricle. Potentially
damaging consequences include low blood pressure and damage to the brain, heart
and other vital organs, therefore, these rhythm disturbances often require
immediate treatment. Prompt slowing of the heart rate is the goal of therapy.
Because of the need to treat patients quickly, intravenous therapies allow for
rapid stabilization of the patient while the underlying condition is treated.

      In the United States, atrial arrhythmias are involved in approximately 2.6
million hospital diagnoses annually. Atrial arrhythmias are a major complication
of heart attacks, heart failure and cardiac surgery. The acute treatment


                                       9
<PAGE>

of atrial arrhythmias involves slowing the heart rate. Later, when the heart
rate is controlled, additional steps can be taken to reverse the abnormal
electrical activity in the atria which underlie these arrhythmias.

      Current Approaches to Acute Heart Rate Control During Atrial Arrhythmias

      Current medical therapies, which include digitalis, calcium channel
blockers, beta blockers and Adenocard(R), 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.
This can be dangerous in patients whose condition requires prompt heart rate
control to restore normal cardiac output. Calcium channel blockers, beta
blockers and Adenocard(R) act quickly but are themselves associated with
reductions in blood pressure and depressed cardiac function. These drugs could
potentially exacerbate the condition of patients already experiencing cardiac
dysfunction as a complication of the arrhythmia. Furthermore, the effect of
Adenocard(R) persists only for a few seconds, and as a result, this product is
not indicated for treatment in patients with atrial fibrillation or flutter.

      Cardiac Conduction System

      During an atrial arrhythmia, the atria of the heart beat too rapidly,
sending excessive electrical impulses to the ventricles of the heart. These
electrical impulses are initiated at a set of specialized cells in the atria,
known as the sinus node, and then run to another set of specialized cells known
as the atrio-ventricular (AV) node. It is this AV node which controls the
transmission of the electrical impulses to the ventricles. Since the rate at
which electrical impulses pass through the AV node determines ventricular heart
rate, slowing AV nodal transmission will result in a reduction in ventricular
heart rate. Since ventricular rate is a primary determinant of cardiac output,
prompt slowing of rapid AV nodal conduction is one treatment approach to slowing
the abnormally rapid heart rate of an atrial arrhythmia.

      Potential Treatment by CVT-510

      CVT-510 is designed to selectively stimulate the A1 adenosine receptor.
Stimulation of the A1 adenosine receptor in the AV node slows the speed of
electrical conduction across the AV node, which in turn reduces the number of
electrical impulses that reach the ventricle. Stimulation of the A2 adenosine
receptor may lower blood pressure. Since CVT-510 may selectively stimulate the
A1 adenosine receptor without significantly stimulating the A2 adenosine
receptor, it may be possible to use CVT-510 to intervene immediately in the
arrhythmia process without the unwanted effect of lowering blood pressure.
CVT-510 may offer cardiac patients and clinicians alternatives to current
therapies that are either relatively slow to act or reduce blood pressure.

      CVT-510 Clinical Trial Status

      In November 2000, at the annual meeting of the American Heart Association,
we announced results from a Phase II trial of CVT-510 indicating that CVT-510
terminated paroxysmal supraventricular tachycardia (PSVT) without adversely
affecting blood pressure. In this open-label, dose escalation study, CVT-510 was
given as one or two bolus injections at least two minutes apart to 37 patients
with inducable PSVT undergoing electrolphysiological study. The results
indicated that in 32 of 37 patients, or 86%, the PSVT was terminated and normal
sinus rhythm was restored. CVT-510 was well tolerated in these patients with no
adverse effects on blood pressure, and no high-grade AV block or other serious
adverse events were observed. Based on the results of this trial, we intend on
initiating a Phase III clinical trial of CVT-510 in patients with PSVT. We are
conducting a second Phase II trial of CVT-510 in patients with atrial
arrhythmias.


                                       10
<PAGE>

CVT-3146

      We are developing CVT-3146 for the potential use as an adjunctive
pharmacologic agent in cardiac perfusion imaging studies. Cardiac perfusion
imaging studies are used for the detection and characterization of coronary
artery disease, by identifying areas of insufficient blood flow in the heart.
Some of these studies are conducted using pharmacologic agents. CVT-3146 is an
A2A adenosine receptor agonist which may act selectively on the heart to cause
coronary vasoldilation and thus increase coronary blood flow. Therefore,
CVT-3146 may provide doctors with an alternative agent for cardiac perfusion
imaging studies without unwanted side effects. We have entered into a
collaboration with Fujisawa Healthcare to develop and market CVT-3146 in North
America. We are currently conducting a Phase I trial to assess the safety and
tolerability of CVT-3146.

      Potential Indication-An Adjunctive Pharmacologic Agent in Cardiac
Perfusion Imaging Studies

      Cardiac perfusion imaging studies are used for the detection and
characterization of coronary artery disease by identifying areas of insufficient
blood flow in the heart. During these tests, the heart is subjected to a period
of stress to stimulate maximal blood flow. Myocardial perfusion is measured
during stress and compared to when patients are at rest. Areas of relatively
poor perfusion during stress as compared to rest indicates which areas of the
heart may be affected by narrowed coronary arteries.

      To stress the heart sufficiently to perform the test, many patients
exercise on a treadmill. However, more than a third of the patients who take the
test are unable to exercise adequately because of medical conditions such as
peripheral vascular disease or arthritis. For those patients, a pharmacologic
agent that temporarily increases coronary blood flow is used to mimic the
increase in blood flow caused by exercise. In 1997, approximately 5.2 million
cardiac perfusion imaging studies were performed in the United States, of which
1.8 million were conducted using a pharmacologic agent.

      Current Approaches to Increasing Coronary Blood Flow During Cardiac
Imaging Studies

      Current pharmacologic therapies used in cardiac imaging testing are
dipyridamole and Adenoscan(R), the brand name for adenosine. Adenoscan(R) is
used for cardiac imaging because it is the naturally occurring agent that causes
coronary vasodilation and it has a short half-life. However, because
Adenoscan(R) activates all four receptor subtypes, it can cause many side
effects. Chief among these are flushing, dyspnea and headache. Adenoscan(R) is
also contraindicated in asthma patients. Another current cardiac imaging agent,
dipyridamole, is known to increase levels of adenosine by inhibiting its
transport into cells. Due to its longer half-life, coronary vasodilation
persists for long periods of time, and therefore, patients must be closely
monitored at the completion of the test. In addition, one of the main side
effects of dipryridamole is dizziness.

      Potential Treatment by CVT-3146

      CVT-3146 has been designed to selectively activate the A2A adenosine
receptor in the heart, in order to elicit the coronary vasodilation response
while avoiding many of the side effects of Adenoscan(R) or dipyridamole.

      CVT-3146 Clinical Trial Status

      In November 2000, we initiated a randomized, double-blind,
placebo-controlled Phase I trial of CVT-3146 in healthy volunteers. The goal of
the trial is to assess the safety and tolerability of CVT-3146.

Adentri(TM) Program

      Patients with congestive heart failure (CHF) have limited heart pumping
function, and the corresponding reduction in blood flow impairs the kidney's
ability to clear fluid wastes from the body. Current therapies for CHF tend to
negatively impact other activities of the kidneys. Preclinical studies and
clinical trials indicate that A1


                                       11
<PAGE>

adenosine receptor antagonists may increase the kidney's ability to clear fluid
wastes without decreasing other functions of the kidneys. Thus, we believe that
A1 adenosine receptor antagonists have the potential to be a new therapy for the
treatment of CHF.

      In March 1997, we licensed the rights to our A1 adenosine receptor
antagonist technology, patents and compounds, including CVT-124, to Biogen, Inc.
Collectively, Biogen's efforts in this area are referred to as the AdentriTM
program. As a result of the agreements we signed, Biogen has an exclusive
worldwide license to develop, manufacture and commercialize CVT-124 and any
other A1 adenosine receptor antagonists developed either by Biogen or us based
on our patents or our technology. As long as Biogen retains its license for our
A1 adenosine receptor antagonist technology and patents, Biogen is responsible
for funding all development and commercialization expenses related to these
compounds.

      In February 2000, Biogen announced that it had successfully completed a
Phase II trial of CVT-124 in patients with moderate-to-severe CHF. However,
Biogen also announced its intention to continue the AdentriTM program with a new
molecule that is currently in preclinical studies.

      Potential Indication-Congestive Heart Failure

      CHF occurs when the heart muscle is weakened by disease so it cannot
adequately pump blood throughout the body. As a result of this pump failure,
fluid accumulates throughout the body, including in the lungs. This results in
shortness of breath. Fluid also accumulates in the body because of adaptations
by the kidneys during CHF.

      Approximately 4.9 million people in the United States in 1998 suffered
from CHF and an estimated 400,000 new cases arise each year. Approximately
875,000 patients in 1995 were hospitalized in the United States with a primary
diagnosis of CHF. CHF is the leading cause of hospital admissions among patients
over 65.

      Current Approaches to Treating Congestive Heart Failure

      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
kidneys. However, current diuretic therapies such as furosemide, thiazides and
spironolactone become less effective over time as the disease progresses.
Approximately one quarter of hospitalized CHF patients are resistant to current
intravenous diuretic therapies. The dosage of the most commonly prescribed
diuretics for CHF are often increased as the disease progresses, which can be
associated with toxic side effects. One such side effect is potassium loss,
which may lead to an increased incidence of cardiac arrhythmias if potassium is
not monitored and replaced, and another is a decline in kidney function.

      Potential Treatment by A1 Adenosine Receptor Antagonists

      An A1 adenosine receptor antagonist blocks the action of the A1 adenosine
receptors. Since the A1 adenosine receptor plays an important role in the
kidneys to cause the kidneys to retain sodium and fluids, blocking the action of
this receptor may reduce the amount of fluid that the kidneys retain.

      Clinical Trial Experience

      In Phase I and Phase II trials, CVT-124 appeared to be generally well
tolerated and produced increases in urine, sodium and chloride excretion
compared to placebo. This was observed both in healthy volunteers and in
moderately severe CHF patients. Moreover, trials to date indicated that CVT-124
may be able to treat fluid overload without an associated reduction in the
filtration function of the kidneys. Furosemide, which is currently the most
commonly used treatment for fluid overload caused by CHF, has been shown in
prior trials to be associated with a reduction in the filtration function of the
kidneys. In February 2000, Biogen announced it had


                                       12
<PAGE>

successfully completed a placebo-controlled Phase II trial evaluating various
doses of CVT-124 in comparison to and in combination with furosemide.

      Program Status

      In February 2000, Biogen announced its intention to continue the AdentriTM
program with a new molecule that is currently in preclinical studies. Prior to
initiating clinical studies with a new compound, Biogen will be required to
complete its preclinical studies and to submit an IND to the FDA.

Preclinical Pipeline

      Our research and development team is creating new product opportunities
through our expertise in molecular cardiology. We have preclinical research
programs in the areas of:

      o     Adenosine Receptor Research
            - Cardiac conduction
            - Angiogenesis

      o     Metabolism
            - Cardiac energetics

      o     Atherosclerosis
            - Increase HDL, "the good cholesterol"

      o     Cell Cycle Inhibition

Adenosine Receptor Research

      Adenosine is a naturally occurring small molecule that is known to elicit
pharmacological responses that tend to compensate for the imbalance in oxygen
supply relative to demand that occurs when blood vessels are partially blocked
by cardiovascular disease. Our adenosine receptor research program has
discovered proprietary compounds that selectively elicit the desired effects of
adenosine receptor stimulation for the treatment of certain electrical
conductance disturbances, such as atrial arrhythmias, and to regulate the
mechanisms of new blood vessel growths, or angiogenesis.

- Cardiac Conduction

      Electrical impulses within the heart muscle play a key role in causing the
heart muscle to sequentially expand and then contract, which is required for the
heart to pump blood throughout the body in a controlled rhythm. Failure of this
electrical system to function properly will result in a poorly pumping heart,
such as in atrial arrhythmias.

      We have discovered a series of novel, proprietary, orally bio-available,
partial A1 adenosine receptor agonists, including CVT-2759, that selectively
slow the electrical conductance in the heart to adjust the rate of a beating
heart into the normal range. These compounds are similar to CVT-510, which is
being developed for the acute care of atrial arrhythmias, but are targeted for
the continued care of patients with chronic atrial arrhythmias.

- Angiogenesis

      Our scientists have led the effort to fully characterize the role of
adenosine in the initiation, maintenance, and growth of new vessels in vascular
beds that are deprived of oxygen due to cardiovascular disease. We have
discovered the receptor that is responsible for regulation of the known mitogens
such as vascular endothelial


                                       13
<PAGE>

growth factor and fibroblast growth factor, and have discovered small molecule
agonists and antagonists of this process. The goal of these programs, which
includes compounds such as CVT-3634, is to harness this naturally occurring
process for the potential treatment of peripheral vascular disease or aberrant
angiogenesis that causes diabetic retinopathy and macular degeneration.

Metabolism

      In order for the heart to adequately pump blood, fuel in the form of fat,
or fatty acids, and sugar, in the form of glucose, are metabolized with oxygen
to yield ATP, water and carbon dioxide. When oxygen is in limited supply, for
example when the vessels that feed the heart are blocked from atherosclerosis
and cardiovascular disease, the normal utilization of glucose becomes impaired.
This metabolic imbalance in favor of fatty acid oxidation (compared to
glucose)can be partially restored by inhibiting fatty acid metabolism with a
partial fatty acid oxidation (pFOX) inhibitor.

      The goals of our cardiac metabolism program are to further characterize
the therapeutic potential of ranolazine in the treatment of indications other
than angina, and to discover new, proprietary second generation ranolazine
products. For example, in an animal model of congestive heart failure,
ranolazine increased work output by the heart without increasing the consumption
of oxygen. In other words, cardiac performance and cardiac efficiency were
improved. We have also discovered several series of novel, proprietary pFOX
inhibitors, including CVT-3833, that are potential second generation compounds
to ranolazine.

Atherosclerosis

      The goal of our Tangier drug discovery program is to study the ways in
which excess cholesterol is removed from the walls of blood vessels, in an
effort to prevent or reverse the buildup of arterial plaques that cause heart
attacks. Roughly half of heart attacks occur in patients with low levels of high
density lipoproteins, known as the "good" form of cholesterol, or HDL. Patients
with the genetic disorder called Tangier disease have virtually no HDL in their
blood, and are at a greatly increased risk for developing cardiovascular
disease. Our scientists have used a new strategy combining gene expression
microarrays, and biochemical techniques to identify the gene that is defective
in patients with Tangier disease. Having identified the gene that is responsible
for the genetic disorder in Tangier disease patients, we have targeted this gene
as part of a drug discovery program to identify novel, proprietary, small
molecules that may increase HDL.

Cell Cycle Inhibition

      The goal of our cell cycle inhibition program is to develop new
therapeutics that suppress abnormal cellular proliferation. Excessive
proliferation of cardiovascular connective tissue cells or vascular smooth
muscle cells cause the scarring and loss of function that is characteristic of
chronic diseases of the heart, blood vessels and kidneys. As part of our drug
discovery strategy, we have focused upon enzymes called cell cycle enzymes that
regulate cellular proliferation. CVT-2584 is a new compound that selectively
inhibits CDK2, a critical cell cycle enzyme. Animal studies with CVT-2584 have
shown substantial reduction of blockages after vascular injury.

Collaborations and Licenses

      We have established, and intend to continue to establish, strategic
partnerships to expedite development and commercialization of our drug
candidates. For those programs with potential application outside of
cardiovascular disease, we intend to identify additional corporate partners. In
addition, we have licensed chemical compounds from academic collaborators and
other companies. Our collaborations and licenses currently in effect include:


                                       14
<PAGE>

      University of Florida Research Foundation

      In June 1994, we entered into a license agreement with the University of
Florida Research Foundation, Inc. under which we received exclusive worldwide
rights to develop A1 adenosine receptor antagonists and agonists for the
detection, prevention and treatment of human and animal diseases. In
consideration for the license, we paid an initial license fee and are obligated
to pay royalties based on net sales of products that utilize the licensed
technology. Under this agreement, we must exercise commercially reasonable
efforts to develop and commercialize one or more products covered by the
licensed technology. In the event we fail to reach certain milestones under the
agreement, the licensor may convert the exclusive license into a non-exclusive
license. We sublicensed our rights under this license that relate to A1
adenosine receptor antagonists to Biogen in March 1997.

      Syntex

      In March 1996, we entered into a license agreement with Syntex (U.S.A.)
Inc. to obtain United States and foreign patent rights to ranolazine for the
treatment of angina and other cardiovascular indications. Pursuant to the
agreement, Syntex provided quantities of the compound to us. The license
agreement is exclusive and worldwide except for the following countries which
Syntex has 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, we paid an initial license fee. In addition,
we are obligated to make payments upon product approvals in the first two major
markets, but in no event later than March 31, 2005 and March 31, 2006,
respectively, unless the contract is terminated. In addition, we will make
royalty payments based on net sales of products that utilize the licensed
technology. We are required to use commercially reasonable efforts to develop
and commercialize the product for angina.

      Biogen

      In March 1997, we entered into two research collaboration and license
agreements with Biogen. The agreements grant Biogen the exclusive worldwide
right to develop and commercialize any products which are produced based on our
A1 adenosine receptor antagonist patents or technologies (including our rights
under the University of Florida Research Foundation license) for all
indications. In exchange, we received a $16.0 million payment consisting of
research related funding, an equity investment and $3.0 million in funding under
a general purpose loan facility. Biogen agreed to make milestone payments and
equity investments, as well as the loan facility, all of which are subject to
achievement of clinical development and commercialization milestones. In
February 1998, we terminated the research component of the agreements and, as a
result, approximately $4.0 million of deferred revenue was recognized as there
were no further research obligations related to this funding. In December 1998,
Biogen released an additional $4.5 million under the loan facility. In February
2000, based on results of a Phase II clinical trial, Biogen announced its
intention to proceed with the program, but with a backup compound, and
subsequently paid us $6.5 million, consisting of a $2.0 million milestone
payment and $4.5 million under the loan facility. Biogen will also pay royalties
on any future sales of products covered by the agreement. Biogen has control and
responsibility for conducting, funding and pursuing all aspects of the
development, submissions for regulatory approvals, manufacture and
commercialization of A1 adenosine receptor antagonist products under the
agreement.

      In March 2000, we repaid the initial $3.0 million installment under the
loan facility. In October 2000, we exercised our right to convert $9.0 million
in debt from the loan facility into 118,932 shares of our common stock at a
price of $75.67 per share, in full repayment of the entire principal amount
under this loan facility. In December 2000, we repaid all accrued and unpaid
interest on the loan facility.


                                       15
<PAGE>

      Biogen may terminate the agreements for any reason upon 60 days written
notice. If Biogen terminates the agreements, all rights to the technology will
revert to us, and we will pay Biogen a small royalty on future sales of any A1
adenosine receptor antagonist.

      Incyte

      In July 1998, we entered into a joint research collaboration agreement
with Incyte Genomics, Inc. to develop a prototype gene expression database in
the area of cardiovascular biology. We contribute our molecular cardiology
expertise and Incyte contributes its genomics capabilities. Incyte owns the data
produced, and we receive a perpetual, non-exclusive license to use the data in
our drug development efforts. Each party bears its own costs of the research.
Either party may terminate the agreement on 60 days written notice.

      Innovex

      In May 1999, we entered into a sales and marketing services agreement with
Innovex, a subsidiary of Quintiles Transnational Corp. Under this agreement, if
ranolazine is approved for sale in the United States by the FDA, Innovex will
hire and train a dedicated sales force for ranolazine and assist in funding
marketing expenses for up to five years after launch. We will receive 100% of
the revenues from sales of ranolazine and we will pay Innovex a share of those
revenues.

      The agreement calls for Innovex to conduct pre-launch activities, hire and
train a dedicated cardiology sales force to launch and promote ranolazine, and
provide post-launch marketing and sales services. To fund pre-launch activities,
Quintiles will provide us with a $10 million credit facility at the time we file
with the FDA for approval. We are required to spend a minimum of $10 million on
ranolazine pre-launch marketing activities so long as Quintiles provides
advances under the credit facility. Upon FDA approval, Quintiles will make a $10
million milestone payment to us, which we are obligated to use to repay any
amounts outstanding under the credit facility. Should we file for approval and
draw down the credit facility, but never receive FDA approval, we are obligated
to repay the loan within 10 years of the date we received the loan.

      Innovex has agreed to provide services for at least three years after
launch and to provide services in years four and five after launch if minimum
sales levels are met. The agreement also specifies the minimum number of sales
representatives and the minimum level of dollars to be spent on marketing by
Innovex during the first two years of the contract, regardless of sales levels.
The minimum size of the sales force and the marketing expenses in year three or
any subsequent year must be maintained by Innovex as long as minimum sales
levels are met.

      In exchange for providing these sales and marketing services, Innovex will
receive a fee equal to up to an average of 33% of revenues in the first two
years of sales, up to 30% of revenues for the third year and up to 25% of
revenues in years four and five. Also, for giving us the option to retain this
trained sales force at the end of the contract, Innovex will receive a royalty
on sales of 7% in the sixth and 4% in the seventh years after launch.

      In connection with the agreement, Quintiles purchased 1,043,705 shares of
our common stock for a total purchase price of $5.0 million.

      We or Innovex may terminate the agreement in the event of material uncured
breach, bankruptcy or insolvency, our decision to not file an NDA for ranolazine
or to terminate development of the product, notice from the United States Food
and Drug Administration that it will not approve the product for marketing, or
failure to achieve certain minimum sales levels. In addition, we or Innovex may
terminate the agreement if product launch will not occur by a specific date. The
agreement will terminate automatically if we no longer retain our license rights
to ranolazine.


                                       16
<PAGE>

      Fujisawa Healthcare

      In July 2000, we entered into a collaboration with Fujisawa Healthcare,
Inc. to develop and market second generation pharmacologic cardiac stress
agents. Under this agreement, FHI received exclusive North American rights to
CVT-3146, a short acting selective A2A adenosine receptor agonist, and a backup
compound. We received $10.0 million from FHI consisting of a $6.0 million
up-front payment, which will be recognized as revenue over the expected term of
the agreement, and the purchase of 54,270 shares of our common stock for a total
purchase price of $4.0 million. We may receive up to an additional $24.0 million
in cash based on development and regulatory milestones. FHI will reimburse us
for 75% of the development costs, and if approved by the FDA, we will receive a
royalty based on product sales of CVT-3146 and may receive a royalty on another
product sold by FHI.

      FHI may terminate the agreement for any reason on 90 days written notice,
and we may terminate the agreement if FHI fails to launch a product within a
specified period after marketing approval. In addition, we or FHI may terminate
the agreement in the event of material uncured breach, or bankruptcy or
insolvency.

Marketing and Sales

      Except for our sales and marketing services agreement with Innovex, we
currently have no sales or distribution capabilities, and have only limited
marketing capabilities. We may promote our products in collaboration with
marketing partners or rely on relationships with one or more companies with
established distribution systems and direct sales forces. For example, Innovex
will provide sales and marketing for ranolazine in the United States. For our
other products, and for ranolazine at the end of the term of our agreement with
Innovex, we may elect to establish our own specialized sales force and marketing
organization to market our products to cardiologists.

Manufacturing

      We do not currently operate manufacturing facilities for clinical or
commercial production of our proposed products. We have no experience in
manufacturing, and currently lack the resources and capability to manufacture
any of our proposed products on a clinical or commercial scale. Accordingly, we
are, and will continue to be, dependent on corporate partners, licensees or
other third parties for clinical and commercial scale manufacturing. We have
entered into several manufacturing agreements relating to ranolazine, including
agreements for commercial scale or scale-up of production of bulk active
pharmaceutical ingredient, tableting and supply of a raw material component of
the product.

      We do 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. In addition, prior
to approval of an NDA for ranolazine, we will be required to demonstrate to the
FDA's satisfaction the equivalence of the multiple sources of supply used in our
clinical trials and their equivalence to the product to be commercially
supplied.

Patents and Proprietary Technology

      Patents and other proprietary rights are important to our business. Our
policy is to file patent applications and to protect technology, inventions and
improvements to inventions that are commercially important to the development of
our business. The evaluation of the patentability of United States and foreign
patent applications can take several years to complete and can entail
considerable expense.

      We own several patents issued by and/or pending with the United States
Patent and Trademark Office and foreign patents or patent applications relating
to our technology, including related to our clinical programs, ranolazine,
CVT-510 and CVT-3146. We also have acquired a license, which is exclusive in
specified territories,


                                       17
<PAGE>

to specified issued patents issued by the United States Patent and Trademark
Office and foreign corresponding patent applications related to ranolazine. A
primary United States patent relating to ranolazine will expire in May 2003
unless we are granted an extension based upon the Waxman-Hatch Act, which we
anticipate would extend the patent protection for an additional five years.

      In addition, we have acquired, and in turn have granted to Biogen, an
exclusive license to issued patents and pending patent applications relating to
A1 adenosine receptor antagonists.

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, 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 a
variety of administrative or judicially imposed sanctions.

      The steps ordinarily required before a new pharmaceutical product may be
marketed in the United States include preclinical laboratory tests, animal tests
and formulation studies, the submission to the FDA of an Investigational New
Drug Application (or IND), which must become effective before clinical testing
may commence, and adequate and well-controlled clinical trials to establish the
safety and effectiveness of the drug for each indication for which it is being
tested.

      Preclinical tests include laboratory evaluation of product chemistry and
formulation, as well as animal trials to assess the potential safety and
efficacy of the product. The conduct of the preclinical tests and formulation of
compounds for testing must comply with federal regulations and 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 trials 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 must be conducted in compliance with federal
regulations and requirements, under protocols detailing the objectives of the
trial, 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. The study protocol and informed consent information for patients in
clinical trials must also be approved by the institutional review board at each
institution where the trials will be conducted.

      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 trials in a limited patient population, to determine dosage
tolerance and optimal dosage, identify possible adverse effects and safety
risks, and provide preliminary support for the efficacy of the drug in the
indication being studied.


                                       18
<PAGE>

      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 trial sites. There can
be no assurance that Phase I, Phase II or Phase III testing of our product
candidates will be completed successfully within any specified time period, if
at all.

      After completion of the required clinical testing, generally a marketing
application called a New Drug Application (NDA) is prepared and submitted to the
FDA. FDA approval of the NDA is required before marketing of the product 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 the NDA is substantial.

      The FDA has 60 days from its receipt of the NDA to determine whether the
application will be accepted for filing based on the agency's threshold
determination that the NDA is sufficiently complete to permit substantive
review. Once the submission is accepted for filing, the FDA begins an in-depth
review of the NDA. Under federal law, 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 typically will 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 an approval letter, or, in some cases, an
approvable letter followed by an approval letter. Both letters usually contain 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. The approval letter authorizes commercial
marketing of the drug for specific indications. As a condition of NDA approval,
the FDA may require postmarketing testing and surveillance to monitor the drug's
safety or efficacy, or impose other conditions. Once granted, product approvals
may be withdrawn if compliance with regulatory standards is not maintained or
problems occur following initial marketing.

      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. The not approvable letter outlines the deficiencies in the
submission and often requires additional testing or information. The FDA
ultimately may decide that the application does not satisfy the regulatory
criteria for approval.

      Foreign Regulation of Drug Compounds

      Approval of a product by comparable regulatory authorities may be
necessary in foreign countries prior to the commencement of marketing of the
product in those countries, whether or not FDA approval has been obtained. The
approval procedure varies among countries and can involve additional testing.
The time required may differ from that required for FDA approval. Although there
are some procedures for unified filings for some 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 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 Union 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. We will choose the appropriate route of European
regulatory filing to accomplish the


                                       19
<PAGE>

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

      Our research and development processes involve the controlled use of
hazardous materials, chemicals and radioactive materials and produce waste
products. We are subject to federal, state and local laws and regulations
governing the use, manufacture, storage, handling and disposing of hazardous
materials and waste products.

Competition

      The pharmaceutical and biopharmaceutical industries are subject to intense
competition and rapid and significant technological change. 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 relatively
inexpensive generic form, including calcium channel blockers, beta blockers and
nitrates. There are also surgical treatments such as coronary artery bypass
grafting and percutaneous transluminal coronary angioplasty. 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 surgical procedures, there is no currently effective
treatment. In refractory patients who are candidates for surgical procedures,
there is no effective pharmacologic treatment available. We are aware of
companies that are developing products that may compete with our other drug
candidates. For example, we believe that Discovery Therapeutics and Fujisawa
Healthcare have A1 adenosine receptor agonists under development which could
compete with CVT-510. We believe King Pharmaceuticals Inc., Discovery
Therapeutics, DuPont Pharmaceuticals Company, and Adenosine Therapeutics LLC
have A2A adenosine receptor agonists under development which could compete with
CVT-3146. Finally, we believe Fujisawa Pharmaceutical, Japan and Discovery
Therapeutics, Inc., are each developing A1 adenosine receptor antagonists which
could compete with Biogen's AdentriTM program.

      We believe that the principal competitive factors in the markets for
ranolazine and CVT-510 will include:

      o     the length of time to receive regulatory approval

      o     product performance

      o     product price

      o     product supply

      o     marketing and sales capability

      o     enforceability of patent and other proprietary rights

      We believe that we and our collaborative partners are or will be
competitive with respect to these factors. Nonetheless, because our products are
still under development, our relative competitive position in the future is
difficult to predict.

Employees

      As of January 31, 2001, we employed 134 individuals full-time, including
35 who hold doctoral degrees. Of our full-time work force, 106 employees are
engaged in or directly support research and development activities and 28 are
engaged in business development, finance and administrative activities. Our
employees are not represented by a collective bargaining agreement. We believe
that our relations with our employees are good.


                                       20
<PAGE>

Risk Factors

      Our product candidates will take at least several years to develop, and we
cannot assure you that we will successfully develop, market and manufacture
these products.

      Since our inception in 1990, we have dedicated substantially all of our
resources to research and development. We do not have any marketed products, and
we have not generated any product revenue. Because all of our potential products
are in research, preclinical or clinical development, we will not realize
product revenues for at least several years, if at all.

      We have not applied for or received regulatory approval in the United
States or any foreign jurisdiction for the commercial sale of any of our
products. All of our product candidates are either in clinical trials under an
Investigational New Drug, or IND, or applicable foreign authority submission, or
are in preclinical research and development. We have not submitted an NDA to the
FDA or equivalent application to any other foreign regulatory authorities for
any of our product candidates, and the products have not been determined to be
safe or effective in humans for their intended uses.

      Conducting clinical trials is a lengthy, time-consuming and expensive
process. Before obtaining regulatory approvals for the commercial sale of any
products, we must demonstrate through preclinical testing and clinical trials
that our product candidates are safe and effective for use in humans. We will
incur substantial expense for, and devote a significant amount of time to,
preclinical testing and clinical trials.

      Drug discovery methods based upon molecular cardiology are relatively new.
We cannot be certain that these methods will lead to commercially viable
pharmaceutical products. In addition, some of our compounds within our adenosine
receptor research, metabolism, atherosclerosis and cell cycle inhibition
programs are in the early stages of research and development, and we have not
submitted IND applications or commenced clinical trials for these new compounds.
We cannot be certain when these clinical trials will commence, if at all.
Because these compounds are in the early stages of product development, we could
abandon further development efforts before they reach clinical trials.

      We cannot be certain that any of our product development efforts will be
successfully completed or that any of our products will be shown to be safe and
effective. Even if we believe that any product is safe and effective, we may not
obtain the required regulatory approvals. Furthermore, we may not be able to
manufacture our products in commercial quantities or market any products
successfully.

      If we are unable to satisfy the regulatory requirements for our clinical
trials, we will not be able to commercialize our drug candidates.

      All of our products may require additional development, preclinical
studies and clinical trials, and will require regulatory approval, prior to
commercialization. Any delays in our clinical trials would delay market launch
and would increase our cash requirements.

      We currently have only three products in clinical development: ranolazine,
CVT-510 and CVT-3146. Many factors could delay completion of our clinical
trials, including:

      o     slower than anticipated patient enrollment

      o     difficulty in obtaining sufficient supplies of clinical trial
            materials

      o     adverse events occurring during the clinical trials.


                                       21
<PAGE>

      For example, our first Phase III clinical trial of ranolazine, called
Monotherapy Assessment of Ranolazine In Stable Angina or MARISA, had challenging
enrollment criteria. These criteria required patients who suffer from angina to
stop taking all of their other anti-anginal medications and receive only placebo
during segments of the clinical trial. This meant that they received no
medication to treat their angina when they received placebo. Given the
difficulty of identifying patients willing to completely stop taking
anti-anginal medications, enrollment for this trial was slower than anticipated.
In addition, while we completed enrollment of the originally planned 462
patients in the second Phase III trial of ranolazine, called Combination
Assessment of Ranolazine In Stable Angina or CARISA, based on a blinded interim
assessment pre-specified in the protocol, we plan on enrolling an additional 186
patients in the study.

      In addition, data obtained from preclinical and clinical activities are
susceptible to different interpretations, which could delay, limit or prevent
regulatory approval. Delays or rejections may be based upon many factors,
including changes in regulatory policy during the period of product development.
For example, the initial clinical trials with ranolazine used a different
formulation of ranolazine than we used in the MARISA trials and we are using in
the CARISA trial. This means that the NDA will contain data from trials using
two different formulations and is subject to interpretation by the FDA. An
unfavorable interpretation could result in actions by the FDA that would delay
potential approval. We may be unable to maintain our proposed schedules for IND
applications and clinical protocol submissions to the FDA, initiations of
clinical trials and completions of clinical trials as a result of FDA reviews or
complications that may arise in any phase of the clinical trial program.

      Furthermore, even if our clinical trials occur on schedule, the results
may differ from those obtained in preclinical studies and earlier clinical
trials. Clinical trials may not demonstrate sufficient safety and efficacy to
obtain the necessary approvals. For example, in November 1995, based on
unfavorable efficacy data from a Phase II trial, we terminated a prior
development program.

      If we are unable to satisfy governmental regulations relating to the
development of our drug candidates, we may be unable to obtain or maintain
necessary regulatory approvals to commercialize our products.

      The research, testing, manufacturing and marketing of drug products are
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. These include:

      o     warning letters

      o     civil penalties

      o     criminal penalties

      o     injunctions

      o     product seizure or detention

      o     product recalls

      o     total or partial suspension of production

      o     FDA refusal to approve pending NDAs or supplements to approved NDAs


                                       22
<PAGE>

      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, this approval process is extremely expensive and uncertain. We
cannot guarantee that any of our products under development will be approved for
marketing by the FDA or corresponding foreign regulatory authorities. Even if
regulatory approval of a product is granted, we cannot be certain that we will
be able to obtain the labeling claims necessary or desirable for the promotion
of those products.

      Even if we obtain regulatory approval, we may be required to undertake
postmarketing trials. In addition, identification of 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, changes in labeling of the product, and
additional marketing applications.

      If we receive regulatory approval, we will also be subject to ongoing FDA
obligations and continued regulatory review, such as continued safety reporting
requirements, and we may also be subject to additional FDA post-marketing
obligations. In addition, we or our third party manufacturers will be required
to adhere to federal regulations setting forth current good manufacturing
practices, known as cGMP. The regulations require that we manufacture our
products and maintain our records in a prescribed manner with respect to
manufacturing, testing and quality control activities. Furthermore, we or our
third party manufacturers must pass a preapproval inspection of manufacturing
facilities by the FDA and foreign authorities before obtaining marketing
approval, and will be subject to periodic inspection by the FDA and
corresponding foreign regulatory authorities under reciprocal agreements with
the FDA. There can be no guarantee that such inspections will not result in
compliance issues that could prevent or delay marketing approval, or require the
expenditure of money or other resources to correct. In addition, drug product
manufacturing facilities in California must be licensed by the State of
California, and other states may have comparable requirements.

      If we receive regulatory approval and if any of our products or services
become reimbursable by a government health care program, such as Medicare or
Medicaid, we may become subject to certain federal and state health care fraud
and abuse and reimbursement laws. These laws include the federal "Anti-Kickback
Statute," "False Claims Act," and "Physician Self-Referral Law," and their state
counterparts. If and when we become subject to such laws, our arrangements with
third parties, including health care providers, physicians, vendors, and
Innovex, will need to comply with these laws as applicable. We do not know
whether our existing or future arrangements will be found to be compliant.
Violations of these statutes could result in criminal and civil penalties and
exclusion from governmental health care programs.

      Our products, even if approved by the FDA or foreign regulatory agencies,
may not be accepted by physicians, insurers or patients.

      If any of our products after receiving FDA or other foreign regulatory
approval fail to achieve market acceptance, our ability to become profitable in
the future will be adversely affected. We believe that market acceptance will
depend on our ability to provide acceptable evidence of safety, efficacy and
cost effectiveness. In addition, we believe market acceptance depends on the
effectiveness of our marketing strategy and the availability of reimbursement
for our products.

      We have no marketing or sales experience, and if we are unable to enter
into or maintain collaborations with marketing partners or if we are unable to
develop our own sales and marketing capability, we may not be successful in
commercializing our products.

      We currently have no sales or distribution capability and only limited
marketing capability. As a result, we depend on collaborations with third
parties, such as Innovex, a subsidiary of Quintiles Transnational Corp., Biogen
Inc. and Fujisawa Healthcare, Inc., which have established distribution systems
and direct sales forces. For instance, we have entered into a sales and
marketing services agreement with Innovex with respect to ranolazine. Innovex
will market and sell ranolazine in the United States using a dedicated sales
force if and when


                                       23
<PAGE>

FDA approval to market ranolazine has been granted. Commercialization of
ranolazine depends on Innovex to perform their contractual obligations. Their
failure to do so would adversely affect commercialization of ranolazine. To the
extent that we enter into co-promotion or other licensing arrangements, our
revenues will depend upon the efforts of third parties, over which we may have
little control. In addition, Biogen is responsible for establishing marketing
and sales activities for any product that results from the AdentriTM program and
Fujisawa is responsible for establishing marketing and sales activities for
CVT-3146.

      If we are unable to reach and maintain agreement with one or more
pharmaceutical companies or collaborative partners, we may be required to market
our products directly. We may elect to establish our own specialized sales force
and marketing organization to market our products to cardiologists. In order to
do this, we would have to develop a marketing and sales force with technical
expertise and with supporting distribution capability. Developing a marketing
and sales force is expensive and time consuming and could delay any product
launch. We cannot be certain that we will be able to develop this capacity.

      Our business depends on attracting and retaining collaborators and
licensors.

      We may not be able to retain current or attract new corporate and academic
collaborators, licensors, licensees and others. Our business strategy requires
us to enter into various arrangements with these parties, and we are dependent
upon the success of these parties in performing their obligations. If we fail to
obtain and maintain these arrangements, the development of our products would be
delayed. We may be unable to proceed with the development, manufacture or sale
of products or we might have to fund development of a particular product
candidate internally. If we have to fund development and commercialization of
all of our products internally, our future capital requirements will increase
substantially.

      The collaborative arrangements that we may enter into in the future may
place responsibility on the collaborative partner for preclinical testing and
clinical trials, manufacturing and preparation and submission of applications
for regulatory approval of potential pharmaceutical products. We cannot control
the amount and timing of resources which our collaborative partners devote to
our programs. If a collaborative partner fails to successfully develop or
commercialize any product, product launch would be delayed. In addition,
collaborators may pursue competing technologies or product candidates.

      Under our collaborative arrangements, we or our collaborative partners may
also have to meet performance milestones. If we fail to meet our obligations
under our collaborative arrangements, our collaborators could terminate their
arrangements or we could lose rights to the compounds under development. For
example, under our agreement with Innovex, we are required to launch the product
by a specific date. If we fail to reach this milestone, Innovex will no longer
be obligated to provide sales and marketing services for ranolazine. Under our
agreement with Biogen, in order for us to receive development milestone
payments, Biogen must meet development milestones. Under our license agreement
with Syntex U.S.A., Inc., a subsidiary of Roche, for ranolazine, we are required
to make milestone payments to Syntex following FDA approval of ranolazine and
following regulatory approval of ranolazine in Europe. These payments are due no
later than March 31, 2005 and March 31, 2006, respectively. Under our agreement
with Fujisawa, we are responsible for development activities and must meet
development milestones in order to receive development milestone payments.

      In addition, collaborative arrangements in our industry are extremely
complex, particularly with respect to intellectual property rights. Disputes may
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 us and our collaborators could lead to delays in the collaborative
research, development or commercialization of product candidates. These disputes
could also result in litigation or arbitration, which is time consuming and
expensive.

      We expect to continue to operate at a loss and may never achieve
profitability.


                                       24
<PAGE>

      We cannot be certain that we will ever achieve and sustain profitability.
Since our inception, we have been engaged in research and development
activities. We have generated no product revenues. As of December 31, 2000, we
had an accumulated deficit of $131.1 million. The process of developing our
products requires significant additional research and development, preclinical
testing and clinical trials, as well as regulatory approvals. These activities,
together with our general and administrative expenses, are expected to result in
operating losses for the foreseeable future.

      We must secure additional financing to meet our future needs.

      We may require substantial additional funding in order to complete our
research and development activities and commercialize any products. In the past,
we have financed our operations primarily through the sale of equity and debt
securities, payments from our collaborators, equipment and leasehold improvement
financing and other debt financing. We have generated no product revenue, and
none is expected for at least several years. We anticipate that our existing
resources and projected interest income will enable us to maintain our current
and planned operations for at least the next 24 months. However, we may require
additional funding prior to that time.

      Additional financing may not be available on acceptable terms or at all.
If we are unable to raise additional funds, we may:

      o     have to delay, scale back or eliminate some or all of our research
            or development programs

      o     lose rights under existing licenses

      o     have to relinquish more of, or all of, our rights to product
            candidates at an earlier stage of development or on less favorable
            terms than we would otherwise seek

      o     be unable to operate as a going concern.

      Our future capital requirements will depend on many factors, including:

      o     scientific progress in our research and development programs

      o     the size and complexity of our programs

      o     the timing, scope and results of preclinical studies and clinical
            trials

      o     our ability to establish and maintain corporate partnerships

      o     the time and costs involved in obtaining regulatory approvals

      o     the costs involved in filing, prosecuting and enforcing patent
            claims

      o     competing technological and market developments

      o     the cost of manufacturing or obtaining preclinical and clinical
            material

      If additional funds are raised by issuing equity securities, substantial
dilution to existing stockholders may result. There may be additional factors
that could affect our need for additional financing. Many of these factors are
not within our control.

      Inability to compete successfully in our market will harm our business.


                                       25
<PAGE>

      The pharmaceutical and biopharmaceutical industries, and the market for
cardiovascular drugs in particular, are intensely competitive. If regulatory
approvals are received, some of our products will compete with well-established,
proprietary and generic cardiovascular therapies that have generated substantial
sales over a number of years. Many of these therapies are reimbursed from
government health administration authorities and private health insurers.

      In addition, we are aware of companies which are developing products that
may compete in the same markets as our products. Many of these potential
competitors have substantially greater product development capabilities and
financial, scientific, marketing and sales resources. Other companies may
succeed in developing products earlier or obtain approvals from the FDA more
rapidly than either we or our corporate partners are able to achieve.
Competitors may also develop products that are safer or more effective than
those under development or proposed to be developed by us and our corporate
partners. In addition, research and development by others could render our
technology or our products obsolete or non-competitive.

      We may be unable to effectively protect our intellectual property.

      Our success will depend to a significant degree on our ability to:

      o     obtain patents and licenses to patent rights

      o     maintain trade secrets

      o     operate without infringing on the proprietary rights of others

      We cannot be certain that patents will issue from any of our pending or
future patent applications, that any issued patent will be sufficient to protect
our technology and investments or that we will be able to obtain extensions of
patents beyond the initial term. For example, a primary patent relating to
ranolazine will expire in May 2003 unless we are granted an extension based upon
the Waxman-Hatch Act, which we anticipate would extend the patent protection for
an additional five years.

      Patent applications in the United States are maintained in secrecy until a
patent issues. As a result, we can never be certain that others have not filed
patent applications for technology covered by our pending applications or that
we were the first to invent the technology. There may be third party patents,
patent applications and other intellectual property relevant to our products and
technology which are not known to us and that block or compete with our
compounds, products or processes.

      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 ours. We may have to
participate in interference proceedings declared by the Patent and Trademark
Office. These proceedings determine the priority of invention and, thus, the
right to a patent for the technology in the United States. In addition,
litigation may be necessary to enforce any patents issued to us or to determine
the scope and validity of the proprietary rights of third parties. Litigation
and interference proceedings, even if they are successful, are expensive to
pursue, and we could use a substantial amount of our limited financial resources
in either case.

      Just as it is important to protect our proprietary rights, we also must
not infringe patents issued to competitors and not breach the licenses that
might cover technology used in our potential products. If our competitors own or
have rights to technology that we need in our product development efforts, we
will need to obtain a license to those rights. If we fail to obtain any
necessary licenses, we may be unable to complete product development.

      We also rely on trade secrets to develop and maintain our competitive
position. Although we protect our proprietary technology in part by
confidentiality agreements with employees, consultants, collaborators, advisors


                                       26
<PAGE>

and corporate partners, these agreements may be breached. We cannot assure you
that these agreements will provide this meaningful protection or adequate
remedies in the event of unauthorized use or disclosure of this information. We
also cannot assure you that the parties to these agreements will not breach
them. In that event, we may not have adequate remedies for any breach. As a
result, third parties may gain access to our trade secrets, and third parties
may disclose our trade secrets and confidential technology to the public. In
addition, it is possible that our trade secrets will otherwise become known or
be discovered independently by our competitors.

      Patent litigation is becoming more widespread in the biopharmaceutical
industry. Although no third party has asserted a claim of infringement against
us, we cannot assure you that third parties will not assert patent or other
intellectual property infringement claims against us with respect to our
products or technology or other matters. If they do, we may not prevail and, as
a result, may be subject to significant liabilities to third parties or may be
required to license the disputed rights from the third parties or cease using
the technology. We may not be able to obtain any necessary licenses on
reasonable terms, if at all. Any such claims against us, with or without merit,
as well as claims initiated by us against third parties, can be time-consuming
and expensive to defend or prosecute.

      We have no manufacturing experience and will depend on third parties to
manufacture our products.

      We do not currently operate manufacturing facilities for clinical or
commercial production of our products under development. We have no experience
in manufacturing and currently lack the resources or capability to manufacture
any of our products on a clinical or commercial scale. As a result, we are
dependent on corporate partners, licensees or other third parties for the
manufacturing of clinical and commercial scale quantities of our products.

      For example, we have entered into agreements with third party
manufacturers for clinical scale production of ranolazine's active
pharmaceutical ingredient and for ranolazine tableting, which we believe are
sufficient to support the remainder of the Phase III program to support filing
of an NDA for ranolazine for chronic angina. In addition, we have entered into
several other manufacturing agreements relating to ranolazine, including for
commercial scale or scale-up of bulk active pharmaceutical ingredient,
tableting, and supply of a raw material component of the product. However,
commercial launch of ranolazine is dependent on these third party arrangements,
and could be affected by delays or difficulties in performance. In addition,
because we have used various manufacturers for ranolazine in different clinical
trials prior to FDA approval of ranolazine, we will be required to demonstrate
to the FDA's satisfaction the bioequivalence of the multiple sources of
ranolazine used in our clinical trials and their bioequivalence to the product
to be commercially supplied.

      Failure to obtain adequate reimbursement from government health
administration authorities, private health insurers and other organizations
could materially adversely affect our future business, results of operations and
financial condition.

      Our ability and the ability of our existing and future corporate partners
to market and sell our products will depend in part on the extent to which
reimbursement for the cost of our 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 our products in Europe,
we will be required to seek reimbursement on a country-by-country basis. We
cannot be certain that any products approved for marketing will be considered
cost effective or that reimbursement will be available or that allowed
reimbursement in foreign countries will be adequate. In addition, payors'
reimbursement policies could adversely affect our or any corporate partner's
ability to sell our products on a profitable basis.

      Our business depends on certain key executives, the loss of whom could
weaken our management team, and on attracting and retaining qualified personnel.


                                       27
<PAGE>

      The growth of our business and success depends in large part on our
ability to attract and retain key management, technical, sales and marketing and
other operating personnel. There can be no assurance that we will be able to
attract and retain the qualified personnel or develop the expertise in these
areas as needed for our business. The loss of the services of one or more
members of these groups or the inability to attract and retain additional
personnel and develop expertise as needed could limit our ability to develop and
commercialize our existing drugs and future drug candidates. Such persons are in
high demand and often receive competing employment offers.

      Our operations involve hazardous materials, which could subject us to
significant liability.

      Our research and development activities involve the controlled use of
hazardous materials, including hazardous chemicals, radioactive materials and
pathogens, and the generation of waste products. Accordingly, we are subject to
federal, state and local laws governing the use, handling and disposal of these
materials. We may incur significant costs to comply with additional
environmental and health and safety regulations in the future. Although we
believe that our safety procedures for handling and disposing of hazardous
materials comply with regulatory requirements, we cannot eliminate the risk of
accidental contamination or injury from these materials. In the event of an
accident or environmental discharge, we may be held liable for any resulting
damages, which may exceed our financial resources and may materially adversely
affect our business, financial condition and results of operations. Although we
believe that we are in compliance in all material respects with applicable
environmental laws and regulations, there can be no assurance that we will not
be required to incur significant costs to comply with environmental laws and
regulations in the future. There can also be no assurance that our operations,
business or assets will not be materially adversely affected by current or
future environmental laws or regulations.

      We may be subject to product liability claims if our products harm people,
and we have only limited product liability insurance.

      The manufacture and sale of human therapeutic products involve an inherent
risk of product liability claims and associated adverse publicity. We currently
have only limited product liability insurance for clinical trials and no
commercial product liability insurance. We do not know if we will be able to
maintain existing or obtain additional product liability insurance on acceptable
terms or with adequate coverage against potential liabilities. This type of
insurance is expensive and may not be available on acceptable terms. If we are
unable to obtain or maintain sufficient insurance coverage on reasonable terms
or to otherwise protect against potential product liability claims, we may be
unable to commercialize our products. A successful product liability claim
brought against us in excess of our insurance coverage, if any, may require us
to pay substantial amounts. This could adversely affect our results of
operations and our need for and the timing of additional financing.

      The market price of our stock may continue to be highly volatile.

      Within the last 12 months, our common stock has traded between $21.08 and
$93.13. The market price of the shares of common stock for our company has been
and may continue to be highly volatile. Announcements may have a significant
impact on the market price of our common stock. These announcements may include:

      o     results of our clinical trials and preclinical studies, or those of
            our corporate partners or our competitors

      o     our operating results

      o     developments in our relationships with corporate partners

      o     developments affecting our corporate partners


                                       28
<PAGE>

      o     negative regulatory action or regulatory approval with respect to
            our announcement or our competitors' announcement of new products

      o     government regulations, reimbursement changes and governmental
            investigations or audits related to us or to our products

      o     developments related to our patents or other proprietary rights or
            those of our competitors

      o     changes in the position of securities analysts with respect to our
            stock

      o     operating results below the expectations of public market analysts
            and investors

      o     market conditions for biopharmaceutical or biotechnology stocks in
            general

      The stock market has from time to time experienced extreme price and
volume fluctuations, which have particularly affected the market prices for
emerging biotechnology and biopharmaceutical companies, and which have often
been unrelated to their operating performance. These broad market fluctuations
may adversely affect the market price of our common stock. In addition, sales of
substantial amounts of our common stock in the public market could lower the
market price of our common stock.

      Delaware law, provisions in our charter and our rights plan could make the
acquisition of our company by another company more difficult.

      Provisions of our certificate of incorporation may have the effect of
delaying or preventing changes in control or management or limit the price that
investors may be willing to pay for shares of our common stock. In addition, we
are subject to the provisions of Section 203 of the Delaware General Corporation
Law, an anti-takeover law, which could delay a merger, tender offer or proxy
contest or make a similar transaction more difficult. In addition, our board of
directors has the authority to issue up to 5,000,000 shares of preferred stock
without stockholders' approval. The rights of the holders of common stock will
be subject to, and may be 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 our outstanding voting stock.

      Furthermore, in February 1999, the board of directors enacted
anti-takeover provisions, including a stockholder rights plan, and authorized
severance agreements in the event of a change of control for key executives. The
Board of Directors amended the stockholders rights plan in July 2000 to lower
the triggering ownership percentage and increase the exercise price while
maintaining the plan in effect.

Item 2. Properties

      We currently lease two buildings in Palo Alto, California. The first
building has 61,081 square feet and a lease with an initial term that expires in
April 2012 with an option to renew for thirteen years. In November and December
2000, we entered into two lease agreements for the second building, which has
73,172 square feet. The first of these two agreements is a sublease with a term
that expires in February 2005. The second agreement is with the master landlord
and has a term from March 2005 through April 2012. Both buildings are used for
general administration, research and development. We believe that these
facilities will be adequate to meet our needs for the foreseeable future.

Item 3. Legal Proceedings

      We are not a party to any material pending legal proceedings.


                                       29
<PAGE>

Item 4. Submission of Matters to a Vote of Securities Holders

      On December 13, 2000, we held a special meeting of our shareholders to
approve and adopt an amendment to our Amended and Restated Certificate of
Incorporation to increase the total number of authorized shares of our common
stock from 30,000,000 to 85,000,000. 14,077,355 votes were cast for the motion,
1,463,246 votes were cast against the motion and 3,388 votes abstained.


                                       30
<PAGE>

                                     PART II

Item 5. Market for Registrant's Common Stock and Related Stockholder Matters

Market Information

      Our common stock trades on the Nasdaq National Market under the symbol
"CVTX".

      The following table sets forth, for the periods indicated, the high and
low price per share of the common stock

                                                     High          Low
                                                 -----------   -----------
Fiscal Year Ended December 31, 1998
First Quarter ended March 31, 1998               $    10.250   $     8.250
Second Quarter ended June 30, 1998               $    10.875   $     8.250
Third Quarter ended September 30, 1998           $     9.063   $     5.750
Fourth Quarter ended December 31, 1998           $     7.500   $     4.250

Fiscal Year Ended December 31, 1999
First Quarter ended March 31, 1999               $     7.250   $     3.688
Second Quarter ended June 30, 1999               $     6.375   $     4.000
Third Quarter ended September 30, 1999           $    21.000   $     5.375
Fourth Quarter ended December 31, 1999           $    27.875   $    10.375

Fiscal Year Ended December 31, 2000
First Quarter ended March 31, 2000               $    69.000   $    22.500
Second Quarter ended June 30, 2000               $    75.625   $    26.500
Third Quarter ended September 30, 2000           $    82.750   $    49.750
Fourth Quarter ended December 31, 2000           $    93.125   $    58.875

on the Nasdaq National Market.

      On February 28, 2001, the closing price for our common stock was $35.75
per share. As of February 28, 2001, we had approximately 105 holders of record
of our common stock.

Dividends

      We have never declared or paid any cash dividends on our capital stock. We
currently intend to retain any future earnings to finance the growth and
development of our business and therefore, do not anticipate paying any cash
dividends in the foreseeable future.


                                       31
<PAGE>

Item 6. Selected Financial Data

      The data 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 included elsewhere in this document and
also with "Management's Discussion and Analysis of Financial Condition and
Results of Operations". No dividends were declared or paid for any periods
presented.

<TABLE>
<CAPTION>
                                                           Year Ended December 31,
                                           --------------------------------------------------------
                                             1996        1997        1998        1999        2000
                                           --------    --------    --------    --------    --------
                                                   (in thousands, except per share amounts)
<S>                                        <C>         <C>         <C>         <C>         <C>
Statements of Operations Data
Revenues:
  Collaborative research                   $    250    $  2,578    $  4,509    $     --    $  3,309
Operating expenses:
  Research and development                    7,141      10,568      14,578      20,342      40,761
  General and administrative                  2,917       4,169       4,158       4,659       7,601
                                           --------    --------    --------    --------    --------
Total operating expenses                     10,058      14,737      18,736      25,001      48,362
                                           --------    --------    --------    --------    --------
Loss from operations                         (9,808)    (12,159)    (14,227)    (25,001)    (45,053)
Interest income                                 587       1,760       2,749       2,795      15,785
Interest and other expense                   (1,144)       (926)     (1,124)       (916)     (9,112)
                                           --------    --------    --------    --------    --------
  Net loss                                 $(10,365)   $(11,325)   $(12,602)   $(23,122)   $(38,380)
                                           ========    ========    ========    ========    ========
Basic and diluted net loss per share (1)   $  (9.83)   $  (1.58)   $  (1.16)   $  (1.75)   $  (2.06)
                                           ========    ========    ========    ========    ========
Shares used in computing basic and
  diluted net loss per share (1)              1,054       7,157      10,905      13,207      18,664
                                           ========    ========    ========    ========    ========
</TABLE>

<TABLE>
<CAPTION>
                                                                 December 31,
                                           --------------------------------------------------------
                                             1996        1997        1998        1999        2000
                                           --------    --------    --------    --------    --------
                                                                (in thousands)
<S>                                        <C>         <C>         <C>         <C>         <C>
Balance Sheet Data
Cash, cash equivalents and marketable
  securities                               $ 21,568    $ 38,090    $ 44,804    $ 91,257    $296,193
Working capital                            $ 20,278    $ 32,904    $ 40,698    $ 88,038    $285,590
Total assets                               $ 26,139    $ 42,644    $ 49,330    $ 96,907    $311,633
Long-term debt                             $  5,000    $  5,052    $  7,838    $  7,855    $197,815
Accumulated deficit                        $(45,626)   $(56,951)   $(69,553)   $(92,675)   $(131,055)
Total stockholders' equity                 $ 18,676    $ 26,557    $ 34,738    $ 82,147    $ 91,782
</TABLE>

----------
(1) See Note 1 of Notes to Consolidated Financial Statements for a description
of the shares used in calculating basic and diluted net loss per share.


                                       32
<PAGE>

Quarterly Results of Operations



      The following table sets forth the quarterly results of operations for the
year ended December 31, 1999:

<TABLE>
<CAPTION>
                                             Reported    Reported    Reported    Reported
(in thousands, except per share amounts)      Mar. 31     Jun. 30     Sep. 30     Dec. 31
                                             --------    --------    --------    --------
<S>                                          <C>         <C>         <C>         <C>
Revenues:
  Collaborative research                     $     --    $     --    $     --    $     --
Operating expenses:
  Research and development                      4,199       4,477       5,546       6,120
  General and administrative                    1,184       1,173         947       1,355
                                             --------    --------    --------    --------
Total operating expenses                        5,383       5,650       6,493       7,475
                                             --------    --------    --------    --------
Loss from operations                           (5,383)     (5,650)     (6,493)     (7,475)
Interest income                                   575         523         482       1,215
Interest and other expense                       (245)       (238)       (213)       (220)
                                             --------    --------    --------    --------
Net loss                                     $ (5,053)   $ (5,365)   $ (6,224)   $ (6,480)
                                             ========    ========    ========    ========
Basic and diluted net loss per share         $  (0.45)   $  (0.45)   $  (0.50)   $  (0.37)
                                             ========    ========    ========    ========
Shares used in computing basic and diluted
  net loss per share                           11,232      11,907      12,331      17,358
                                             ========    ========    ========    ========
</TABLE>

      The following table sets forth the quarterly results of operations for the
year ended December 31, 2000:

<TABLE>
<CAPTION>
                                             Reported    Reported    Reported    Reported
(in thousands, except per share amounts)      Mar. 31     Jun. 30     Sep. 30     Dec. 31
                                             --------    --------    --------    --------
<S>                                          <C>         <C>         <C>         <C>
Revenues:
  Collaborative research                     $     --    $  2,000    $    469    $    840
Operating expenses:
  Research and development                      6,694       9,346       9,994      14,727
  General and administrative                    1,532       1,585       2,366       2,118
                                             --------    --------    --------    --------
Total operating expenses                        8,226      10,931      12,360      16,845
                                             --------    --------    --------    --------
Loss from operations                           (8,226)     (8,931)    (11,891)    (16,005)
Interest income                                 2,048       4,265       4,513       4,959
Interest and other expense                       (905)     (2,717)     (2,775)     (2,715)
                                             --------    --------    --------    --------
Net loss                                     $ (7,083)   $ (7,383)   $(10,153)   $(13,761)
                                             ========    ========    ========    ========
Basic and diluted net loss per share         $  (0.39)   $  (0.40)   $  (0.54)   $  (0.71)
                                             ========    ========    ========    ========
Shares used in computing basic and diluted
  net loss per share                           18,247      18,379      18,667      19,364
                                             ========    ========    ========    ========
</TABLE>


                                       33
<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. Our 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

      CV Therapeutics is a biopharmaceutical company engaged in the discovery,
development and commercialization of new small molecule drugs for the treatment
of cardiovascular diseases. Since our inception in December 1990, substantially
all of our resources have been dedicated to research and development. To date,
we have not generated any product revenues and do not expect to generate any
product revenues for at least several years. As of December 31, 2000, we had an
accumulated deficit of $131.1 million. We expect our sources of revenues, if
any, for the next several years to consist of payments under corporate
partnerships and interest income. The process of developing our products will
require significant additional research and development, preclinical testing and
clinical trials, as well as regulatory approval. These activities, together with
our general and administrative expenses, are expected to result in operating
losses for the foreseeable future. We will not receive product revenues unless
we or our collaborative partners complete clinical trials and successfully
commercialize one or more of our products.

      We are subject to risks common to biopharmaceutical companies, including
risks inherent in our 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 us and, in some cases, our collaborators, to conduct preclinical
tests and clinical trials, demonstrate efficacy and safety of our product
candidates, obtain regulatory clearances, enter into manufacturing, distribution
and marketing arrangements and obtain market acceptance. We cannot provide
assurance that we will generate revenues or achieve and sustain profitability in
the future.

Results of Operations

      Years Ended December 31, 2000 and 1999

      Collaborative Research Revenues. Collaborative research revenues were $3.3
million for the year ended December 31, 2000 while there were none for the year
ended December 31, 1999. The collaborative research revenues for the year ended
December 31, 2000 included a $2.0 million milestone payment from our partner,
Biogen Inc., which was released in connection with its completion of a Phase II
trial of CVT-124 and its decision to continue with the A1 adenosine receptor
antagonist program. The remaining revenues relate to our collaboration with
Fujisawa Healthcare, Inc. and consisted of both the amortization of up-front
payments and the reimbursement of certain development costs.

      Research and Development Expenses. Research and development expenses
increased to $40.8 million for the year ended December 31, 2000, compared to
$20.3 million for the year ended December 31, 1999. The increase was primarily
due to greater external costs associated with ranolazine and CVT-510 clinical
trials, in addition to hiring additional employees to provide support for an
increased level of activity in our research, development and clinical programs.
We expect research and development expenses to continue to increase in the
future as we further expand product development efforts and clinical trials.

      General and Administrative Expenses. General and administrative expenses
increased to $7.6 million for the year ended December 31, 2000, compared to $4.7
million for the year ended December 31, 1999. The increase was primarily due to
greater use of outside consultants for general business matters. We expect
general and


                                       34
<PAGE>

administrative expenses to increase in the future in line with our research,
development and commercialization activities.

      Interest Income. Interest income increased to $15.8 million for the year
ended December 31, 2000, compared to $2.8 million for the year ended December
31, 1999. The increase was primarily due to higher average investment balances
as the result of our follow-on public offering in October 1999 and the sale of
convertible subordinated notes in March 2000. We expect that interest income
will fluctuate with average investment balances and market interest rates.

      Interest and Other Expense. Interest and other expense increased to $9.1
million for the year ended December 31, 2000, compared to $916,000 for the year
ended December 31, 1999. The increase was primarily due to interest expense
related to the convertible subordinated notes issued in March 2000, which
totaled $7.6 million for the year. We expect that interest and other expense
will fluctuate with average loan balances.

      Taxes. We have not generated taxable income to date. At December 31, 2000,
the net operating losses potentially available to offset future taxable income
for federal and state income tax purposes were approximately $114 million and
$30 million, respectively. Because we have experienced ownership changes, future
utilization of the carryforwards may be limited in any one fiscal year pursuant
to Internal Revenue Code regulations. The federal carryforwards expire at
various dates beginning in 2006 through 2020 if not utilized. The state
carryforwards expire at various dates beginning in 2001 through 2005 if not
utilized. As a result of the annual limitation, a portion of these carryforwards
may expire before becoming available to reduce our federal and state income tax
liabilities.

      Years Ended December 31, 1999 and 1998

      Collaborative Research Revenues. There were no collaborative research
revenues for the year ended December 31, 1999 compared to $4.5 million for the
year ended December 31, 1998. The collaborative research revenues for the year
ended December 31, 1998 were the result of our completion of the research
component of our collaboration with Biogen during the first quarter of 1998.

      Research and Development Expenses. Research and development expenses were
$20.3 million for the year ended December 31, 1999, compared to $14.6 million
for the year ended December 31, 1998. The increase in 1999 was due to hiring
additional employees to provide support for an increased level of activity in
our research, development and clinical programs, in addition to greater external
costs for the clinical programs.

      General and Administrative Expenses. General and administrative expenses
were $4.7 million for the year ended December 31, 1999, compared to $4.2 million
for the year ended December 31, 1998. The increase was primarily due to an
increase in outside legal expenses for a variety of administrative and corporate
development activities.

      Interest Income. Interest income increased to $2.8 million for the year
ended December 31, 1999, compared to $2.7 million for the year ended December
31, 1998. Our average investment balance increased as a result of our follow-on
public offering that was completed in October 1999.

      Interest and Other Expense. Interest and other expense decreased to
$916,000 for the year ended December 31, 1999, compared to $1.1 million for the
year ended December 31, 1998. The decrease was due to a charge of $371,000
recognized during the first quarter of 1998 related to the early retirement of a
capital lease obligation offset by a higher average loan balance.


                                       35
<PAGE>

Liquidity and Capital Resources

      We have financed our operations since inception primarily through private
placements and public offerings of debt and equity securities, equipment and
leasehold improvement financing, other debt financing and payments under
corporate collaborations. In January 1998, we completed a follow-on public
offering and raised net proceeds of approximately $19.6 million. In December
1998, we drew down $4.5 million under a general purpose loan facility with
Biogen. In May 1999, we entered into a sales and marketing services agreement
with Innovex Inc. pursuant to which Innovex's parent, Quintiles Transnational
Corp., purchased 1,043,705 shares of our common stock for a total investment of
$5.0 million. In addition, we entered into two promissory notes with Quintiles.
The first promissory note in the amount of $10.0 million may be drawn down by us
upon filing a New Drug Application for ranolazine. The second promissory note
shall be for an amount to be determined after commercial launch of ranolazine.
Both notes are convertible into shares of common stock at the option of
Quintiles upon the occurrence of certain events. In October 1999, we completed a
follow-on public offering and raised net proceeds of approximately $64.3
million. In March 2000, we entered into a purchase agreement pursuant to which
we sold to certain purchasers $196.3 million in aggregate principal amount of
convertible subordinated notes. The offering of the notes was made to qualified
institutional buyers under Rule 144A of the Securities Act of 1933, as amended.
Interest on the notes will accrue at a rate of 4.75% per year, subject to
adjustment in certain circumstances. The notes will mature on March 7, 2007 and
are convertible into shares of our common stock at a conversion price of $63.84
per share, subject to adjustment in certain circumstances. We may, at our
option, redeem the notes at any time after March 7, 2003 or earlier if our stock
price reachs certain defined levels. In March 2000, we repaid the initial $3.0
million installment under the Biogen loan facility, bringing the outstanding
balance to $4.5 million. In July 2000 we entered into a collaboration with
Fujisawa Healthcare, Inc. to develop and market second generation pharmacologic
cardiac stress agents. Under this agreement we received $10.0 million from
Fujisawa Healthcare, Inc. consisting of an up-front payment and the purchase of
our common stock. In July 2000, we received a financing commitment from Acqua
Wellington North American Equities Fund, Ltd. to purchase up to $120 million of
our common stock through November 2002. As of December 31, 2000 we have issued
shares representing $30.0 million under this commitment. In August 2000, we drew
down an additional $4.5 million under a general purpose loan facility with
Biogen bringing the outstanding balance to $9.0 million. In October 2000, we
exercised our right to convert $9.0 million in debt from the Biogen loan
facility into 118,932 shares of our common stock at a price of $75.67 per share,
in full repayment of the entire principal amount under this loan facility. In
December 2000, we repaid all accrued and unpaid interest on the loan facility,
in full repayment of the loan facility.

      Cash, cash equivalents and marketable securities at December 31, 2000
totaled $296.2 million compared to $91.3 million at December 31, 1999. The
increase was due to the proceeds of $189.5 million from the sale of convertible
subordinated notes, net of issuance costs of $6.7 million, plus $45.9 million
raised through the issuance of common stock, offset by $24.3 million used to
fund operations and $12.0 million used to repay debt.

      Net cash used in operations for the year ended December 31, 2000 was $24.3
million compared to $21.2 million for the year ended December 31, 1999. Net cash
used in operations increased by only $3.1 million even though our net loss
increased to $38.4 million for the year ended December 31, 2000 from $23.1
million for the year ended December 31, 1999. The $15.3 million increase in net
loss was offset by a $5.7 million increase in deferred revenue, resulting
primarily from up-front payments received from Fujisawa Healthcare, and a $5.9
million increase in accrued and other liabilities.

      As of December 31, 2000, we have invested $10.6 million in property and
equipment with the rate of investment having increased in line with increased
research and development efforts. We expect to continue to make investments in
property and equipment to support our growth.

      We may require substantial additional funding in order to complete our
research and development activities and commercialize any potential products. We
currently estimate that our existing resources and projected interest income,
including the proceeds from our recently completed offering of convertible
subordinated notes and


                                       36
<PAGE>

common stock financing, will enable us to maintain our current and planned
operations for at least the next 24 months. However, we cannot assure you that
we will not require additional funding prior to then or that additional
financing will be available on acceptable terms or at all.

      Our future capital requirements will depend on many factors, including
scientific progress in our research and development programs, the size and
complexity of these programs, the scope and results of preclinical studies and
clinical trials, our ability 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 our control. We cannot guarantee
that the additional financing to meet our capital requirements will be available
on acceptable terms or at all. Insufficient funds may require us to delay, scale
back or eliminate some or all of our 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 we
would otherwise choose or may adversely affect our ability to operate as a going
concern. If additional funds are raised by issuing equity securities,
substantial dilution to existing stockholders may result.

Item 7a. Quantitative and Qualitative Disclosures about Market Risk

      Our exposure to market rate risk for changes in interest rates relates
primarily to our investment portfolio. We do not use derivative financial
instruments in our investment portfolio. We place our investments with high
quality issuers and, by policy, limit the amount of credit exposure to any one
issuer. We are averse to principal loss and ensure the safety and preservation
of our invested funds by limiting default, market and reinvestment risk. We
classify our cash equivalents and marketable securities as "fixed-rate" if the
rate of return on such instruments remains fixed over their term. These
"fixed-rate" investments include U.S. government securities, commercial paper,
asset backed securities, corporate bonds, and foreign bonds. We classify our
cash equivalents and marketable securities as "variable-rate" if the rate of
return on such investments varies based on the change in a predetermined index
or set of indices during their term. These "variable-rate" investments primarily
included money market accounts.

      The table below presents the amounts and related weighted interest rates
of our investment portfolio, where

                                       Average
($ in thousands)                    Interest Rate      Cost         Fair Value
                                    -------------      ----         ----------
Cash equivalents
  Variable rate                         5.85%        $ 29,266        $ 29,266
  Fixed rate                            5.32%        $ 24,635        $ 24,744
Marketable securities
  Fixed rate (2001)                     6.56%        $ 74,468        $ 74,511
  Fixed rate (2002)                     6.56%        $120,964        $121,840
  Fixed rate (2003)                     6.77%        $ 45,530        $ 45,814

no security has a maturity beyond three years, at December 31, 2000:

Item 8. Financial Statements and Supplementary Data

      Our Financial Statements and notes thereto appear beginning on page F-1 of
this Report.

Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure

      None.


                                       37
<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

      Information required by this item, insofar as it relates to directors and
officers, will be contained under the captions "Election of Directors",
"Management" and "Compliance with Section 16(a) of the Securities Exchange Act
of 1934" in the Company's definitive proxy statement with respect to the
Company's 2001 Annual Meeting of Stockholders (the "Proxy Statement"), and is
hereby incorporated by reference thereto.

Item 11. Executive Compensation

      The information required by this item will be contained in the definitive
proxy statement for our Annual Meeting of Stockholders, which we anticipate will
be filed no later than 120 days after the end of our fiscal year pursuant to
Regulation 14A, under the caption "Executive Compensation", and is hereby
incorporated by reference thereto.

Item 12. Security Ownership of Certain Beneficial Owners and Management

      The information required by this item will be contained in the definitive
proxy statement for our Annual Meeting of Stockholders, which we anticipate will
be filed no later than 120 days after the end of our fiscal year pursuant to
Regulation 14A, under the caption "Security Ownership of Certain Beneficial
Owners and Management", and is hereby incorporated by reference thereto.

Item 13. Certain Relationships and Related Transactions

      The information required by this item will be contained in the definitive
proxy statement for our Annual Meeting of Stockholders, which we anticipate will
be filed no later than 120 days after the end of our fiscal year pursuant to
Regulation 14A, under the caption "Security Ownership of Certain Beneficial
Owners and Management", and is hereby incorporated by reference thereto.


                                       38
<PAGE>

                                       PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

      (a)(1) Index to Financial Statements and Report of Ernst &Young LLP,
Independent Auditors

      The Consolidated Financial Statements required by this item are submitted
in a separate section beginning on page F-1 of this report.

                                                                          Page
                                                                          ----

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-5

Notes to Consolidated Financial Statements                                F-6

      (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

    Exhibit
    Number
    ------

      3.1   Amended and Restated Certificate of Incorporation of the
            Registrant. (15)

      3.2   Amendment No. 1 to the Amended and Restated Certificate of
            Incorporation. (16)

      3.3   Restated Bylaws of the Registrant. (1)

      10.1* 1992 Stock Option Plan, as amended. (1)

      10.2* 1994 Equity Incentive Plan, as amended. (6)

      10.3  Non-Employee Directors' Stock Option Plan, as amended.

      10.4* Form of Incentive Stock Option Grant. (1)

      10.5* Form of Non-Incentive Stock Option Grant. (1)

      10.6  Form of Non-Statutory Stock Option Grant under Non-Employee
            Directors' Stock Option Plan. (2)

      10.7* Employee Stock Purchase Plan, as amended.

      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.
            (1)

      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.
            (1)


                                       39
<PAGE>

     Exhibit
     Number
     ------

     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.
            (1)

     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.
            (1)

     10.12* Form of Indemnification Agreement between Registrant and its
            directors and officers. (1)

     10.13  Amended and Restated Investor Rights Agreement between Registrant
            and the stockholders named therein, dated May 29, 1996. (1)

     10.14  Form of Series A Preferred Stock Warrant, and amendment thereto. (1)

     10.15  Amended and Restated Series B Preferred Stock Warrant to Genta
            Incorporated. (1)

     10.16  Form of Series D Preferred Stock Warrant to Alex Brown & Sons
            Incorporated. (1)

     10.17  Form of Amended and Restated Series D Preferred Stock Warrant. (1)

     10.18  Form of Series E Preferred Stock Warrant. (1)

     10.19  Series E Preferred Stock Warrant to Cooley Godward LLP. (1)

     10.20  Series E Preferred Stock Warrant to Syntex (U.S.A.) Inc. (1)

     10.21  Form of Common Stock Warrant exercisable immediately, dated
            September 27, 1996. (1)

     10.22  Form of Common Stock Warrant, dated September 17, 1996. (1)

    10.23** License Agreement between Registrant and University of Florida
            Research Foundation, Inc., dated June 7, 1994. (1)

    10.24** Research Agreement between Registrant and University of Florida,
            dated June 27, 1994. (1)

    10.25** License Agreement between Registrant and Syntex (U.S.A.) Inc.,
            dated March 27,1996. (1)

     10.26  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. (1)

    10.27** Research Collaboration and License Agreement (U.S.) between the
            Registrant and Biogen, Inc., dated March 7, 1997. (3)

    10.28** Research Collaboration and License Agreement (Europe) between the
            Registrant and Biogen Manufacturing Ltd., dated March 7, 1997. (3)

    10.29** Common Stock Purchase Agreement between the Registrant and Biotech
            Manufacturing Ltd., dated March 7, 1997. (3)

    10.30** Loan Agreement between the Registrant and Biotech Manufacturing
            Ltd., dated March 7, 1997. (3)


                                       40
<PAGE>

     Exhibit
     Number
     ------

    10.31** Letter Agreement, dated March 7, 1997, between the Registrant and
            the University of Florida Research Foundation, Inc. (4)

    10.32** Amendment to License Agreement, effective as of July 3, 1997,
            between the Registrant and Syntex (U.S.A.), Inc. (4)

      10.33 Common Stock Purchase Agreement, dated October 7, 1997, between the
            Registrant and Biotech Target S.A. (5)

      10.34 Transition Agreement between the Registrant and Kathy Stafford dated
            September 15, 1997. (5)

      10.35 Amendment to Research Collaboration and License Agreement (U.S.),
            dated June 12, 1998, between the Registrant and Biogen, Inc. (7)

      10.36 Amendment No. 1 to Loan Agreement, dated as of June 12, 1998,
            between the Registrant and Biotech Manufacturing Ltd. (7)


                                       41
<PAGE>

    Exhibit
    Number
    ------

    10.37** Letter agreement regarding termination of research program of the
            Research Collaboration and License Agreement, dated June 12, 1998,
            between the Registrant and Biogen, Inc. (7)

     10.38* Executive Severance Benefits Agreement between the Registrant and
            Louis G. Lange, M.D., Ph.D., dated February 2, 1999. (8)

     10.39* Executive Severance Benefits Agreement between the Registrant and
            Daniel K. Spiegelman, dated February 2, 1999. (8)

     10.40* Executive Severance Benefits Agreement between the Registrant and
          Andrew A. Wolff, M.D., dated February 2, 1999. (8)

     10.41* Executive Severance Benefits Agreement between the Registrant and
          Cynthia L. Clark, Esq., dated February 2, 1999. (8)

     10.42* Executive Severance Benefits Agreement between the Registrant and
          Brent K. Blackburn, Ph.D., dated February 2, 1999. (8)

     10.43* Executive Severance Benefits Agreement between the Registrant and
          Richard M. Lawn, Ph.D., dated February 2, 1999. (8)

     10.44* Executive Severance Benefits Agreement between the Registrant and
            Luiz Belardinelli, M.D., dated February 2, 1999. (8)

     10.45* Executive Severance Benefits Agreement between the Registrant and
            Stephen J. Grana, dated February 2, 1999. (8)

      10.46 Stock Purchase Agreement dated May 5, 1999 between the Registrant
            and Quintiles Transnational Corp. (9)

    10.47** Sales and Marketing Services Agreement dated May 5, 1999 between
            the Registrant, Innovex Inc. and Quintiles Transnational Corp. (9)

    10.48** Loan Agreement dated May 5, 1999 between the Registrant and
            Quintiles Transnational Corp. (9)

      10.49 Security Agreement dated May 5, 1999 between the Registrant and
            Quintiles Transnational Corp. (9)

      10.50 Promissory Note dated May 5, 1999 to Quintiles in principal amount
            of $10.0 million. (9)

      10.51 Promissory Note dated May 5, 1999 to Quintiles Transnational in
            principal amount specified therein. (9)

      10.52 Amendment to Loan Agreement dated April 30, 1999 between the
            Registrant and Biotech Manufacturing Ltd. (9)

      10.53 Indenture dated March 7, 2000 between the Registrant and Norwest
            Bank Minnesota. (10)

      10.54 Convertible subordinated note dated March 7, 2000. (10)


                                       42
<PAGE>

     Exhibit
     Number
     ------

      10.55 Purchase agreement dated March 1, 2000 between the Registrant and
            Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
            Incorporated, J.P. Morgan Securities Inc., FleetBoston Robertson
            Stephens Inc. and SG Cowen Securities Corporation as
            Representatives(s) of the several Initial Purchasers. (10)

      10.56 Resale Registration Rights agreement dated March 7, 2000 between the
            Registrant and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
            Smith Incorporated, J.P. Morgan Securities Inc., FleetBoston
            Robertson Stephens Inc. and SG Cowen Securities Corporation as
            Representatives(s) of the several Initial Purchasers. (10)

     10.57* 2000 Equity Incentive Plan.

      10.58 First Amended and Restated Rights Agreement dated July 19, 2000
            between the Registrant and Wells Fargo Bank Minnesota, N.A. (11)

      10.59 Certificate of Designation of Series A Junior Participating
            Preferred Stock dated February 2, 1999. (11)

      10.60 Form of Right Certificate dated July 19, 2000. (11)

      10.61 Summary of Rights to Purchase Preferred Shares dated July 19, 2000.
            (11)

     10.62* Executive Severance Benefits Agreement between the Registrant and
            David McCaleb dated October 15, 1999. (12)

      10.63 Stock Purchase Agreement between the Registrant and Fujisawa
            Healthcare, Inc. dated as of July 10, 2000. (12)

    10.64** Collaboration and License Agreement between the Registrant and
            Fujisawa Healthcare, Inc. dated as of July 10, 2000. (12)

      10.65 Common Stock Purchase Agreement, dated as of August 7, 2000, between
            the Registrant and Acqua Wellington North American Equities Fund,
            Ltd. (13)

     10.66* Executive Severance Benefits Agreement between the Registrant and
            Tricia Borga Suvari dated August 31, 2000. (12)

      10.67 Amendment No. 1 to Common Stock Purchase Agreement, dated as of
            February 20, 2001, between the Registrant and Acqua Wellington North
            American Equities fund, Ltd. (14)

      10.68 Sublease Agreement between the Registrant and Systemix, Inc. dated
            as of November 1, 2000.

      10.69 Lease between the Registrant and Kaiser Marquardt, Inc. dated as of
            December 1, 2000.

     10.70* 2000 Nonstatutory Incentive Plan.

      23.1  Consent of Ernst & Young LLP, Independent Auditors.


                                       43
<PAGE>

(1) 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.

(2) 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.

(3) Incorporated by reference to Exhibits filed with the Registrant's Quarterly
Report on Form 10-Q, for the First Quarter 1997.

(4) Incorporated by reference to Exhibits filed with the Registrant's Quarterly
Report on Form 10-Q, for the Second Quarter 1997.

(5) Incorporated by reference to Exhibits filed with the Registrant's Quarterly
Report on Form 10-Q, for the Third Quarter 1997.

(6) Incorporated by reference to Exhibits filed with the Registrant's
Registration Statement on Form S-8 No. 333-44717, which became effective January
22, 1998.

(7) Incorporated by reference to Exhibits filed with the Registrant's Quarterly
Report on Form 10-Q, for the Third Quarter 1998.

(8) Incorporated by reference to Exhibits filed with the Registrant's Quarterly
Report on Form 10-Q, for the First Quarter 1999.

(9) Incorporated by reference to Exhibits filed with the Registrant's Quarterly
Report on Form 10-Q, for the Second Quarter 1999.

(10) Incorporated by reference to Exhibits filed with the Registrant's Quarterly
Report on Form 10-Q, for the First Quarter 2000.

(11) Incorporated by reference to Exhibits filed with the Registrant's Quarterly
Report on Form 10-Q, for the Second Quarter 2000.

(12) Incorporated by reference to Exhibits filed with the Registrant's Quarterly
Report on Form 10-Q, for the Third Quarter 2000.

(13) Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K
filed August 16, 2000.

(14) Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K
filed February 21, 2001.

(15) Incorporated by reference to Exhibit 3.1 filed with the Registrant's
Annual Report on Form 10-K, for the year ended December 31, 1999.

(16) Incorporated by reference to Exhibit 4.2 filed with the Registrant's
Registration Statement on Form S-3 No. 333-53206, which became effective
January 12, 2001.

*     Management contract or compensatory plan or arrangement.

**    Confidential treatment has previously been granted for portions of this
      exhibit.

      (b)   Reports on Form 8-K

            The Registrant filed no reports on Form 8-K during the last quarter
      of the fiscal year ended December 31, 2000.

      (c)   Exhibits

            See Exhibits listed under Item 14(a)(3) above.

      (d)   Financial Statements and Schedules

            The financial statement schedules required by this Item are listed
      under 14(a)(1) and (2) above.


                                       44
<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 30,
2001.

                                 CV THERAPEUTICS, INC.

                                 By: /s/ LOUIS G. LANGE, M.D., PH.D.
                                     ----------------------------------------
                                         Louis G. Lange, M.D., Ph.D.
                                     Chairman of the Board of CV Therapeutics
                                           Chief Executive Officer

      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
           ---------                                    -----                           ----
<S>                                   <C>                                   <C>
/s/ LOUIS G. LANGE, M.D., PH.D.       Chairman of the Board & Chief         March 30, 2001
----------------------------------    Executive Officer (Principal
Louis G. Lange, M.D., Ph.D.           Executive Officer)

/s/ DANIEL K. SPIEGELMAN              Chief Financial Officer (Principal    March 30, 2001
----------------------------------    Financial and Accounting Officer)
Daniel K. Spiegelman

/s/ R. SCOTT GREER                    Director                              March 30, 2001
----------------------------------
R. Scott Greer

/s/ THOMAS L. GUTSHALL                Director                              March 30, 2001
----------------------------------
Thomas L. Gutshall

/s/ PETER BARTON HUTT, ESQ.           Director                              March 30, 2001
-----------------------------------
Peter Barton Hutt, Esq.

/s/ BARBARA J. MCNEIL, M.D., PH.D.    Director                              March 30, 2001
----------------------------------
Barbara J. McNeil, M.D., Ph.D.

/s/ J. LEIGHTON READ, M.D.            Director                              March 30, 2001
----------------------------------
J. Leighton Read, M.D.

/s/ COSTA G. SEVASTOPOULOS, PH.D.     Director                              March 30, 2001
----------------------------------
Costa G. Sevastopoulos, Ph.D.
</TABLE>


                                       45
<PAGE>

                 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders

CV Therapeutics, Inc.

      We have audited the accompanying consolidated balance sheets of CV
Therapeutics, Inc. as of December 31, 1999 and 2000, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 2000. 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 auditing standards generally
accepted in the United States. 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. at December 31, 1999 and 2000, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2000 in conformity with accounting principles
generally accepted in the United States.

                                          /s/ Ernst & Young LLP

Palo Alto, California
February 20, 2001


                                      F-1
<PAGE>

                              CV THERAPEUTICS, INC.
                           CONSOLIDATED BALANCE SHEETS
               (in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                  December 31,
                                                                             ----------------------
                                                                                1999         2000
                                                                             ---------    ---------
<S>                                                                          <C>          <C>
                                             ASSETS

Current assets:
  Cash and cash equivalents                                                  $  20,763    $  54,028
  Marketable securities                                                         70,494      242,165
  Other current assets                                                           2,447        5,739
                                                                             ---------    ---------
Total current assets                                                            93,704      301,932
Notes receivable from related parties                                              448          303
Property and equipment, net                                                      2,676        3,400
Other assets                                                                        79        5,998
                                                                             ---------    ---------

Total assets                                                                 $  96,907    $ 311,633
                                                                             =========    =========

                                LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                           $   1,541    $   5,206
  Accrued liabilities                                                            3,227        9,343
  Current portion of long-term debt                                                500           --
  Current portion of capital lease obligation                                      398          764
  Current portion of deferred revenue                                               --        1,029
                                                                             ---------    ---------
Total current liabilities                                                        5,666       16,342
Long-term debt                                                                   7,000           --
Capital lease obligation                                                           855        1,565
Convertible subordinated notes                                                      --      196,250
Deferred revenue                                                                 1,000        5,659
Other liabilities                                                                  239           35
                                                                             ---------    ---------
Total liabilities                                                               14,760      219,851
Commitments
Stockholders' equity:
  Preferred stock, $0.001 par value, 5,000,000 shares authorized, none
    issued and outstanding                                                          --           --
  Common stock, $0.001 par value, 85,000,000 shares authorized, 18,157,261
    and 19,523,045 shares issued and outstanding at December 31, 1999 and
    2000, respectively; at amounts paid in                                     175,777      222,223
  Notes receivable issued for stock                                                (87)          --
  Deferred compensation                                                           (691)        (589)
  Accumulated deficit                                                          (92,675)    (131,055)
  Cumulative other comprehensive income                                           (177)       1,203
                                                                             ---------    ---------
Total stockholders' equity                                                      82,147       91,782
                                                                             ---------    ---------
Total liabilities and stockholders' equity                                   $  96,907    $ 311,633
                                                                             =========    =========
</TABLE>

                             See accompanying notes


                                      F-2
<PAGE>

                              CV THERAPEUTICS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)

                                                  Year ended December 31,
                                             --------------------------------
                                               1998        1999         2000
                                             --------    --------    --------
Revenues:
  Collaborative research                     $  4,509    $     --    $  3,309
Operating expenses:
  Research and development                     14,578      20,342      40,761
  General and administrative                    4,158       4,659       7,601
                                             --------    --------    --------
Total operating expenses                       18,736      25,001      48,362
                                             --------    --------    --------
Loss from operations                          (14,227)    (25,001)    (45,053)
Interest income                                 2,749       2,795      15,785
Interest and other expense                     (1,124)       (916)     (9,112)
                                             --------    --------    --------
Net loss                                     $(12,602)   $(23,122)   $(38,380)
                                             ========    ========    ========
Basic and diluted net loss per share         $  (1.16)   $  (1.75)   $  (2.06)
                                             ========    ========    ========
Shares used in computing basic and diluted
  net loss per share                           10,905      13,207      18,664
                                             ========    ========    ========

                             See accompanying notes


                                      F-3
<PAGE>

                              CV THERAPEUTICS, INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                      (in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                            Notes                                      Cumulative
                                                                          Receivable                                      Other
                                                   Common Stock              From          Deferred     Accumulated   Comprehensive
                                               Shares         Amount       Officers      Compensation     Deficit         Income
                                            ----------    -----------    ---------      -----------    -----------    -----------
<S>                                         <C>           <C>            <C>            <C>            <C>            <C>
Balances at December 31, 1997                8,458,063    $    85,262    $      (108)   $    (1,649)   $   (56,951)   $         3
Issuance of common stock,
  net of repurchases                         2,751,015         20,025             --             --             --             --
Deferred compensation related to
  grants of certain stock options                   --            274             --           (274)            --             --
Amortization and reduction of
  deferred compensation                             --           (125)            --            874             --             --
Comprehensive loss:
  Net loss                                          --             --             --             --        (12,602)            --
  Unrealized gains on investments                   --             --             --             --             --              9

Total comprehensive loss
                                            ----------    -----------    ---------      -----------    -----------    -----------
Balances at December 31, 1998               11,209,078        105,436           (108)        (1,049)       (69,553)            12
Issuance of common stock,
  net of repurchases                         6,948,183         69,972             --             --             --             --
Deferred compensation related to
  grants of cetain stock options                    --            374             --           (374)            --             --
Repayment of notes receivable                       --             --             21             --             --             --
Amortization and reduction of
  deferred compensation                             --             (5)            --            732             --             --
Comprehensive loss:
  Net loss                                          --             --             --             --        (23,122)            --
  Unrealized losses on investments                  --             --             --             --             --           (189)
Total comprehensive loss
                                            ----------    -----------    ---------      -----------    -----------    -----------
Balances at December 31, 1999               18,157,261        175,777            (87)          (691)       (92,675)          (177)
Issuance of common stock,
  net of repurchases                         1,365,784         45,945             --             --             --             --
Deferred compensation related to
  grants of cetain stock options                    --            516             --           (516)            --             --
Repayment of notes receivable                       --             --             87             --             --             --
Amortization and reduction of
  deferred compensation                             --            (15)            --            618             --             --
Comprehensive loss:
  Net loss                                          --             --             --             --        (38,380)            --
  Unrealized gains on investments                   --             --             --             --             --          1,380
Total comprehensive loss
                                            ==========    ===========    =========      ===========    ===========    ===========
Balances at December 31, 2000               19,523,045    $   222,223    $        --    $      (589)   $  (131,055)   $     1,203
                                            ==========    ===========    =========      ===========    ===========    ===========

<CAPTION>

                                                Total
                                            Stockholders'
                                                Equity
                                            -----------
<S>                                         <C>
Balances at December 31, 1997               $    26,557
Issuance of common stock,
  net of repurchases                             20,025
Deferred compensation related to
  grants of certain stock options                    --
Amortization and reduction of
  deferred compensation                             749
Comprehensive loss:
  Net loss                                      (12,602)
  Unrealized gains on investments                     9
                                            -----------
Total comprehensive loss                        (12,593)
                                            -----------
Balances at December 31, 1998                    34,738
Issuance of common stock,
  net of repurchases                             69,972
Deferred compensation related to
  grants of cetain stock options                     --
Repayment of notes receivable                        21
Amortization and reduction of
  deferred compensation                             727
Comprehensive loss:
  Net loss                                      (23,122)
  Unrealized losses on investments                 (189)
Total comprehensive loss                        (23,311)
                                            -----------
Balances at December 31, 1999                    82,147
Issuance of common stock,
  net of repurchases                             45,945
Deferred compensation related to
  grants of cetain stock options                     --
Repayment of notes receivable                        87
Amortization and reduction of
  deferred compensation                             603
Comprehensive loss:
  Net loss                                      (38,380)
  Unrealized gains on investments                 1,380
Total comprehensive loss                        (37,000)
                                            ===========
Balances at December 31, 2000               $    91,782
                                            ===========
</TABLE>

                             See accompanying notes


                                      F-4
<PAGE>

                             CV THERAPEUTICS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                                        ------------------------------------
                                                                           1998         1999         2000
                                                                        ---------    ---------    ---------
<S>                                                                     <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                                $ (12,602)   $ (23,122)   $ (38,380)
Adjustments to reconcile net loss to net cash used in operating
  activities:
  Amortization of deferred compensation                                       749          727          603
  Depreciation and amortization                                             1,184        1,437        1,505
  Change in assets and liabilities:
    Other current assets                                                       13       (1,211)      (3,292)
    Other assets                                                              439           97           --
    Accounts payable                                                          318          540        3,665
    Accrued and other liabilities                                           1,010          293        5,912
    Deferred revenue                                                       (5,009)          --        5,688
                                                                        ---------    ---------    ---------
Net cash used in operating activities                                     (13,898)     (21,239)     (24,299)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments                                                  (27,752)     (65,392)    (239,590)
Maturities of investments                                                  26,365       27,246       70,007
Capital expenditures                                                       (1,221)      (1,136)      (2,155)
Notes receivable from officers and employees                                  (37)          23          232
                                                                        ---------    ---------    ---------
Net cash used in investing activities                                      (2,645)     (39,259)    (171,506)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under capital lease obligations                                    443        1,000        1,500
Payments on capital lease obligations                                      (1,257)        (165)        (424)
Borrowings under convertible subordinated debt, net of issuance costs          --           --      189,549
Borrowings under long-term debt                                             4,500           --        4,500
Repayments of long-term debt                                               (1,500)      (1,500)     (12,000)
Net proceeds from issuance of common stock,
  net of repurchases                                                       20,025       69,972       45,945
                                                                        ---------    ---------    ---------
Net cash provided by financing activities                                  22,211       69,307      229,070
                                                                        ---------    ---------    ---------
Net increase in cash and cash equivalents                                   5,668        8,809       33,265
Cash and cash equivalents at beginning of year                              6,286       11,954       20,763
                                                                        ---------    ---------    ---------
Cash and cash equivalents at end of year                                $  11,954    $  20,763    $  54,028
                                                                        =========    =========    =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest                                                  $     758    $     551    $   6,611
                                                                        =========    =========    =========
</TABLE>

                             See accompanying notes


                                      F-5
<PAGE>

                              CV THERAPEUTICS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

      The Company

      CV Therapeutics is a biopharmaceutical company focused on the application
of molecular cardiology to the discovery, development and commercialization of
novel small molecule drugs for the treatment of cardiovascular disease. Since
our inception in December 1990, substantially all of our resources have been
dedicated to research and development activities, including a portion performed
on behalf of collaborators.

      Principles of Consolidation

      The financial statements include the accounts of the Company and its
wholly-owned subsidiary, CVT Adenosine Company, which was incorporated in
February 1999 in the Cayman Islands. The subsidiary was dissolved in December
2000. 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 include direct and research and
development-related overhead expenses.

      Cash Equivalents and Investments

      We consider all highly liquid debt investments with a maturity from date
of purchase of three months or less to be cash equivalents. Cash equivalents
consist of money market funds, commercial paper and repurchase agreements. All
other liquid investments are classified as marketable securities. We limit
concentration of risk by diversifying investments among a variety of issuers.

      We determine the appropriate classification of investment securities at
the time of purchase and reaffirm such designation as of each balance sheet
date. At December 31, 1999 and 2000, 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 as a
component of other comprehensive income (loss). The amortized cost of debt
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. Realized gains and losses on available-for-sale securities are included
in the statement of operations, if any.

      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.


                                      F-6
<PAGE>

                              CV THERAPEUTICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Summary of Significant Accounting Policies (Continued)

      Revenue Recognition

      Revenue under our collaborative research arrangements is recognized based
on the performance requirements of the contract. Payments received consist of
up-front payments and milestones. Up-front payments, which are still subject to
future performance requirements, are recorded as deferred revenue and are
amortized over the performance period. Payments received related to substantive,
at-risk milestones are recognized upon completion of the scientific or
regulatory event specified in the underlying agreement. Payments received for
research activities are recognized as the related research effort is incurred.

      Net Loss Per Share

      In accordance with Statement of Financial Accounting Standards No. 128
"Earnings Per Share" ("SFAS 128"), basic and diluted net loss per share has been
computed using the weighted average number of shares of common stock outstanding
during the period.

      Had we been in a net income position for the years ended December 31,
1998, 1999 and 2000, diluted earnings per share would have included the shares
used in the computation of basic net loss per share, as well as the dilutive
effect of 1,415,000, 1,753,000 and 2,156,000 stock options and 465,004, 443,078
and 40,000 warrants to purchase common stock (prior to the application of the
treasury stock method). We have excluded the impact of our convertible
subordinated notes from the computation of diluted shares outstanding because
the impact of an assumed conversion of these notes is anti-dilutive for all
periods presented.

      Other Assets

      Other assets include $5,919,000 of issuance costs, net of related
amortization, associated with the sale of $196,250,000 aggregate principal
amount of convertible subordinated notes in March 2000 (see Note 8). These
issuance costs are being amortized to interest expense over the seven year
life of the notes.

      Stock-Based Compensation

      We account for stock options granted to employees using the
intrinsic-value method and, thus, recognize no compensation expense for options
granted with exercise prices equal to the fair market value of our common stock
on the date of the grant.

      Deferred compensation is recorded when stock options are granted at prices
lower than the fair market value. The amount is amortized to expense over the
vesting period of the related options.

      Comprehensive Income

      Statement of Financial Accounting Standards No. 130 "Reporting
Comprehensive Income" ("SFAS 130"), established standards for the reporting and
display of comprehensive income and its components. SFAS 130 requires unrealized
gains or losses on our available-for-sale securities, which prior to adoption
were reported separately in stockholders' equity, to be included in other
comprehensive income (loss).


                                      F-7
<PAGE>

                              CV THERAPEUTICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Summary of Significant Accounting Policies (Continued)

      New Accounting Pronouncements

      In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"), which will be effective for the year
ending 2001. This statement establishes accounting and reporting standards
requiring that every derivative instrument, including certain derivative
instruments imbedded in other contracts, be recorded in the balance sheet as
either an asset or liability measured at its fair value. The statement also
requires that changes in the derivative's fair value be recognized in earnings
unless specific hedge accounting criteria are met. We believe the adoption of
SFAS 133 will not have a material effect on the financial statements since we
currently do not hold derivative instruments or engage in hedging activities.

2. License and Collaboration Agreements

      University of Florida Research Foundation

      In June 1994, we entered into a license agreement with the University of
Florida Research Foundation, Inc. under which we received exclusive worldwide
rights to develop A1 adenosine receptor antagonists and agonists for the
detection, prevention and treatment of human and animal diseases. In
consideration for the license, we paid an initial license fee and are obligated
to pay royalties based on net sales of products that utilize the licensed
technology. Under this agreement, we must exercise commercially reasonable
efforts to develop and commercialize one or more products covered by the
licensed technology. In the event we fail to reach certain milestones under the
agreement, the licensor may convert the exclusive license into a non-exclusive
license. We sublicensed our rights under this license that relate to A1
adenosine receptor antagonists to Biogen in March 1997.

      Syntex

      In March 1996, we entered into a license agreement with Syntex (U.S.A.)
Inc. to obtain United States and foreign patent rights to ranolazine for the
treatment of angina and other cardiovascular indications. Pursuant to the
agreement, Syntex provided quantities of the compound to us. The license
agreement is exclusive and worldwide except for the following countries which
Syntex has 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, we paid an initial license fee. In addition,
we are obligated to make payments upon product approvals in the first two major
markets, but in no event later than March 31, 2005 and March 31, 2006,
respectively, unless the contract is terminated. In addition, we will make
royalty payments based on net sales of products that utilize the licensed
technology. We are required to use commercially reasonable efforts to develop
and commercialize the product for angina.


                                      F-8
<PAGE>

                              CV THERAPEUTICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. License and Collaboration Agreements (Continued)

      Biogen

      In March 1997, we entered into two research collaboration and license
agreements with Biogen. The agreements grant Biogen the exclusive worldwide
right to develop and commercialize any products which are produced based on our
A1 adenosine receptor antagonist patents or technologies (including our rights
under the University of Florida Research Foundation license) for all
indications. In exchange, we received a $16.0 million payment consisting of
research related funding, an equity investment and $3.0 million in funding under
a general purpose loan facility. Biogen agreed to make milestone payments and
equity investments, as well as the loan facility, all of which are subject to
achievement of clinical development and commercialization milestones. In
February 1998, we terminated the research component of the agreements and, as a
result, approximately $4.0 million of deferred revenue was recognized as there
were no further research obligations related to this funding. In December 1998,
Biogen released an additional $4.5 million under the loan facility. In February
2000, based on results of a Phase II clinical trial, Biogen announced its
intention to proceed with the program, but with a backup compound, and
subsequently paid us $6.5 million, consisting of a $2.0 million milestone
payment and $4.5 million under the loan facility. Biogen will also pay royalties
on any future sales of products covered by the agreement. Biogen has control and
responsibility for conducting, funding and pursuing all aspects of the
development, submissions for regulatory approvals, manufacture and
commercialization of A1 adenosine receptor antagonist products under the
agreement.

      In March 2000, we repaid the initial $3.0 million installment under the
loan facility. In October 2000, we exercised our right to convert $9.0 million
in debt from the loan facility into 118,932 shares of our common stock at a
price of $75.67 per share, in full repayment of the entire principal amount
under this loan facility. In December 2000, we repaid all accrued and unpaid
interest on the loan facility.

      Biogen may terminate the agreements for any reason upon 60 days written
notice. If Biogen terminates the agreements, all rights to the technology will
revert to us, and we will pay Biogen a small royalty on future sales of any A1
adenosine receptor antagonist.

      Incyte

      In July 1998, we entered into a joint research collaboration agreement
with Incyte Genomics, Inc. to develop a prototype gene expression database in
the area of cardiovascular biology. We contribute our molecular cardiology
expertise and Incyte contributes its genomics capabilities. Incyte owns the data
produced, and we receive a perpetual, non-exclusive license to use the data in
our drug development efforts. Each party bears its own costs of the research.
Either party may terminate the agreement on 60 days written notice.

      Innovex

      In May 1999, we entered into a sales and marketing services agreement with
Innovex, a subsidiary of Quintiles Transnational Corp. Under this agreement, if
ranolazine is approved for sale in the United States by the FDA, Innovex will
hire and train a dedicated sales force for ranolazine and assist in funding
marketing expenses for up to five years after launch. We will receive 100% of
the revenues from sales of ranolazine and we will pay Innovex a share of those
revenues.


                                      F-9
<PAGE>

                              CV THERAPEUTICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. License and Collaboration Agreements (Continued)

      Innovex (Continued)

      The agreement calls for Innovex to conduct pre-launch activities, hire and
train a dedicated cardiology sales force to launch and promote ranolazine, and
provide post-launch marketing and sales services. To fund pre-launch activities,
Quintiles will provide us with a $10 million credit facility at the time we file
with the FDA for approval. We are required to spend a minimum of $10 million on
ranolazine pre-launch marketing activities so long as Quintiles provides
advances under the credit facility. Upon FDA approval, Quintiles will make a $10
million milestone payment to us, which we are obligated to use to repay any
amounts outstanding under the credit facility. Should we file for approval and
draw down the credit facility, but never receive FDA approval, we are obligated
to repay the loan within 10 years of the date we received the loan.

      Innovex has agreed to provide services for at least three years after
launch and to provide services in years four and five after launch if minimum
sales levels are met. The agreement also specifies the minimum number of sales
representatives and the minimum level of dollars to be spent on marketing by
Innovex during the first two years of the contract, regardless of sales levels.
The minimum size of the sales force and the marketing expenses in year three or
any subsequent year must be maintained by Innovex as long as minimum sales
levels are met.

      In exchange for providing these sales and marketing services, Innovex will
receive a fee equal to up to an average of 33% of revenues in the first two
years of sales, up to 30% of revenues for the third year and up to 25% of
revenues in years four and five. Also, for giving us the option to retain this
trained sales force at the end of the contract, Innovex will receive a royalty
on sales of 7% in the sixth and 4% in the seventh years after launch.

      In connection with the agreement, Quintiles purchased 1,043,705 shares of
our common stock for a total purchase price of $5.0 million.

      We or Innovex may terminate the agreement in the event of material uncured
breach, bankruptcy or insolvency, our decision to not file an NDA for ranolazine
or to terminate development of the product, notice from the United States Food
and Drug Administration that it will not approve the product for marketing, or
failure to achieve certain minimum sales levels. In addition, we or Innovex may
terminate the agreement if product launch will not occur by a specific date. The
agreement will terminate automatically if we no longer retain our license rights
to ranolazine.

      Fujisawa Healthcare

      In July 2000, we entered into a collaboration with Fujisawa Healthcare,
Inc. to develop and market second generation pharmacologic cardiac stress
agents. Under this agreement, FHI received exclusive North American rights to
CVT-3146, a short acting selective A2A adenosine receptor agonist, and a backup
compound. We received $10.0 million from FHI consisting of a $6.0 million
up-front payment, which will be recognized as revenue over the expected term of
the agreement, and the purchase of 54,270 shares of our common stock for a total
purchase price of $4.0 million. We may receive up to an additional $24.0 million
in cash based on development and regulatory milestones. FHI will reimburse us
for 75% of the development costs, and if approved by the FDA, we will receive a
royalty based on product sales of CVT-3146 and may receive a royalty on another
product sold by FHI.


                                      F-10
<PAGE>

      FHI may terminate the agreement for any reason on 90 days written notice,
and we may terminate the agreement if FHI fails to launch a product within a
specified period after marketing approval. In addition, we or FHI may terminate
the agreement in the event of material uncured breach, or bankruptcy or
insolvency.


                                      F-11
<PAGE>

                              CV THERAPEUTICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Investments

                                             Gross        Gross
                            Amortized     Unrealized    Unrealized      Market
                           Cost Basis        Gains        Losses         Value
                           ----------     ----------    ----------    ----------
                                             (in thousands)
Cash equivalents
  Money market funds       $   12,571     $       --    $       --    $   12,571
  Commercial paper              4,715              5            --         4,720
  Corporate bonds               2,254             --            --         2,254
                           ----------     ----------    ----------    ----------
                           $   19,540     $        5    $       --    $   19,545
                           ==========     ==========    ==========    ==========
Marketable securities
  Commercial paper         $   11,886     $       15    $       --    $   11,901
  Corporate bonds              57,288             --           194        57,094
  Foreign bonds                 1,502             --             3         1,499
                           ----------     ----------    ----------    ----------
                           $   70,676     $       15    $      197    $   70,494
                           ==========     ==========    ==========    ==========

      Following is a summary of available-for-sale securities at December 31,
1999:

      As of December 31, 1999, we had marketable securities with maturities of
less than one year of $43.3 million and greater than one year of $27.2 million.
The average contractual maturity as of December 31, 1999 was approximately eight
months, with no single investment's maturity exceeding sixteen months.

      Following is a summary of available-for-sale securities at December 31,
2000:


                                      F-12
<PAGE>

                                              Gross         Gross
                                Amortized   Unrealized    Unrealized     Market
                               Cost Basis     Gains         Losses       Value
                               ----------   ----------    ----------    --------
                                                 (in thousands)
Cash equivalents
  Money market funds           $   29,266   $       --   $       --   $   29,266
  Commercial paper                 24,744           --           --       24,744
                               ----------   ----------   ----------   ----------
                               $   54,010   $       --   $       --   $   54,010
                               ==========   ==========   ==========   ==========
Marketable securities
  Commercial paper             $   34,545   $       36   $       --   $   34,581
  US government securities         10,042           80           --       10,122
  Asset backed securities          13,970           81           --       14,051
  Corporate bonds                 177,418        1,046           16      178,448
  Foreign bonds                     4,987           --           24        4,963
                               ----------   ----------   ----------   ----------
                               $  240,962   $    1,243   $       40   $  242,165
                               ==========   ==========   ==========   ==========

      As of December 31, 2000, we had marketable securities with maturities of
less than one year of $34.6 million and greater than one year of $207.6 million.
The average contractual maturity as of December 31, 2000 was approximately
fifteen months, with no single investment's maturity exceeding thirty-six
months.


                                      F-13
<PAGE>

                              CV THERAPEUTICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Property and Equipment

                                                              December 31,
                                                         ----------------------
                                                           1999          2000
                                                         --------      --------
                                                             (in thousands)
Machinery and equipment                                  $  4,319      $  5,682
Furniture and fixtures                                        629           833
Leasehold improvements                                      3,536         4,124
                                                         --------      --------
                                                            8,484        10,639
Less accumulated depreciation and amortization             (5,808)       (7,239)
                                                         --------      --------
                                                         $  2,676      $  3,400
                                                         ========      ========

      Property and equipment are recorded at cost and consist of the following:

      Property and equipment include $1.4 million and $2.9 million recorded
under capital leases at December 31, 1999 and 2000, respectively. Accumulated
amortization related to leased assets totaled $297,000 and $950,000 at December
31, 1999 and 2000, respectively (see Note 7).

      Depreciation expense, including depreciation of assets under capital
leases, was $435,000, $608,000 and $670,000 for 1998, 1999 and 2000
respectively. Amortization expense, for leasehold improvements, was $399,000,
$517,000 and $761,000 for 1998, 1999 and 2000 respectively.

5. Accrued Liabilities

                                                              December 31,
                                                         ----------------------
                                                           1999          2000
                                                         --------      --------
                                                             (in thousands)
Accrued interest                                         $    571      $  2,952
Compensation related accruals                                 952         1,456
Accrued research obligation                                   308           308
Clinical trials                                                --         1,562
Other                                                       1,396         3,065
                                                         --------      --------
                                                         $  3,227      $  9,343
                                                         ========      ========

      Accrued liabilities consists of the following:


                                      F-14
<PAGE>

                              CV THERAPEUTICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. Long-Term Debt

      In March 1997, we entered into an unsecured loan agreement with Biotech
Manufacturing in association with the Biogen Agreements (see Note 2). Under the
terms of the Biotech Manufacturing loan agreement, Biotech Manufacturing made
available to us for general purposes an amount not to exceed $12.0 million with
interest due annually at prime plus 1.5%. Upon the effective date of the Biogen
Agreements, we drew down $3.0 million of the loan. In December 1998, we drew
down an additional $4.5 million in connection with the final study report from
an earlier phase II study of AdentriTM, which was jointly prepared by us and
Biogen. In August 2000, we drew down the remaining $4.5 million. In March 2000,
we repaid the initial $3.0 million installment. In October 2000, we exercised
our right to convert the remaining $9.0 million in debt from the loan facility
into 118,932 shares of our common stock at a price of $75.67 per share, in full
repayment of the entire principal amount under this loan facility. In December
2000, we repaid all accrued and unpaid interest on the loan facility, in full
repayment of the loan facility.

7. Leases

      We lease some of our fixed assets under four noncancellable capital
leases.

      We lease two facilities under noncancellable operating leases. The lease
for one facility expires in April 2012. The lease for the second facility
incorporates a sublease which expires in February 2005 and a master lease which
expires in April 2012.

                                                         Operating      Capital
                                                          Leases        Leases
                                                         --------      --------
                                                              (in thousands)
Year ending December 31,
  2001                                                   $  7,696      $    943
  2002                                                     10,911           885
  2003                                                     11,902           448
  2004                                                     12,290           410
  2005                                                      9,795            --
  2006 and thereafter                                      91,644            --
                                                         --------      --------
Total minimum payments                                   $144,238         2,686
                                                         ========
Less amount representing interest                                          (357)
                                                                       --------
Present value of future lease payments                                    2,329
Less current portion                                                       (764)
                                                                       --------
Long-term portion                                                      $  1,565
                                                                       ========

      Following is a schedule of future minimum lease payments:

      Rent expense, net of sublease rentals, for the years ended December 31,
1998, 1999, and 2000 was $396,000, $409,000 and $1.1 million respectively.


                                      F-15
<PAGE>

                              CV THERAPEUTICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Convertible Subordinated Notes

      In March 2000, we completed a private placement of $196,250,000 aggregate
principal amount of 4.75% convertible subordinated notes due March 7, 2007. The
notes are unsecured and subordinated in right of payment to all existing and
future senior debt as defined in the indenture governing the notes. We pay
interest semi-annually on March 7th and September 7th of each year. The
conversion rate is 15.66 shares of common stock per $1,000 principal amount of
notes. This is equivalent to a conversion price of $63.84 per share. The
conversion rate is subject to adjustment in certain events. We have reserved
3,074,091 shares of authorized common stock for issuance upon conversion of the
notes. We may redeem the notes on or after March 7, 2003 and prior to maturity,
at a premium or earlier if our stock price reaches certain defined levels. We
incurred issuance costs related to this private placement of approximately
$6,701,000 which have been recorded as other assets and are being amortized to
interest expense over the seven-year life of the notes.

      The fair value of our convertible subordinated notes, based upon the last
publicly-traded price for the notes at December 31, 2000, approximates
$244,253,000.

9. Related Party Transactions

      From 1992 through 2000, we issued loans to certain of our officers and
employees related to relocation, purchases of stock and other purposes of which
loans aggregating $547,000 and $358,000 were outstanding at December 31, 1999
and 2000, respectively. These loans bear interest at 4.51% to 10.00% per annum.
The amounts are repayable on various dates through January 1, 2005. As of
December 31, 1999, loans for $87,000 related to the purchase of common stock,
were included in stockholders' equity.

10. Stockholders' Equity

      Employee Stock Purchase Plan

      In September 1996, the board of directors adopted the Employee Stock
Purchase Plan (the "Purchase Plan") covering an aggregate of 150,000 shares of
our common stock. In May 2000, our stockholders approved an additional 75,000
shares for this plan with annual increases through 2005 in an amount equal to
the least of (i) one-half of one percent of the number of outstanding shares of
our common stock, (ii) 100,000 shares, or (iii) a smaller number of shares
determined by the board of directors. The Purchase Plan is designed to allow
eligible employees of ours or an affiliate of ours to purchase shares of our
common stock at quarterly intervals through their periodic 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 our common stock at the beginning of the offering period or an amount equal
to 85 percent of the fair market value of our common stock on each 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 us. We have issued 163,890 shares under the Purchase Plan
through December 31, 2000.


                                      F-16
<PAGE>

                              CV THERAPEUTICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. Stockholders' Equity (Continued)

      Stock Option Plans

      We reserved 345,000 shares of common stock for issuance under our amended
and restated 1992 Stock Option Plan, which provided for common stock options to
be granted to employees, consultants, officers, and directors. No additional
grants will be made under the 1992 Stock Option Plan.

      We reserved 1,800,000 shares of common stock for issuance under our
amended and restated 1994 Equity Incentive Plan which provided for common stock
options to be granted to employees of and consultants to us and our affiliates.
No additional grants will be made under the 1994 Equity Incentive Plan.

      Our Non-Employee Directors' Stock Option Plan was amended and restated in
1996 to allow the granting of up to 250,000 shares of common stock to our
directors who are not otherwise an employee of, or consultant of ours or any
affiliate of ours. In May 2000, our stockholders approved an additional 150,000
shares for this plan. 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 market 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 for new directors while they vest one year after grant
date for other grants. In August 2000, the board of directors approved amending
the plan to increase the number of shares automatically granted to new members
of the board of directors and to modify the vesting schedule of all future
grants under the plan.

      In May 2000, our stockholders approved the 2000 Equity Incentive Plan and
the issuance of up to 1,500,000 shares of common stock under the plan. The 2000
Equity Incentive Plan provides for common stock options to be granted to
employees of and consultants to us and our affiliates. The Plan allows for the
grant of incentive stock options, non-statutory stock options, stock bonuses,
and 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 market value of the stock subject to the option on the
date the option is granted. The exercise price of each non-statutory option
shall be not less than 100% of the fair market 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.

      In July 2000, the board of directors approved the 2000 Nonstatutory
Incentive Plan and the issuance of up to 250,000 shares of common stock under
the plan. In February 2001, the board of directors approved the issuance of up
to an additional 350,000 shares of common stock for a total of up to 600,000
shares under the plan. The 2000 Nonstatutory Incentive Plan provides for common
stock options to be granted to employees of and consultants to us and our
affiliates. The Plan allows for the grant of nonstatutory stock options, stock
bonuses and rights to purchase restricted stock. Options and rights granted
under this plan expire no later than 10 years from the date of grant. The
exercise price of each nonstatutory option shall be not less than 100% of the
fair market 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.


                                      F-17
<PAGE>

                              CV THERAPEUTICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. Stockholders' Equity (Continued)

<TABLE>
<CAPTION>
                                                   Outstanding Options
                                   -----------------------------------------------------
                                    Shares     Number                       Weighted
                                   Available     of        Price per         Average
                                   for Grant   Shares        Share        Exercise Price
                                   ---------   ------    --------------   --------------
                                           (in thousands, except per share amounts)
<S>                                <C>        <C>        <C>              <C>
Balance at December 31, 1997         1,078     1,077     $0.80 - $10.88       $ 4.75
Options granted                       (533)      533     $4.50 - $10.50       $ 9.03
Options forfeited                      116      (116)    $0.80 - $10.00       $ 5.20
Options exercised                       --       (79)     $0.80 - $8.50       $ 2.45
                                   -------    ------
Balance at December 31, 1998           661     1,415     $0.80 - $10.88       $ 6.45
Options granted                       (472)      472     $3.94 - $15.88       $ 7.41
Options forfeited                       52       (52)    $2.00 - $10.88       $ 6.16
Options exercised                       --       (82)     $0.80 - $9.88       $ 3.45
                                   -------    ------
Balance at December 31, 1999           241     1,753     $0.80 - $15.88       $ 6.86
Shares authorized                    1,900        --                 --           --
Options granted                       (900)      900    $23.50 - $86.56       $45.75
Options forfeited                       48       (48)    $2.50 - $72.38       $25.37
Options exercised                       --      (449)    $0.80 - $15.88       $ 5.15
                                   -------    ------
Balance at December 31, 2000         1,289     2,156     $0.80 - $86.56       $23.04
                                   =======    ======
</TABLE>


      The following table summarizes option activity under all option plans:

<TABLE>
<CAPTION>
                                                                     Outstanding Options
--------------------------------------------------------------------------------------------------------------------------
                                                       Weighted                                  Exercisable Options
                                                       Average                            --------------------------------
                                       Shares         Remaining           Weighted         Number of         Weighted
                                     Outstanding   Contractual Life    Average Exercise      Shares       Average Exercise
Range of Exercise Prices            (in thousands)    (in years)            Price         (in thousands)       Price
------------------------            -------------- ----------------  -------------------- --------------  ----------------
<S>                                 <C>            <C>               <C>                  <C>             <C>
$ 0.80 - $ 7.13                           571             7.2             $    4.79             344          $    4.15
$ 7.25 - $ 9.25                           547             7.0             $    8.71             340          $    8.52
$ 9.38 - $37.13                           770             9.1             $   31.75              75          $   11.37
$37.44 - $86.56                           268             9.6             $   66.19              15          $   74.41
                                    ---------                                              --------
$ 0.80 - $86.56                         2,156             8.1             $   23.04             774          $    8.12
                                    =========                                              ========
</TABLE>

      The following table summarizes information about stock options outstanding
at December 31, 2000:


                                      F-18
<PAGE>

                              CV THERAPEUTICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. Stockholders' Equity (Continued)

      Pro Forma Information-Stock-Based Compensation

      We have elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations, in accounting for our employee stock options because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"),
requires use of option valuation models that were not developed for use in
valuing employee stock options. Under APB 25, if the exercise price of our
employee stock options equals the fair market value of the underlying stock on
the date of grant, no compensation expense is recognized.

      Pro forma information regarding net loss and loss per share is required by
SFAS 123 for awards granted after December 31, 1994 as if we had accounted for
our stock-based awards to employees under the fair value method of SFAS 123. The
fair value of our stock-based awards to employees was estimated using a
Black-Scholes option pricing model. 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 our 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 our opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of our stock-based awards to
employees. The fair value of our stock-based awards to employees was estimated
assuming no expected

                                     1998             1999             2000
                                     ----             ----             ----
Expected life (years)                5.1              5.1              4.9
Expected volatility                  .54              .60              .65
Risk-free interest rate              5.5%             5.5%             6.5%

dividends and the following weighted-average assumptions:

      For pro forma purposes, the estimated fair value of our stock-based awards
to employees is amortized over the options' vesting period. Our pro forma
information follows (in thousands except for loss per share information):

                                     1998              1999              2000
                                 ----------        ----------        ----------
Net loss:
  As reported                    $  (12,602)       $  (23,122)       $  (38,380)
                                 ==========        ==========        ==========
  Pro forma                      $  (13,691)       $  (24,336)       $  (45,055)
                                 ==========        ==========        ==========
Net loss per share:
  As reported                    $    (1.16)       $    (1.75)       $    (2.06)
                                 ==========        ==========        ==========
  Pro forma                      $    (1.25)       $    (1.84)       $    (2.41)
                                 ==========        ==========        ==========

      The weighted-average fair value of options granted with exercise prices at
fair value of our common stock during 1998, 1999 and 2000 was $4.73, $4.18 and
$24.00 respectively.


                                      F-19
<PAGE>

                              CV THERAPEUTICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. Stockholders' Equity (Continued)

      Warrants

      Warrants to purchase our common stock were issued in connection with
various financing, lending and equipment lease arrangements. As of December 31,
2000, 40,000 warrants, issued in April 1995 with an exercise price of $8.90 and
an expiration date in April 2005, were outstanding. We have reserved 40,000
shares of our common stock for issuance upon the exercise of the warrants.

      Stockholders Rights Plan

      In February 1999, we announced that the board of directors approved the
adoption of a Stockholders Rights Plan under which all stockholders of record as
of February 23, 1999 received and all stockholders receiving newly issued shares
after that date have or will receive rights to purchase shares of a new series
of preferred stock.

      The Rights Plan is designed to enable all CVT shareholders to realize the
full value of their investment and to provide for fair and equal treatment for
all stockholders in the event that an unsolicited attempt is made to acquire
CVT. The adoption of the Rights Plan is intended as a means to guard against
abusive takeover tactics and was not in response to any particular proposal.

      The rights were distributed as a non-taxable dividend and will expire in
ten years from the Record Date. The rights will be exercisable only if a person
or group acquires 20 percent or more of the CVT common stock or announces a
tender offer of CVT's common stock. If a person acquires 20 percent or more of
CVT's stock, all rightsholders except the buyer will be entitled to acquire CVT
common stock at discount. The effect will be to discourage acquisitions of more
than 20 percent of CVT's common stock without negotiations with the Board.

      In July 2000, the board of directors approved certain amendments to our
stockholders rights plan, including lowering the trigger percentage from 20
percent to 15 percent, and raising the exercise price for each right from $35.00
to $500.00.


                                      F-20
<PAGE>

                              CV THERAPEUTICS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Income Taxes

      As of December 31, 2000, we had federal and state net operating loss
carryforwards of approximately $114 million and $30 million, respectively. We
also had federal and California research and development tax credit
carryforwards of approximately $3.6 million and $2.7 million. The federal net
operating loss and credit carryforwards will expire at various dates beginning
in the year 2006 through 2020, if not utilized. The state of California net
operating loss carryforwards will expire at various dates beginning in the year
2001 through 2005, if not utilized.

      Utilization of the federal and state net operating losses and credit
carryforwards may be subject to a substantial annual limitation due to the
"change in ownership" provisions of the Internal Revenue Code of 1986. 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

                                                         1999            2000
                                                       --------        --------
                                                             (in thousands)
Net operating loss carryforwards                       $ 30,310        $ 40,430
Research credits (expiring 2008-2020)                     4,520           5,400
Capitalized research and development                      3,490           2,260
Other, net                                                1,890           3,670
                                                       --------        --------
Total deferred tax assets                                40,210          51,760
Valuation allowance for deferred tax assets             (40,210)        (51,760)
                                                       --------        --------
Total                                                  $     --        $     --
                                                       ========        ========

of our deferred tax assets are as follows at December 31:

      The valuation allowance increased by $6.3 million and $10.2 million during
the years ended December 31, 1998, and 1999, respectively.

12. Subsequent Events (unaudited)

      In July 2000, we received a financing commitment from Acqua Wellington
North American Equities Fund, Ltd. to purchase up to $120 million of our common
stock through November 2002. As of December 31, 2000 we have issued shares
representing $30 million under this commitment. On February 20, 2001, we amended
the common stock purchase agreement to allow for the sale of up to an aggregate
of $220 million of our common stock, an increase of $100 million.


                                      F-21