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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNITED
      STATES</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
      AND EXCHANGE COMMISSION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WASHINGTON,
      D.C. 20549</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FORM
      8-K</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENT
      REPORT</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PURSUANT
      TO SECTION 13 OR 15(d) OF</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THE
      SECURITIES EXCHANGE ACT OF 1934</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
      of
      report (date of earliest event reported): April 3, 2006</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>COUGAR
      BIOTECHNOLOGY, INC.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      name of registrant as specified in its charter)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Delaware</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
      or
      other jurisdiction of incorporation)</font></div>
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                File Number)</font></div>
            </td>
            <td width="20%">&#160;</td>
            <td valign="top" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(IRS
                Employer Identification No.)</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>10990
      Wilshire Blvd, Suite 1200</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Los
      Angeles, CA 90024</strong></font></div>
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      of principal executive offices) (Zip Code)</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(310)
      943-8040</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Registrant&#8217;s
      telephone number, including area code)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SRKP
      4, INC.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>10940
        Wilshire Blvd, Suite 600</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Los
        Angeles, CA 90024</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Former
      name or former address, if changed since last report)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>&#160;Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>&#160;Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>&#160;Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>&#160;Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">1</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      <div>&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      1.01. Entry into a Material Definitive Agreement.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      disclosures set forth under Item 2.01 hereof are hereby incorporated by
      reference in this Item&#160;1.01.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      2.01. Completion of Acquisition or Disposition of Assets.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to an Agreement and Plan of Merger dated February 27, 2006 (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Merger
      Agreement</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
      by
      and among SRKP 4, Inc. (referred to herein as the&#160;&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Company,</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;
      &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SRKP</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;
or
      the
&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Registrant</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
      SRKP
      Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the
      Company (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>MergerCo</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
      and
      Cougar Biotechnology, Inc., a Delaware corporation (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Cougar</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
      MergerCo merged with and into Cougar, with Cougar remaining as the surviving
      entity and a wholly owned operating subsidiary of the Company. This transaction
      is referred to throughout this report as the&#160;&#8220;Merger.&#8221; The Merger was
      effective as of April 3, 2006, upon the filing of a certificate of merger with
      the Delaware Secretary of State.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      the
      effective time of the Merger, the legal existence of MergerCo ceased and all
      of
      the 11,994,229 shares of Cougar common stock, par value $.001 per share (the
      &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Cougar
      Common Stock</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
      and
      24,698,022 shares of Cougar preferred stock, par value $.001 per share (the
      &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Cougar
      Preferred Stock</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;),
      that
      were outstanding immediately prior to the Merger were cancelled, with one share
      of Cougar Common Stock issued to the Company. Simultaneously, the Company issued
      to the former holders of Cougar Common Stock and Cougar Preferred Stock, in
      consideration of their capital stock of Cougar, an aggregate of 4,607,105 shares
      of the Company&#8217;s common stock, par value $.0001 per share (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Common
      Stock</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
      and
      9,486,752 shares of the Company&#8217;s Series A Preferred Stock, par value $.0001 per
      share (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Preferred
      Stock</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;).
      In
      addition, all securities convertible or exercisable into shares of Cougar
      capital stock outstanding immediately prior to the Merger (excluding the Cougar
      Preferred Stock) were cancelled, and the holders thereof received similar
      securities for the purchase of an aggregate of 2,327,299 shares of the Common
      Stock. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Contemporaneously
      with the closing of the Merger, pursuant to the terms of a Redemption Agreement
      dated February 27, 2006 by and among the Company and its then-current
      stockholders, the Company completed the closing of a redemption of an aggregate
      of 2,700,000 shares of Common Stock (the &#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Redemption</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
      from
      its former stockholders in consideration of an aggregate of $200,000 less (i)
      the aggregate amount of fees, costs and expenses of SRKP&#8217;s attorneys,
      accountants and other service providers incurred by SRKP on or prior to the
      effective time (&#8220;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SRKP
      Professional Fees</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8221;)
      and
      (ii) an aggregate of $12,500 to be paid to such former stockholders on a pro
      rata basis in satisfaction of an outstanding obligation of the Company to such
      former stockholders. The 2,700,000 shares constituted all of the issued and
      outstanding shares of the Company&#8217;s capital stock, on a fully-diluted basis,
      immediately prior to the Merger. The Company&#8217;s entry into the Redemption
      Agreement was disclosed on the Company&#8217;s Current Report on Form 8-K filed with
      the Securities and Exchange Commission on March 2, 2006, which is hereby
      incorporated by reference, including the copy of the Redemption Agreement filed
      as Exhibit 10.2 thereto. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      condition to the Merger, SRKP entered into an Indemnity Agreement dated April
      3,
      2006 with its former officers and directors, pursuant to which the Company
      agreed to indemnify such former officers and directors for actions taken by
      such
      officers and directors in their official capacities relating to the
      consideration, approval and consummation of the Merger. A copy of the Indemnity
      Agreement is filed herewith as Exhibit 10.1, and is incorporated hereby by
      reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Upon
      completion of the Merger and the Redemption, the former stockholders of Cougar
      held 100% of the outstanding shares of capital stock of the Company.
      Accordingly, the Merger represents a change in control of the Company. As of
      the
      date of this report, there are 4,607,105 shares of Common Stock and 9,486,752
      shares of Preferred Stock outstanding. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      accounting purposes, the Merger has been accounted for as a reverse acquisition
      with Cougar as the accounting acquirer (legal acquiree) and SRKP as the
      accounting acquiree (legal acquiror). Upon effectiveness of the Merger, Cougar&#8217;s
      business plan became the business plan of the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Merger Agreement was filed as Exhibit 10.1 to the Company&#8217;s Current Report on
      Form 8-K filed with the Securities and Exchange Commission on March 2, 2006,
      and
      is incorporated herein by reference. The foregoing description of the Merger
      Agreement and the transactions contemplated thereby do not purport to be
      complete and are qualified in their entireties by reference to the Merger
      Agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      April
      6, 2006, the Company&#8217;s Board of Directors approved a transaction pursuant to
      which Cougar merged with and into the Company, leaving the Company as the
      surviving corporation. In connection with this merger, the Company relinquished
      its corporate name and assumed in its place the name &#8220;Cougar Biotechnology,
      Inc.&#8221; The merger and name change became effective on April 6, 2006, upon the
      filing of a Certificate of Ownership with the Delaware Secretary of State.&#160;
The Certificate of Ownership is filed as Exhibit 3.2 hereto, and is incorporated
      herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unless
      otherwise provided in this current report, all references in this current report
      to &#8220;we,&#8221; &#8220;us,&#8221; &#8220;our company,&#8221; &#8220;our,&#8221; or the &#8220;Company&#8221; refer to the combined
      Cougar Biotechnology, Inc. entity.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Description
      of Business of Cougar Biotechnology, Inc.</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cougar
      was incorporated in Delaware on May 14, 2003, and is a development stage
      biopharmaceutical company based in Los Angeles, California that in-licenses
      and
      develops novel therapeutics for the treatment of cancer. Cougar&#8217;s strategy is to
      license technologies that have previously been tested in clinical trials,
      enabling it to obtain an initial indication of the drug&#8217;s safety and biological
      activity in humans before committing capital to the drug&#8217;s development. Cougar
      does not conduct any drug discovery activities and limits its involvement with
      preclinical research activity. Cougar currently owns the rights to three
      clinical stage oncology drug candidates. Cougar has attracted a management
      team,
      Board of Directors and Scientific Advisory Board experienced in biotechnology,
      pharmaceuticals and cancer treatment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>CB7630</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      April
      2004, Cougar exclusively licensed the worldwide rights to CB7630 (abiraterone
      acetate) from BTG plc. CB7630 is an orally active targeted inhibitor of the
      steroidal enzyme 17</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">a</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-hydroxylase/C17,20
      lyase, a cytochrome p450 complex that is involved in testosterone production.
      In
      preclinical studies, CB7630 has demonstrated the ability to selectively inhibit
      the target enzyme, reducing levels of testosterone production in both the
      adrenals and the testes that is believed to stimulate the growth of prostrate
      cancer cells.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      Phase
      I trials performed by the Centre for Cancer Therapeutics, Institute of Cancer
      Research (Sutton, United Kingdom), and Royal Marsden NHS Trust (Sutton, United
      Kingdom), CB7630 was administered as a single agent to 26 patients with prostate
      cancer. Cougar believes that the data from these clinical studies indicate
      that:
      1) CB7630, at an oral dose of 800mg, can successfully suppress testosterone
      levels to the castrate range; 2) CB7630 can suppress testosterone produced
      by
      both the testes and the adrenals; and 3) CB7630 is well tolerated with an
      acceptable toxicity profile. The results from these Phase I studies of CB7630
      were published in the British Journal of Cancer in June 2004. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">3</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      December 2005, Cougar initiated a Phase I/II trial of CB7630 for the treatment
      of advanced prostate cancer. The Phase I/II trial is being conducted at The
      Institute of Cancer Research, in the Cancer Research UK Centre for Cancer
      Therapeutics, and at The Royal Marsden Hospital in the United Kingdom. The
      Phase
      I/II study is an open label, dose escalating study to evaluate the safety and
      efficacy of CB7630 administered daily to patients with chemotherapy-na&#239;ve
      hormone refractory prostate cancer (HRPC) with a rising PSA (prostate specific
      antigen) despite hormonal therapy. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, in February 2006, Cougar announced that its Investigational New Drug
      Application for CB7630 had been approved by the US Food and Drug Administration.
      The Company anticipates that a Phase I trial of CB7630 as a second line hormonal
      agent for advanced prostate cancer patients that have failed treatment with
      first line hormone therapy will be initiated in the first half of
      2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additional
      clinical studies are currently being planned.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>CB3304</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      March
      2004, Cougar exclusively licensed the worldwide rights to CB3304 (noscapine),
      an
      orally active alkaloid derived from opium. Preclinical studies have demonstrated
      that CB3304 has anti-tumor activity and acts as an inhibitor of microtubule
      dynamics. Therefore, Cougar believes that CB3304 has potential applications
      in
      the treatment of a number of different tumor types where tubulin binding agents
      are known to have activity. These tumor types include, but are not limited
      to,
      non-Hodgkin&#8217;s lymphoma, multiple myeloma, breast cancer, lung cancer, ovarian
      cancer and prostate cancer. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      December 2005, Cougar announced positive interim data from an ongoing Phase
      I
      trial of CB3304 in patients with relapsed or refractory non-Hodgkin&#8217;s lymphoma.
      The trial is an open label dose escalating study, being conducted at the
      University of Southern California Norris Comprehensive Cancer Center, where
      cohorts of patients with relapsed/refractory non-Hodgkin&#8217;s lymphoma (NHL) or
      chronic lymphocytic leukemia (CLL/SLL) were treated at one of three different
      dose levels involving total daily doses of 1 g, 2 g, and 3 g per day. At each
      dose level, noscapine was administered orally on a three times a day schedule
      for 49 days. In the trial, responses for NHL patients were evaluated using
      the
      International Working Group Response Criteria for NHL and responses for CLL
      patients were evaluated using the NCI Working Group criteria. For both NHL
      and
      CLL patients, toxicity was graded according to the NCI common toxicity criteria
      (CTC).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      this
      interim analysis, 12 patients with a median age of 65 years (range 38-71) have
      been accrued. Four subjects had CLL/SLL, 2 had mantle cell lymphoma, one had
      follicular grade III-lymphoma, 4 had diffuse large cell lymphoma (DLC), and
      one
      had lymphoplasmacytic low grade lymphoma. These interim results suggest:
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Of
                the 10 patients that are evaluable for response, one patient with
                follicular grade III disease has had a partial response. This patient
                initially demonstrated stabilization of their disease for a period
                of
                approximately four years before achieving a partial response. In
                addition,
                two patients, one with mantle cell lymphoma and one with DLC have
                demonstrated stable disease of duration 30 days and 77 days,
                respectively.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CB3304
                has been well tolerated, with no grade 3 or 4 hematological toxicities.
                One grade 3 neurotoxicity consisting of depressed level of consciousness
                was experienced at the 3 gram dose level.
</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
                larger study of noscapine is warranted to evaluate the efficacy of
                the
                compound in patients with lymphoma.
</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">4</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      December 2005, Cougar also announced results from preclinical experiments that
      it believes demonstrate the effectiveness of CB3304 for the treatment of NHL
      and
      multiple myeloma and that warrant continued development of the drug in
      hematological malignancies. The preclinical studies demonstrate that CB3304
      exhibits potent antitumor activity against NHL and myeloma in vitro, as well
      as
      in vivo in xenograft models. More specifically, the in vitro studies
      demonstrated that following exposure to CB3304, the OPM2 (multiple myeloma),
      H9
      (T cell lymphoma) and RL (B cell lymphoma) tumor cell lines exhibited an IC50
      of
      approximately 30 nM, 700 nM, and 500 nM for the OPM2, H9 and RL lines,
      respectively. Treatment with noscapine resulted in the induction of apoptosis
      in
      each of the cell lines tested. Additionally, in vivo studies demonstrated that
      in xenograft models, daily administration of noscapine resulted in tumor growth
      delays of between 30-80% of the control tumor volumes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due
      to
      the results of these preclinical studies, the clinical protocol for the ongoing
      Phase I trial of CB3304 has been amended in order to allow multiple myeloma
      patients to be enrolled in the trial in addition to NHL patients. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>CB1089</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      June
      2005, Cougar exclusively licensed the worldwide rights to CB1089 (seocalcitol),
      a synthetic vitamin D analog. In prostate cancer clinical studies of a
      metabolite of vitamin D (calcitriol) given in combination with chemotherapy
      suggested that patients that received the combination of calcitriol plus
      chemotherapy had an improvement in their survival over the patients that
      received chemotherapy plus placebo without an increase in the toxicity of the
      chemotherapy. Preclinical studies in prostate cancer have shown that CB1089
      is a
      more potent anti-cancer drug than calcitriol, which may result in better
      efficacy when used in combination therapy to treat prostrate cancer as opposed
      to calcitriol. We anticipate beginning clinical trials of CB1089 in prostate
      cancer in the second half of 2006. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Competition</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      development and commercialization for new products to treat cancer is highly
      competitive, and there will be considerable competition from major
      pharmaceutical, biotechnology, and specialty cancer companies. Many of our
      competitors have substantially more resources than the Company, including both
      financial and technical. In addition, many of these companies have more
      experience than the Company in preclinical and clinical development,
      manufacturing, regulatory, and global commercialization. The Company is also
      competing with academic institutions, governmental agencies and private
      organizations that are conducting research in the field of cancer. Competition
      for highly qualified employees is intense.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Potential
      competitors to Cougar include, but are not limited to, Abbott Labs, Astrazeneca,
      Bristol Myers Squibb, Roche, Genzyme, Novacea, Kosan, Dendreon and Cell Genesys.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>License
      Agreements and Intellectual Property</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      goal
      is to obtain, maintain and enforce patent protection for our products,
      formulations, processes, methods and other proprietary technologies, preserve
      our trade secrets, and operate without infringing on the proprietary rights
      of
      other parties, both in the United States and in other countries. Our policy
      is
      to actively seek to obtain, where appropriate, the broadest intellectual
      property protection possible for our current product candidates (CB7630, CB3304,
      CB1089, CB6604 and the noscapine analogs) and any future product candidates,
      proprietary information and proprietary technology through a combination of
      contractual arrangements and patents, both in the U.S. and abroad. However,
      even
      patent protection may not always afford us with complete protection against
      competitors who seek to circumvent our patents. See &#8220;Risk Factors - Risks
      Relating to Our Business - If we fail to adequately protect or enforce our
      intellectual property rights or secure rights to patents of others, the value
      of
      our intellectual property rights would diminish,&#8221; below.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
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        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      will
      continue to depend upon the skills, knowledge and experience of our scientific
      and technical personnel, as well as that of our advisors, consultants and other
      contractors, none of which is patentable. To help protect our proprietary
      know-how, which is not patentable, and for inventions for which patents may
      be
      difficult to enforce, we currently rely and will in the future rely on trade
      secret protection and confidentiality agreements to protect our interests.
      To
      this end, we require all of our employees, consultants, advisors and other
      contractors to enter into confidentiality agreements that prohibit the
      disclosure of confidential information and, where applicable, require disclosure
      and assignment to us of the ideas, developments, discoveries and inventions
      important to our business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>License
      Agreements</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      April
      2004, Cougar entered into an exclusive, worldwide license agreement with BTG
      plc
      for CB7630 (abiraterone acetate). Specifically, Cougar licensed US Patent No.
      5,604,213, dated February 18, 1997 entitled &#8220;17-Substituted Steroids Useful in
      Cancer Treatment&#8221;, US Patent No. 5,618,807, dated April 8, 1997 entitled &#8220;Method
      for Preparing 17-Substituted Steroids useful in Cancer Treatment&#8221;, the
      corresponding foreign patents and two additional US patent applications. As
      consideration for the rights to abiraterone acetate, Cougar paid BTG an initial
      license fee of $923,100 and agreed to pay BTG an annual license maintenance
      fee
      of 150,000 pounds sterling (currently, approximately $288,000) until the first
      commercial sale of the licensed product. In addition, the license agreement
      requires the Company to make substantial payments upon the achievement of
      certain clinical and regulatory milestones. Should abiraterone acetate become
      commercialized, the Company will be obligated to pay to BTG an annual royalty
      based on net sales of the product. In the event that the Company sublicenses
      abiraterone acetate to a third party, the Company is obligated to pay royalties
      to BTG based on a fixed rate of fees or royalties received from the sublicense.
      The license agreement contains other customary clauses and terms as are common
      in similar agreements in the industry.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      March
      2004, Cougar entered into an exclusive, worldwide license agreement with Emory
      University for CB3304 (noscapine), CB6604 and the noscapine analogs.
      Specifically, Cougar licensed US Patent No. 6,376,516, dated April 23, 2002
      entitled &#8220;Noscapine Derivatives, Useful as Anticancer Agents&#8221;, US Patent No.
      6,673,814, dated January 6, 2004 entitled &#8220;Delivery Systems and Methods for
      Noscapine and Noscapine Derivatives, Useful as Anticancer Agents&#8221;, the
      corresponding foreign patent applications and additional US patent applications.
      As consideration for the rights to noscapine and the analogs of noscapine,
      Cougar paid Emory University an initial license fee of $72,435 and agreed to
      sponsor a Research Project involving the licensed technology in the amount
      of&#160;approximately $114,000. In connection with the License Agreement, the
      Company has agreed to make substantial payments to Emory University, payable
      upon the achievement of certain clinical and regulatory milestones. Should
      a
      product incorporating the licensed technology be commercialized, the Company
      will be obligated to pay to Emory University an annual royalty based on net
      sales of the product. In the event that the Company sublicenses the licensed
      technology to a third party, the Company will be obligated to pay royalties
      to
      Emory University based on a fixed rate of fees or royalties received from the
      sublicense. The license agreement contains other customary clauses and terms
      as
      are common in similar agreements in the industry.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      June
      2005, Cougar entered into an exclusive, worldwide license agreement with LEO
      Pharma A/S for CB1089 (seocalcitrol). Specifically, Cougar licensed US Patent
      No. 5,190,934, dated April 7, 1990, US Patent No. 6,310,226, dated October
      30,
      2001, the corresponding foreign patents and certain additional foreign patent
      applications. As consideration for the rights to seocalcitrol, Cougar paid
      LEO
      Pharma A/S an initial license fee of $250,000. In addition, the license
      agreement requires the Company to make substantial payments upon the achievement
      of certain clinical and regulatory milestones. Should seocalcitrol become
      commercialized, the Company will be obligated to pay to LEO Pharma A/S an annual
      royalty based on net sales of the product. In the event that the Company
      sublicenses seocalcitrol to a third party, the Company is obligated to pay
      royalties to LEO Pharma A/S based on a fixed rate of fees or royalties received
      from the sublicense. The license agreement contains other customary clauses
      and
      terms as are common in similar agreements in the industry.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">6</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Government
      Regulation</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      research, development, testing, manufacture, labeling, promotion, advertising,
      distribution, and marketing, among other things, of our products are extensively
      regulated by governmental authorities in the United States and other countries.
      In the United States, the FDA regulates drugs under the Federal Food, Drug,
      and
      Cosmetic Act, or the &#8220;FDCA,&#8221; and its implementing regulations. Failure to comply
      with the applicable U.S. requirements may subject us to administrative or
      judicial sanctions, such as FDA refusal to approve pending New Drug
      Applications, warning letters, product recalls, product seizures, total or
      partial suspension of production or distribution, injunctions, and/or criminal
      prosecution.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Drug
      Approval Process</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      None of
      our drugs may be marketed in the U.S. until the drug has received FDA approval.
      The steps required before a drug may be marketed in the U.S.
      include:</font></div>
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            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">preclinical
                laboratory tests, animal studies, and formulation
                studies;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">submission
                to the FDA of an IND for human clinical testing, which must become
                effective before human clinical trials may
                begin;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">adequate
                and well-controlled human clinical trials to establish the safety
                and
                efficacy of the drug for each
                indication;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">submission
                to the FDA of an NDA;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">satisfactory
                completion of an FDA inspection of the manufacturing facility or
                facilities at which the drug is produced to assess compliance with
                current
                good manufacturing practices, or &#8220;cGMPs&#8221;;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
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            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FDA
                review and approval of the NDA.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Preclinical
      tests include laboratory evaluation of product chemistry, toxicity, and
      formulation, as well as animal studies. The conduct of the preclinical tests
      and
      formulation of the compounds for testing must comply with federal regulations
      and requirements. The results of the preclinical tests, together with
      manufacturing information and analytical data, are submitted to the FDA as
      part
      of an IND, which must become effective before human clinical trials may begin.
      An IND will automatically become effective 30 days after receipt by the FDA,
      unless before that time the FDA raises concerns or questions about issues such
      as the conduct of the trials as outlined in the IND. In such a case, the IND
      sponsor and the FDA must resolve any outstanding FDA concerns or questions
      before clinical trials can proceed. The Company cannot be sure that submission
      of an IND will result in the FDA allowing clinical trials to begin.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Clinical
      trials involve the administration of the investigational drug to human subjects
      under the supervision of qualified investigators. Clinical trials are conducted
      under protocols detailing the objectives of the study, the parameters to be
      used
      in monitoring safety, and the effectiveness criteria to be evaluated. Each
      protocol must be submitted to the FDA as part of the IND.</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">7</font></div>
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          <hr style="COLOR: black" noshade size="2">
        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Clinical
      trials typically are conducted in three sequential Phases, but the Phases may
      overlap. The study protocol and informed consent information for study subjects
      in clinical trials must also be approved by an Institutional Review Board for
      each institution where the trials will be conducted. Study subjects must sign
      an
      informed consent form before participating in a clinical trial. Phase I usually
      involves the initial introduction of the investigational drug into people to
      evaluate its short-term safety, dosage tolerance, metabolism, pharmacokinetics
      and pharmacologic actions, and, if possible, to gain an early indication of
      its
      effectiveness. Phase II usually involves trials in a limited patient population
      to (i) evaluate dosage tolerance and appropriate dosage; (ii) identify possible
      adverse effects and safety risks; and (iii) evaluate preliminarily the efficacy
      of the drug for specific indications. Phase III trials usually further evaluate
      clinical efficacy and test further for safety by using the drug in its final
      form in an expanded patient population. There can be no assurance that Phase
      I,
      Phase II, or Phase III testing will be completed successfully within any
      specified period of time, if at all. Furthermore, the Company or the FDA may
      suspend clinical trials at any time on various grounds, including a finding
      that
      the subjects or patients are being exposed to an unacceptable health
      risk.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      FDCA
      permits FDA and the IND sponsor to agree in writing on the design and size
      of
      clinical studies intended to form the primary basis of an effectiveness claim
      in
      an NDA application. This process is known as Special Protocol Assessment. These
      agreements may not be changed after the clinical studies begin, except in
      limited circumstances.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Assuming
      successful completion of the required clinical testing, the results of the
      preclinical studies and of the clinical studies, together with other detailed
      information, including information on the manufacture and composition of the
      drug, are submitted to the FDA in the form of an NDA requesting approval to
      market the product for one or more indications. The testing and approval process
      requires substantial time, effort, and financial resources. The agencies review
      the application and may deem it to be inadequate to support the registration,
      and companies cannot be sure that any approval will be granted on a timely
      basis, if at all. The FDA may also 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 recommendations of the advisory committee.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      FDA
      has various programs, including fast track, priority review, and accelerated
      approval, that are intended to expedite or simplify the process for reviewing
      drugs, and/or provide for approval on the basis surrogate endpoints. Generally,
      drugs that may be eligible for one or more of these programs are those for
      serious or life-threatening conditions, those with the potential to address
      unmet medical needs, and those that provide meaningful benefit over existing
      treatments. A company cannot be sure that any of its drugs will qualify for
      any
      of these programs, or that, if a drug does qualify, that the review time will
      be
      reduced.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Section
      505(b)(2) of the FDCA allows the FDA to approve a follow-on drug on the basis
      of
      data in the scientific literature or a prior FDA approval of an NDA for a
      related drug. This procedure potentially makes it easier for generic drug
      manufacturers to obtain rapid approval of new forms of drugs based on
      proprietary data of the original drug manufacturer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Before
      approving an NDA, the FDA usually will inspect the facility or the facilities
      at
      which the drug is manufactured and will not approve the product unless cGMP
      compliance is satisfactory. If the FDA evaluates the NDA and the manufacturing
      facilities as acceptable, 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&#8217;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 post-marketing testing and
      surveillance to monitor the drug&#8217;s safety or efficacy, or impose other
      conditions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">8</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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        <div id="GLHDR" style="WIDTH: 100%" align="right">
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">After
      approval, certain changes to the approved product, such as adding new
      indications, making certain manufacturing changes, or making certain additional
      labeling claims, are subject to further FDA review and approval. Before a
      company can market products for additional indications, it must obtain
      additional approvals from FDA. Obtaining approval for a new indication generally
      requires that additional clinical studies be conducted. A company cannot be
      sure
      that any additional approval for new indications for any product candidate
      will
      be approved on a timely basis, or at all.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Post-Approval
      Requirements</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Often
      times, even after a drug has been approved by the FDA for sale, the FDA may
      require that certain post-approval requirements be satisfied, including the
      conduct of additional clinical studies. If such post-approval conditions are
      not
      satisfied, the FDA may withdraw its approval of the drug. In addition, holders
      of an approved NDA are required to: (i) report certain adverse reactions to
      the
      FDA, (ii) comply with certain requirements concerning advertising and
      promotional labeling for their products, and (iii) continue to have quality
      control and manufacturing procedures conform to cGMP after approval. The FDA
      periodically inspects the sponsor&#8217;s records related to safety reporting and/or
      manufacturing facilities; this latter effort includes assessment of compliance
      with cGMP. Accordingly, manufacturers must continue to expend time, money,
      and
      effort in the area of production and quality control to maintain cGMP
      compliance. We intend to use third party manufacturers to produce our products
      in clinical and commercial quantities, and future FDA inspections may identify
      compliance issues at the facilities of our contract manufacturers that may
      disrupt production or distribution, or require substantial resources to correct.
      In addition, discovery of problems with a product after approval may result
      in
      restrictions on a product, manufacturer, or holder of an approved NDA, including
      withdrawal of the product from the market.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Employees</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of the
      date of this Report, Cougar had 3 employees, all of which are full-time. Cougar
      anticipates hiring up to 7 additional full-time employees devoted to research
      and development activities and up to 3 additional part-time employees for
      general and administrative activities over the next few years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Description
      of Property</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Commencing
      April 8, 2006, the Company&#8217;s corporate offices will be located at 10990 Wilshire
      Boulevard, Suite 1200, Los Angeles, California 90024. Pursuant to an Office
      Lease dated October 31, 2005 by and between Cougar and Douglas Emmett Realty
      Fund 1997, we are required to make monthly lease payments of $18,671, with
      annual increases of approximately 3%. The office space is approximately 7,300
      square feet, and the lease expires on February 28, 2011. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Legal
      Proceedings</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cougar
      is
      not currently involved in any material legal proceedings.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Cautionary
      Note Regarding Forward-Looking Statements</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      report contains certain statements that are &#8220;forward-looking statements,&#8221;
including, among other things, discussions of our business strategies, future
      operations and capital resources. Words such as, but not limited to, &#8220;may,&#8221;
&#8220;likely,&#8221; &#8220;anticipate,&#8221; &#8220;expect&#8221; and &#8220;believes&#8221; indicate forward-looking
      statements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">9</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Forward-looking
      statements are included in the section of this report entitled &#8220;Description of
      Business of Cougar Biotechnology, Inc.&#8221; Although we believe that the
      expectations reflected in such forward-looking statements are generally
      reasonable, we cannot assure you that such expectations will ultimately prove
      to
      be correct. Generally, these statements relate to our business plans and
      strategies, projected or anticipated benefits or other consequences of market
      conditions and opportunities, business plans or strategies, projections
      involving anticipated sales and revenues, expenses, projected future earnings
      and other aspects of operational results. All phases of our operations are
      subject to a number of uncertainties, risks and other influences, most of which
      are outside our control, and any one or combination of which could materially
      and adversely affect the results of our operations, and also, could affect
      whether any such forward-looking statements contained herein ultimately prove
      to
      be accurate. Important factors that could cause actual results to differ
      materially from our current expectations are summarized in the section captioned
      &#8220;Risk Factors&#8221; immediately following.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Risk
      Factors</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      currently have no product revenues and will need to raise additional capital
      to
      operate our business</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      To
      date, we have generated no product revenues</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Until,
      and unless, we receive approval from the U.S. Food and Drug Administration,
      or
      FDA, and other regulatory authorities for our product candidates, we cannot
      sell
      our drugs and will not have product revenues. Currently, our only product
      candidates are CB7630, CB3304, CB6604, the noscapine analogs and CB1089, and
      none of these products is approved by the FDA for sale. Therefore, for the
      foreseeable future, we will have to fund all of our operations and capital
      expenditures from cash on hand, licensing fees and grants, and potentially,
      future offerings. Currently, we believe we have cash on hand to fund our
      operations through December 2007. However, changes may occur that would consume
      our available capital before that time, including changes in and progress of
      our
      development activities, acquisitions of additional candidates and changes in
      regulation. We will need to seek additional sources of financing, which may
      not
      be available on favorable terms, if at all. If we do not succeed in raising
      additional funds on acceptable terms, we may be unable to complete planned
      pre-clinical and clinical trials or obtain approval of any product candidates
      from the FDA and other regulatory authorities. In addition, we could be forced
      to discontinue product development, reduce or forego sales and marketing efforts
      and forego attractive business opportunities. Any additional sources of
      financing will likely involve the issuance of our equity securities, which
      will
      have a dilutive effect on our stockholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      are not currently profitable and may never become
      profitable</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      We have
      a history of losses and expect to incur substantial losses and negative
      operating cash flow for the foreseeable future, and we may never achieve or
      maintain profitability. For the twelve months ended December 31, 2005, we had
      a
      net loss of $7,811,338 and since our inception in May 2003 through December
      31,
      2005, we have incurred a net loss of $11,349,849. Even if we succeed in
      developing and commercializing one or more product candidates, we expect to
      incur substantial losses for the foreseeable future and may never become
      profitable. We also expect to continue to incur significant operating and
      capital expenditures and anticipate that our expenses will increase
      substantially in the foreseeable future as we:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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          <tr valign="top" style="line-height: 1.25;">
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            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">continue
                to undertake pre-clinical development and clinical trials for product
                candidates;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">seek
                regulatory approvals for product
                candidates;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">implement
                additional internal systems and infrastructure;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">10</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">hire
                additional personnel.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      also
      expect to experience negative cash flow for the foreseeable future as we fund
      our operating losses and capital expenditures. As a result, we will need to
      generate significant revenues in order to achieve and maintain profitability.
      We
      may not be able to generate these revenues or achieve profitability in the
      future. Our failure to achieve or maintain profitability could negatively impact
      the value of our securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      have a limited operating history upon which to base an investment
      decision</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      We are a
      development-stage company and have not demonstrated an ability to perform the
      functions necessary for the successful commercialization of any product
      candidates. The successful commercialization of any product candidates will
      require us to perform a variety of functions, including: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
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            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">continuing
                to undertake pre-clinical development and clinical
                trials;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">participating
                in regulatory approval processes;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">formulating
                and manufacturing products; and </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">conducting
                sales and marketing activities. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      operations have been limited to organizing and staffing our Company, acquiring,
      developing and securing our proprietary technology and undertaking pre-clinical
      trials of our product candidates. These operations provide a limited basis
      for
      you to assess our ability to commercialize our product candidates and the
      advisability of investing in our securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      we do not obtain the necessary U.S. or worldwide regulatory approvals to
      commercialize any product candidate, we will not be able to sell our product
      candidates</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      We
      cannot assure you that we will receive the approvals necessary to commercialize
      any of our product candidates (CB7630, CB3304, CB6604, the noscapine analogs
      and
      CB1089), or any product candidate we acquire or develop in the future. We will
      need FDA approval to commercialize our product candidate in the U.S. and
      approvals from the FDA-equivalent regulatory authorities in foreign
      jurisdictions to commercialize our product candidate in those jurisdictions.
      In
      order to obtain FDA approval of any product candidate, we must submit to the
      FDA
      a New Drug Application, or NDA, demonstrating that the product candidate is
      safe
      for humans and effective for its intended use. This demonstration requires
      significant research and animal tests, which are referred to as pre-clinical
      studies, as well as human tests, which are referred to as clinical trials.
      Satisfaction of the FDA&#8217;s regulatory requirements typically takes many years,
      depends upon the type, complexity and novelty of the product candidate and
      requires substantial resources for research, development and testing. We cannot
      predict whether our research and clinical approaches will result in drugs that
      the FDA considers safe for humans and effective for indicated uses. The FDA
      has
      substantial discretion in the drug approval process and may require us to
      conduct additional pre-clinical and clinical testing or to perform
      post-marketing studies. The approval process may also be delayed by changes
      in
      government regulation, future legislation or administrative action or changes
      in
      FDA policy that occur prior to or during our regulatory review. Delays in
      obtaining regulatory approvals may:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">delay
                commercialization of, and our ability to derive product revenues
                from, our
                product candidate;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">impose
                costly procedures on us; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
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        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">diminish
                any competitive advantages that we may otherwise
                enjoy.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Even
      if
      we comply with all FDA requests, the FDA may ultimately reject one or more
      of
      our NDAs. We may never obtain regulatory clearance for any of our product
      candidates (CB7630, CB3304, CB6604, the noscapine analogs and CB1089). Failure
      to obtain FDA approval of any of our product candidates will severely undermine
      our business by leaving us without a saleable product, and therefore without
      any
      source of revenues, until another product candidate can be developed. There
      is
      no guarantee that we will ever be able to develop or acquire another product
      candidate. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      foreign jurisdictions, we must receive approval from the appropriate regulatory
      authorities before we can commercialize any drugs. Foreign regulatory approval
      processes generally include all of the risks associated with the FDA approval
      procedures described above. We cannot assure you that we will receive the
      approvals necessary to commercialize our product candidate for sale outside
      the
      United States.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Our
      product candidates are in early stages of clinical
      trials</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Each of
      our product candidates (CB7630, CB3304, CB6604, the noscapine analogs and
      CB1089), are in early stages of development and requires extensive pre-clinical
      and clinical testing. We cannot predict with any certainty if or when we might
      submit an NDA for regulatory approval for any of our product candidate or
      whether any such NDA will be accepted.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Clinical
      trials are very expensive, time-consuming and difficult to design and
      implement</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Human
      clinical trials are very expensive and difficult to design and implement, in
      part because they are subject to rigorous regulatory requirements. The clinical
      trial process is also time consuming. We estimate that clinical trials of our
      product candidate will take at least several years to complete. Furthermore,
      failure can occur at any stage of the trials, and we could encounter problems
      that cause us to abandon or repeat clinical trials. The commencement and
      completion of clinical trials may be delayed by several factors,
      including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">unforeseen
                safety issues;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">determination
                of dosing issues;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">lack
                of effectiveness during clinical
                trials;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">slower
                than expected rates of patient
                recruitment;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">inability
                to monitor patients adequately during or after treatment;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">inability
                or unwillingness of medical investigators to follow our clinical
                protocols.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, we or the FDA may suspend our clinical trials at any time if it
      appears that we are exposing participants to unacceptable health risks or if
      the
      FDA finds deficiencies in our Investigational New Drug, or IND, submissions
      or
      the conduct of these trials. Therefore, we cannot predict with any certainty
      the
      schedule for future clinical trials. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>The
      results of our clinical trials may not support our product candidate
      claims</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Even if
      our clinical trials are completed as planned, we cannot be certain that their
      results will support our product candidate claims. Success in pre-clinical
      testing and early clinical trials does not ensure that later clinical trials
      will be successful, and we cannot be sure that the results of later clinical
      trials will replicate the results of prior clinical trials and pre-clinical
      testing. The clinical trial process may fail to demonstrate that our product
      candidates are safe for humans and effective for indicated uses. This failure
      would cause us to abandon a product candidate and may delay development of
      other
      product candidates. Any delay in, or termination of, our clinical trials will
      delay the filing of our NDAs with the FDA and, ultimately, our ability to
      commercialize our product candidates and generate product revenues. In addition,
      our clinical trials involve a small patient population. Because of the small
      sample size, the results of these clinical trials may not be indicative of
      future results. In addition, the initial clinical trial for CB7630 was performed
      outside the United States, and therefore, may not have been performed in
      accordance with standards normally required by the FDA and other regulatory
      agencies.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">12</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Physicians
      and patients may not accept and use our drugs</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Even if
      the FDA approves one or more of our product candidates, physicians and patients
      may not accept and use it. Acceptance and use of our product will depend upon
      a
      number of factors including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">perceptions
                by members of the health care community, including physicians, about
                the
                safety and effectiveness of our
                drug;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">cost-effectiveness
                of our product relative to competing
                products;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">availability
                of reimbursement for our product from government or other healthcare
                payers; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">effectiveness
                of marketing and distribution efforts by us and our licensees and
                distributors, if any. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because
      we expect sales of our current product candidates, if approved, to generate
      substantially all of our product revenues for the foreseeable future, the
      failure of these drugs to find market acceptance would harm our business and
      could require us to seek additional financing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Our
      drug-development program depends upon third-party researchers who are outside
      our control</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      We
      depend upon independent investigators and collaborators, such as universities
      and medical institutions, to conduct our pre-clinical and clinical trials under
      agreements with us. These collaborators are not our employees and we cannot
      control the amount or timing of resources that they devote to our programs.
      These investigators may not assign as great a priority to our programs or pursue
      them as diligently as we would if we were undertaking such programs ourselves.
      If outside collaborators fail to devote sufficient time and resources to our
      drug-development programs, or if their performance is substandard, the approval
      of our FDA applications, if any, and our introduction of new drugs, if any,
      will
      be delayed. These collaborators may also have relationships with other
      commercial entities, some of whom may compete with us. If our collaborators
      assist our competitors at our expense, our competitive position would be
      harmed.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      will rely exclusively on third parties to formulate and manufacture our product
      candidate</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      We have
      no experience in drug formulation or manufacturing and do not intend to
      establish our own manufacturing facilities. We lack the resources and expertise
      to formulate or manufacture our own product candidates. We currently have no
      agreements for the commercial scale manufacture of our product candidates.
      We
      intend to enter into agreements with one or more manufacturers to manufacture,
      supply, store and distribute drug supplies for our clinical trials. If any
      of
      our current product candidates or any product candidates we may develop or
      acquire in the future receive FDA approval, we will rely on one or more
      third-party contractors to manufacture our drugs. Our anticipated future
      reliance on a limited number of third-party manufacturers exposes us to the
      following risks:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">13</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
                may be unable to identify manufacturers on acceptable terms or at
                all
                because the number of potential manufacturers is limited and the
                FDA must
                approve any replacement contractor. This approval would require new
                testing and compliance inspections. In addition, a new manufacturer
                would
                have to be educated in, or develop substantially equivalent processes
                for,
                production of our products after receipt of FDA approval, if
                any.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                third-party manufacturers might be unable to formulate and manufacture
                our
                drugs in the volume and of the quality required to meet our clinical
                needs
                and commercial needs, if any.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
                future contract manufacturers may not perform as agreed or may not
                remain
                in the contract manufacturing business for the time required to supply
                our
                clinical trials or to successfully produce, store and distribute
                our
                products.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Drug
                manufacturers are subject to ongoing periodic unannounced inspection
                by
                the FDA, the Drug Enforcement Administration, and corresponding state
                agencies to ensure strict compliance with good manufacturing practice
                and
                other government regulations and corresponding foreign standards.
                We do
                not have control over third-party manufacturers&#8217; compliance with these
                regulations and standards.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
                any third-party manufacturer makes improvements in the manufacturing
                process for our products, we may not own, or may have to share, the
                intellectual property rights to the
                innovation.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
      of
      these risks could delay our clinical trials, the approval, if any, of our
      product candidates by the FDA or the commercialization of our product candidates
      or result in higher costs or deprive us of potential product
      revenues.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      have no experience selling, marketing or distributing products and no internal
      capability to do so</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.
      </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      currently have no sales, marketing or distribution capabilities. We do not
      anticipate having the resources in the foreseeable future to allocate to the
      sales and marketing of our proposed products. Our future success depends, in
      part, on our ability to enter into and maintain collaborative relationships
      for
      such capabilities, the collaborator&#8217;s strategic interest in the products under
      development and such collaborator&#8217;s ability to successfully market and sell any
      such products. We intend to pursue collaborative arrangements regarding the
      sales and marketing of our products, however, there can be no assurance that
      we
      will be able to establish or maintain such collaborative arrangements, or if
      able to do so, that they will have effective sales forces. To the extent that
      we
      decide not to, or are unable to, enter into collaborative arrangements with
      respect to the sales and marketing of our proposed products, significant capital
      expenditures, management resources and time will be required to establish and
      develop an in-house marketing and sales force with technical expertise. There
      can also be no assurance that we will be able to establish or maintain
      relationships with third party collaborators or develop in-house sales and
      distribution capabilities. To the extent that we depend on third parties for
      marketing and distribution, any revenues we receive will depend upon the efforts
      of such third parties, and there can be no assurance that such efforts will
      be
      successful. In addition, there can also be no assurance that we will be able
      to
      market and sell our products in the United States or overseas.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      we cannot compete successfully for market share against other drug companies,
      we
      may not achieve sufficient product revenues and our business will
      suffer</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      The
      market for our product candidates is characterized by intense competition and
      rapid technological advances. If any of our product candidates receives FDA
      approval, it will compete with a number of existing and future drugs and
      therapies developed, manufactured and marketed by others. Existing or future
      competing products may provide greater therapeutic convenience or clinical
      or
      other benefits for a specific indication than our products, or may offer
      comparable performance at a lower cost. If our products fail to capture and
      maintain market share, we may not achieve sufficient product revenues and our
      business will suffer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">14</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      will
      compete against fully integrated pharmaceutical companies and smaller companies
      that are collaborating with larger pharmaceutical companies, academic
      institutions, government agencies and other public and private research
      organizations. Many of these competitors have oncology compounds already
      approved or in development. In addition, many of these competitors, either
      alone
      or together with their collaborative partners, operate larger research and
      development programs or have substantially greater financial resources than
      we
      do, as well as significantly greater experience in:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">developing
                drugs;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">undertaking
                pre-clinical testing and human clinical
                trials;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">obtaining
                FDA and other regulatory approvals of
                drugs;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">formulating
                and manufacturing drugs; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">launching,
                marketing and selling drugs.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Developments
      by competitors may render our products or technologies obsolete or
      non-competitive</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      The
      biotechnology and pharmaceutical industries are intensely competitive and
      subject to rapid and significant technological change. Some of the drugs that
      we
      are attempting to develop, such as CB7630, CB3304, CB6604, the noscapine analogs
      and CB1089, will have to compete with existing therapies. In addition, a large
      number of companies are pursuing the development of pharmaceuticals that target
      the same diseases and conditions that we are targeting. We face competition
      from
      pharmaceutical and biotechnology companies in the United States and abroad.
      In
      addition, companies pursuing different but related fields represent substantial
      competition. Many of these organizations competing with us have substantially
      greater capital resources, larger research and development staffs and
      facilities, longer drug development history in obtaining regulatory approvals
      and greater manufacturing and marketing capabilities than we do. These
      organizations also compete with us to attract qualified personnel and parties
      for acquisitions, joint ventures or other collaborations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      we fail to adequately protect or enforce our intellectual property rights or
      secure rights to patents of others, the value of our intellectual property
      rights would diminish</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Our
      success, competitive position and future revenues will depend in part on our
      ability and the abilities of our licensors to obtain and maintain patent
      protection for our products, methods, processes and other technologies, to
      preserve our trade secrets, to prevent third parties from infringing on our
      proprietary rights and to operate without infringing the proprietary rights
      of
      third parties. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      date,
      we hold certain exclusive patent rights, including rights under U.S. patent
      Nos.
      5,604,213, 5,618,807, 6,376,516, 6,673,814, 5,190,935, 6,310,226 and U.S. patent
      applications as well as rights under foreign patents and patent applications.
      See &#8220;License Agreements &amp; Intellectual Property&#8221; below. We anticipate filing
      additional patent applications both in the U.S. and in other countries, as
      appropriate. However, we cannot predict:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">15</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                degree and range of protection any patents will afford us against
                competitors, including whether third parties will find ways to invalidate
                or otherwise circumvent our
                patents;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">if
                and when patents will issue;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">whether
                or not others will obtain patents claiming aspects similar to those
                covered by our patents and patent applications;
                or</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">whether
                we will need to initiate litigation or administrative proceedings
                which
                may be costly whether we win or
                lose.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success also depends upon the skills, knowledge and experience of our scientific
      and technical personnel, our consultants and advisors as well as our licensors
      and contractors. To help protect our proprietary know-how and our inventions
      for
      which patents may be unobtainable or difficult to obtain, we rely on trade
      secret protection and confidentiality agreements. To this end, it is our policy
      to require all of our employees, consultants, advisors and contractors to enter
      into agreements which prohibit the disclosure of confidential information and,
      where applicable, require disclosure and assignment to us of the ideas,
      developments, discoveries and inventions important to our business. These
      agreements may not provide adequate protection for our trade secrets, know-how
      or other proprietary information in the event of any unauthorized use or
      disclosure or the lawful development by others of such information. If any
      of
      our trade secrets, know-how or other proprietary information is disclosed,
      the
      value of our trade secrets, know-how and other proprietary rights would be
      significantly impaired and our business and competitive position would
      suffer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      we infringe the rights of third parties we could be prevented from selling
      products, forced to pay damages, and defend against
      litigation</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      If our
      products, methods, processes and other technologies infringe the proprietary
      rights of other parties, we could incur substantial costs and we may have
      to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">obtain
                licenses, which may not be available on commercially reasonable terms,
                if
                at all;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">abandon
                an infringing drug candidate;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">redesign
                our products or processes to avoid
                infringement;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">stop
                using the subject matter claimed in the patents held by
                others;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">pay
                damages; or</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">defend
                litigation or administrative proceedings which may be costly whether
                we
                win or lose, and which could result in a substantial diversion of
                our
                financial and management resources.</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Our
      ability to generate product revenues will be diminished if our drugs sell for
      inadequate prices or patients are unable to obtain adequate levels of
      reimbursement</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Our
      ability to commercialize our drugs, alone or with collaborators, will depend
      in
      part on the extent to which reimbursement will be available from:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">government
                and health administration
                authorities;</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">16</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">private
                health maintenance organizations and health insurers;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">other
                healthcare payers.</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Significant
      uncertainty exists as to the reimbursement status of newly approved healthcare
      products. Healthcare payers, including Medicare, are challenging the prices
      charged for medical products and services. Government and other healthcare
      payers increasingly attempt to contain healthcare costs by limiting both
      coverage and the level of reimbursement for drugs. Even if one of our product
      candidates is approved by the FDA, insurance coverage may not be available,
      and
      reimbursement levels may be inadequate, to cover such drug. If government and
      other healthcare payers do not provide adequate coverage and reimbursement
      levels for one of our products, once approved, market acceptance of such product
      could be reduced.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      may not successfully manage our growth</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Our
      success will depend upon the expansion of our operations and the effective
      management of our growth, which will place a significant strain on our
      management and on our administrative, operational and financial resources.
      To
      manage this growth, we must expand our facilities, augment our operational,
      financial and management systems and hire and train additional qualified
      personnel. If we are unable to manage our growth effectively, our business
      would
      be harmed.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      may be exposed to liability claims associated with the use of hazardous
      materials and chemicals</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Our
      research and development activities may involve the controlled use of hazardous
      materials and chemicals. Although we believe that our safety procedures for
      using, storing, handling and disposing of these materials comply with federal,
      state and local laws and regulations, we cannot completely eliminate the risk
      of
      accidental injury or contamination from these materials. In the event of such
      an
      accident, we could be held liable for any resulting damages and any liability
      could materially adversely affect our business, financial condition and results
      of operations. In addition, the federal, state and local laws and regulations
      governing the use, manufacture, storage, handling and disposal of hazardous
      or
      radioactive materials and waste products may require us to incur substantial
      compliance costs that could materially adversely affect our business, financial
      condition and results of operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      rely on key executive officers and scientific and medical advisors, and their
      knowledge of our business and technical expertise would be difficult to
      replace</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      We are
      highly dependent on our principal scientific, regulatory and medical advisors.
      We do not have &#8220;key person&#8221; life insurance policies for any of our officers. The
      loss of the technical knowledge and management and industry expertise of any
      of
      our key personnel could result in delays in product development, loss of
      customers and sales and diversion of management resources, which could adversely
      affect our operating results.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>If
      we are unable to hire additional qualified personnel, our ability to grow our
      business may be harmed</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      We will
      need to hire additional qualified personnel with expertise in pre-clinical
      testing, clinical research and testing, government regulation, formulation
      and
      manufacturing and sales and marketing. In particular, over the next 12 months,
      we expect to hire up to seven new employees devoted to research and development.
      We expect that the hiring of such additional personnel will increase our annual
      expenditures by approximately $1,040,000. We compete for qualified individuals
      with numerous biopharmaceutical companies, universities and other research
      institutions. Competition for such individuals is intense, and we cannot be
      certain that our search for such personnel will be successful. Attracting and
      retaining qualified personnel will be critical to our success.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>We
      may incur substantial liabilities and may be required to limit commercialization
      of our products in response to product liability
      lawsuits</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      The
      testing and marketing of medical products entail an inherent risk of product
      liability. If we cannot successfully defend ourselves against product liability
      claims, we may incur substantial liabilities or be required to limit
      commercialization of our products. Our inability to obtain sufficient product
      liability insurance at an acceptable cost to protect against potential product
      liability claims could prevent or inhibit the commercialization of
      pharmaceutical products we develop, alone or with collaborators. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">17</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Management&#8217;s
      Discussion and Analysis or Plan of Operation</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following discussion of the financial condition and results of operation of
      Cougar Biotechnology, Inc. should read in conjunction with the financial
      statements and the notes to those statements included in this 8-K. This
      discussion includes forward-looking statements that involve risk and
      uncertainties. As a result of many factors, such as those set forth under &#8220;Risk
      Factors,&#8221; actual results may differ materially from those anticipated in these
      forward-looking statements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Overview</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since
      the
      inception of Cougar Biotechnology, Inc. in May 2003, our efforts and resources
      have been focused primarily on acquiring and developing our pharmaceutical
      technologies, raising capital and recruiting personnel. We are a development
      stage company and have no product sales to date and we will not receive any
      product sales until we receive approval from the FDA or equivalent foreign
      regulatory bodies to begin selling our pharmaceutical candidates. Developing
      pharmaceutical products, however, is a lengthy and very expensive process.
      Assuming we do not encounter any unforeseen safety issues during the course
      of
      developing our product candidates, we do not expect to complete the development
      of a product candidate until approximately 2011. Currently, a large portion
      of
      the development expenses have related to our lead product candidate, CB-7630.
      As
      we proceed with the clinical development of CB-7630 and as we further develop
      CB-3304 and CB-1089, our second and third product candidates, respectively,
      our
      research and development expenses will further increase. To the extent we are
      successful in acquiring additional product candidates for our development
      pipeline, our need to finance further research and development will continue
      increasing. Accordingly, our success depends not only on the safety and efficacy
      of our product candidates, but also on our ability to finance the development
      of
      the products. Our major sources of working capital have been proceeds from
      various private financings, primarily private sales of our common stock and
      other equity securities. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      April
      3, 2006, SRKP Acquisition Corp., a Delaware corporation and a wholly owned
      subsidiary of SRKP 4, Inc., a Delaware corporation (&#8220;SRKP&#8221;), merged with and
      into Cougar (the &#8220;Merger&#8221;), with Cougar remaining as the surviving corporation
      and a wholly owned subsidiary of SRKP 4, Inc. Cougar stockholders received,
      in
      exchange for all of the outstanding shares of capital stock in Cougar, shares
      of
      capital stock of SRKP representing 100% of the outstanding capital stock of
      SRKP, on a fully-diluted basis, after giving effect to the Merger and a
      redemption, contemporaneous with the closing of the Merger, of all shares of
      SRKP capital stock held by SRKP&#8217;s former stockholders immediately prior to the
      Merger. In addition, at the time of effectiveness of the Merger, the board
      of
      directors of SRKP was reconstituted, such that the directors of SRKP immediately
      prior to the Merger resigned and were replaced by the directors of Cougar
      immediately prior to the Merger. Further, upon the effective time of the Merger,
      the business of SRKP was abandoned and the business plan of Cougar was adopted.
      The transaction was therefore accounted for as a reverse acquisition with Cougar
      as the acquiring party and SRKP as the acquired party. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      April
      6, 2006, our Board of Directors approved a merger of Cougar into the Company
      and
      changing our name to &#8220;Cougar Biotechnology, Inc.&#8221;&#160; This merger was effected
      on April 6, 2006 upon the filing of a Certificate of Ownership with the
      Secretary of State of Delaware.&#160; Accordingly, when we refer to our business
      and financial information relating to periods prior to the Merger, we are
      referring to the business and financial information of Cougar, unless otherwise
      indicated. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Research
      and development expenses consist primarily of salaries and related personnel
      costs, fees paid to consultants and outside service providers for regulatory
      and
      quality assurance support, licensing of drug compounds, and other expenses
      relating to the manufacture, development, testing and enhancement of our product
      candidates. We expense our research and development costs as they are
      incurred.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">18</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">General
      and administrative expenses consist primarily of salaries and related expense
      for executive, finance and other administrative personnel, professional fees,
      business insurance, rent, general legal activities, and other corporate
      expenses.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      results include non-cash compensation expense as a result of the issuance of
      stock and stock option grants. Compensation expense for options granted to
      employees and directors (excluding directors who are also scientific advisory
      board member or consultants) represents the difference between the fair value
      of
      our common stock and the exercise price of the options at the date of grant.
      We
      account for stock-based employee compensation arrangements in accordance with
      the provisions of Accounting Principles Board Opinion No. 25, &#8220;Accounting for
      Stock Issued to Employees&#8221; and comply with the disclosure provisions of
      Statement of Financial Accounting Standards No. 123, &#8220;Accounting for Stock-Based
      Compensation.&#8221; Compensation for options granted to consultants has been
      determined in accordance with SFAS No. 123 as the fair value of the equity
      instruments issued. The expense is included in the respective categories of
      expense in the statement of operations. We expect to record additional non-cash
      compensation expense in the future, which may be significant.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Results
      of Operations</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Years
      Ended December 31, 2005 and 2004</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>General
      and administrative expenses</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">:
      For the
      year ended December 31, 2005, general and administrative expense was $1,266,620
      compared to $2,162,018 for the year ended December 31, 2004. This decrease
      of
      $895,398 is attributable to a decrease in licensing fees of $923,100, a
      reduction in&#160;payroll costs, including bonus,&#160;of $75,000 and a
      reduction in recruiting fees of approximately $42,000. The reduction in bonus
      expense resulted from one licensing agreement signed in 2005 compared to two
      agreements signed in 2004. The reduction in recruiting fees resulted from not
      hiring additional staff in 2005. We recorded a full year of directors and
      officers insurance and added general liability and clinical liability insurance
      in 2005, compared to only two months of directors and officers insurance in
      2004, resulting in additional expenses of approximately $55,800. In late 2004
      we
      increased the amount of office space rented as additional employees were hired,
      resulting in an increase in rent expense of approximately $25,800. In 2005
      we
      incurred expenses of approximately $60,000 relating to a potential merger
      compared to $0 expense for that purpose in 2004.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Research
      and development expenses</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">:
      For the
      year ended December 31, 2005, research and development expense was $6,256,700
      compared to $1,018,171 for the year ended December 31, 2004, representing an
      increase of $5,238,529. For the year ended December 31, 2005, we incurred
      professional contract services associated with the development of our three
      lead
      compounds of approximately $4,404,450 compared to approximately $452,300 in
      2004. Licensing fees of approximately $539,500 were incurred in 2005 resulting
      from the licensing of one compound ($250,000) and the payment of a license
      maintenance fee ($289,500). For year ended December 31, 2005, we recorded
      approximately $445,150 of stock-based compensation for consultants compared
      to
      approximately $14,700 in 2004. Payroll cost for the year ended December 31,
      2005
      increased approximately $259,600 resulting from a full year of payroll related
      expenses compared only 1.5 months of payroll related expenses in 2004. Also,
      in
      2005 we forgave $48,000 of an employee advance made in 2004. Bonus expense
      for
      the year ended December 31, 2005 increased approximately $116,300 due to only
      recording 1.5 months of bonus expense in 2004. Scientific Advisory Board fees
      increased approximately $31,800 for the year ended December 31, 2005. Partially
      off-setting these increases was a reduction in recruiting fees of approximately
      $143,200 as no additional staff was hired in 2005.</font></div>
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    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">19</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Interest
      expense</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">:
      For the
      year ended December 31, 2005 interest expense was approximately $299,300 as
      compared to $0 for the year ended December 31, 2004. During 2005 we sold
      promissory notes with warrants, convertible notes with warrants and secured
      a
      revolving credit facility. The interest expense includes a non-cash charge
      for
      amortization of note discounts of approximately $130,100, a non-cash charge
      for
      amortization of debt and note issuance cost of approximately $89,600 and accrued
      interest on the notes of approximately $51,400, interest charged by vendors
      of
      approximately $18,100 and interest on the credit facility of approximately
      $10,100.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Liquidity
      and Capital resources</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">From
      inception to December 31, 2005, we have incurred an aggregate net loss of
      $11,349,849, primarily as a result of expenses incurred through a combination
      of
      research and development activities related to the various technologies under
      our control and expenses supporting those activities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      financed our operations since inception primarily through equity and debt
      financing. During the year ended December 31, 2005, we experienced a decrease
      in
      cash and cash equivalents of $797,730. This decrease primarily resulted from
      net
      cash used on operating activities of $5,577,227 and net cash used in the
      purchase of fixed assets being partially offset by net proceeds of $4,784,162
      from debt and note financing. Total cash resources as of December 31, 2005
      were
      $1,040,864 compared to $1,838,594 at December 31, 2004.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      continued operations will depend on whether we are able to raise additional
      funds through various potential sources, such as equity and debt financing.
      Through December 31, 2005, a significant portion of our financing has been
      through private placements of common stock and debt financing. We will continue
      to fund operations from cash on hand and through the similar sources of capital
      previously described. We can give no assurances that any additional capital
      that
      we are able to obtain will be sufficient to meet our needs. Based on our
      resources at April 4, 2006, we believe that we have sufficient capital to fund
      our operations through December 2007, but will need additional financing
      thereafter until we can achieve profitability, if ever. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Financings</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      July
      15, 2005, we entered into a credit facility with a commercial bank that allows
      for borrowing under a line of credit of up to $1,000,000. The credit facility
      is
      guaranteed by a stockholder and member of our Board of Directors. In return
      for
      such guaranty, we granted the stockholder warrants to purchase a number of
      shares of Cougar common stock based on amount of the credit facility used by
      the
      Company. Prior to terminating the credit facility in 2006, we utilized up to
      $600,000 of the credit facility, and issued the stockholder a five-year warrant
      to purchase 82,613 shares of Cougar common stock at an exercise price of $3.18
      per share in consideration of the guaranty.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June
      30, 2005, we issued unsecured promissory notes to six individuals, including
      a
      member of our Board of Directors, in the aggregate amount of $1,000,000 in
      consideration for aggregate proceeds to the Company of $1,000,000. In addition
      to the promissory notes, we issued the six individuals five-year warrants to
      purchase an aggregate of 137,689 shares of Cougar common stock at an exercise
      price of $3.18 per share.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      two
      closings on November 23, 2005 and January 24, 2006, Cougar sold an aggregate
      of
      $6,145,120 in aggregate principal amount of senior convertible notes (the
&#8220;Bridge Notes&#8221;) to certain institutional and individual accredited investors in
      a private placement transaction (the &#8220;Bridge Offering&#8221;). Additionally, Cougar
      issued warrants to purchase an aggregate of 193,243 shares of Cougar Common
      Stock at an exercise price per share of $3.18 to our placement agents, and
      paid
      commissions and other offering-related expenses aggregating approximately
      $326,000. The principal balance of $6,145,120, together with accrued and unpaid
      interest of approximately $89,000 thereon, was automatically converted into
      Units of Cougar securities on April 3, 2006 at a price per share of $1.73,
      pursuant to the terms of the&#160;Private Placement described
      below.&#160;Accordingly, the holders of the Bridge Notes received an aggregate
      of 360,356 shares of Cougar Common Stock and 3,243,217 shares of Cougar
      Preferred Stock upon conversion. The holders of the Bridge Securities are
      entitled to piggy-back registration rights with respect to the shares of Cougar
      Common Stock issued or issuable upon conversion of such securities.</font></div>
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    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">20</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
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        <div id="GLHDR" style="WIDTH: 100%" align="right">
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Contemporaneously
      with the closing of the Merger, we completed a private placement offering
      whereby we raised gross proceeds of approximately $39,650,000 through the sale
      of 20,939,034 shares of Series A Convertible Preferred Stock and 2,326,561
      shares of Common Stock (the &#8220;Offering&#8221;). Additionally, on terms similar to that
      in the Offering, we sold 91,989 shares of Common Stock and 827,909 shares of
      Series A Preferred Stock in consideration of cash in the amount of approximately
      $600,000 and the cancellation of certain note obligations of the Company in
      the
      aggregate amount of&#160; approximately $990,000, including principal and
      interest. Each share of the Series A Convertible Preferred Stock will be
      convertible, in whole or in part, at the option of the holder at any into shares
      of our common stock initially on a one-for-one basis and at an initial
      conversion price of $4.50 per share (as adjusted for the Merger). At our
      election, we may require each holder to convert its outstanding shares of the
      Series A Convertible Preferred Stock into shares of our common stock if the
      price per share of common stock trades at or above 200% of the Purchase price
      for a period of twenty consecutive trading days on any securities exchange,
      automated quotation system or any other over-the-counter market.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Current
      and Future Financing Needs</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      incurred negative cash flow from operations since we started our business.
      We
      have spent, and expect to continue to spend, substantial amounts in connection
      with implementing our business strategy, including our planned product
      development efforts, our clinical trials, and our research and discovery
      efforts. Given the current and desired pace of clinical development of our
      three
      product candidates, over the next 12 months we estimate that that our research
      and development expenses will be approximately $12.8 million. We will need
      approximately $2.7 million for general administrative expenses for
      2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">However,
      the actual amount of funds we will need to operate is subject to many factors,
      some of which are beyond our control. These factors include the
      following:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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          <tr valign="top" style="line-height: 1.25;">
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            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                progress of our research
                activities;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                number and scope of our research
                programs;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                progress of our pre-clinical and clinical development
                activities;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                progress of the development efforts of parties with whom we have
                entered
                into research and development
                agreements;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
                ability to maintain current research and development programs and
                to
                establish new research and development and licensing
                arrangements;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                cost involved in prosecuting and enforcing patent claims and other
                intellectual property rights; and</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">21</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                cost and timing of regulatory
                approvals.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      based our estimate on assumptions that may prove to be wrong. We may need to
      obtain additional funds sooner then planned or in greater amounts than we
      currently anticipate. Potential sources of financing include strategic
      relationships, public or private sales of equity or debt and other sources.
      We
      may seek to access the public or private equity markets when conditions are
      favorable due to our long-term capital requirements. We do not have any
      committed sources of financing at this time, and it is uncertain whether
      additional funding will be available when we need it on terms that will be
      acceptable to us, or at all. If we raise funds by selling additional shares
      of
      common stock or other securities convertible into common stock, the ownership
      interest of our existing stockholders will be diluted. If we are not able to
      obtain financing when needed, we may be unable to carry out our business plan.
      As a result, we may have to significantly limit our operations and our business,
      financial condition and results of operations would be materially
      harmed.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Plan
      of Operation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      plan
      of operation for the year ending December 31, 2006 is to continue implementing
      our business strategy, including the clinical development of our three product
      candidates. We also intend to expand our drug candidate portfolio by acquiring
      additional drug technologies for development. We expect our principal
      expenditures during the next 12 months to include:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Operating
                expenses, including expanded research and development and general
                and
                administrative expenses; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">product
                development expenses, including the costs incurred with respect to
                applications to conduct clinical trials in the United States for
                our three
                products.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      part
      of our planned expansion, we anticipate hiring up to 7 additional full-time
      employees devoted to research and development activities and up to 3 additional
      full-time employees for general and administrative activities. In addition,
      we
      intend to use clinical research organizations and third parties to perform
      our
      clinical studies and manufacturing. As indicated above, at our current and
      desired pace of clinical development of our three product candidates, during
      2006 we expect to spend approximately $12.8 million on clinical development
      and
      research and development activities and expend approximately $2.5 million on
      general and administrative expenses and $242,000 on facilities
      rent.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Research
      and Development Projects</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CB-7630.
      In April 2004, we exclusively licensed the worldwide rights to CB-7630
      (abiraterone </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">acetate)
      from BTG plc. CB-7630 is an orally active targeted inhibitor of the steroidal
      enzyme 17&#945;-hydroxylase/C17,20 lyase, a cytochrome p450 complex that is involved
      in testosterone production. In preclinical studies, CB-7630 has demonstrated
      the
      ability </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">to
      selectively inhibit the target enzyme, reducing levels of testosterone
      production in both the adrenals and the testes that is believed to stimulate
      the
      growth of prostrate cancer cells. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      Phase
      I trials performed by the Centre for Cancer Therapeutics, Institute of Cancer
      Research (Sutton, United Kingdom), and Royal Marsden NHS Trust (Sutton, United
      Kingdom), CB-7630 was administered as a single agent to 26 patients with
      prostate cancer. We believe that the data from these clinical studies indicate
      that: 1) CB-7630, at an oral dose of 800mg, can successfully suppress
      testosterone levels to the castrate range; 2) CB-7630 can suppress testosterone
      produced by both the testes and the adrenals; and 3) CB-7630 is well tolerated
      with an acceptable toxicity profile. The results from these Phase I studies
      of
      CB-7630 were published in the British Journal of Cancer in June
      2004.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">22</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      December 2005, we initiated a Phase I/II trial of CB-7630 for the treatment
      of
      advanced prostate cancer. The Phase I/II trial is being conducted at The
      Institute of Cancer Research, in the Cancer Research UK Centre for Cancer
      Therapeutics, and at The Royal Marsden Hospital in the United Kingdom. The
      Phase
      I/II study is an open label, dose escalating study to evaluate the safety and
      efficacy of CB-7630 administered daily to patients with chemotherapy-na&#239;ve
      hormone refractory prostate cancer (HRPC) with a rising PSA (prostate specific
      antigen) despite hormonal therapy. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Through
      fiscal 2005, we have incurred approximately $5,962,700 of cost related to the
      development of CB-7630, of which $4,270,700 was incurred in fiscal 2005 and
      $1,692,000 was incurred in fiscal 2004. Currently, we anticipate that we will
      need to expend approximately an additional $4,900,000 to $5,400,000 in
      development costs in fiscal 2006 and at least an aggregate of approximately
      $50,000,000 to $75,000,000 until we receive FDA approval for CB-7630. Should
      we
      choose to continued development we expect that it will take an additional 6
      to 8
      years before we complete development and obtain FDA approval of CB-7630, if
      ever.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CB-3304.
      In March 2004, we exclusively licensed the worldwide rights to CB-3304
      (noscapine), an orally active alkaloid derived from opium. Preclinical studies
      have demonstrated that CB-3304 has anti-tumor activity and acts as an inhibitor
      of microtubule dynamics. Therefore, we believe that CB-3304 has potential
      applications in the treatment of a number of different tumor types where tubulin
      binding agents are known to have activity. These tumor types include, but are
      not limited to, non-Hodgkin&#8217;s lymphoma, multiple myeloma, breast cancer, lung
      cancer, ovarian cancer and prostate cancer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      December 2005, we announced positive interim data from an ongoing Phase I trial
      of CB-3304 in patients with relapsed or refractory non-Hodgkin&#8217;s lymphoma. The
      trial is an open label dose escalating study, being conducted at the University
      of Southern California Norris Comprehensive Cancer Center, where cohorts of
      patients with relapsed/refractory non-Hodgkin&#8217;s lymphoma (NHL) or chronic
      lymphocytic leukemia (CLL/SLL) were treated at one of three different dose
      levels involving total daily doses of 1 g, 2 g, and 3 g per day. At each dose
      level, noscapine was administered orally on a three times a day schedule for
      49
      days. In the trial, responses for NHL patients were evaluated using the
      International Working Group Response Criteria for NHL and responses for CLL
      patients were evaluated using the NCI Working Group criteria. For both NHL
      and
      CLL patients, toxicity was graded according to the NCI common toxicity criteria
      (CTC).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      this
      interim analysis, 12 patients with a median age of 65 years (range 38-71) have
      been accrued. Four subjects had CLL/SLL, 2 had mantle cell lymphoma, one had
      follicular grade III lymphoma, 4 had diffuse large cell lymphoma (DLC), and
      one
      had lymphoplasmacytic low grade lymphoma. These interim results
      suggest:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Of
                the 10 patients that are evaluable for response, one patient with
                follicular grade III disease has had a partial response. This patient
                initially demonstrated stabilization of their disease for a period
                of
                approximately four years before achieving a partial response. In
                addition,
                two patients, one with mantle cell lymphoma and one with DLC have
                demonstrated stable disease of duration 30 days and 77 days,
                respectively.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CB-3304
                has been well tolerated, with no grade 3 or 4 hematological toxicities.
                One grade 3 neurotoxicity consisting of depressed level of consciousness
                was experienced at the 3 gram dose
                level.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
                larger study of noscapine is warranted to evaluate the efficacy of
                the
                compound in patients with lymphoma.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">23</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      December 2005, we also announced results from preclinical experiments that
      we
      believe demonstrate the effectiveness of CB-3304 for the treatment of NHL and
      multiple myeloma and that warrant our continued development of the drug in
      hematological malignancies. The preclinical studies demonstrate that CB-3304
      exhibits potent antitumor activity against NHL and myeloma in vitro, as well
      as
      in vivo in xenograft models. More specifically, the in vitro studies
      demonstrated that following exposure to CB-3304, the OPM2 (multiple myeloma),
      H9
      (T cell lymphoma) and RL (B cell lymphoma) tumor cell lines exhibited an IC50
      of
      approximately 30 nM, 700 nM, and 500 nM for the OPM2, H9 and RL lines,
      respectively. Treatment with noscapine resulted in the induction of apoptosis
      in
      each of the cell lines tested. Additionally, in vivo studies demonstrated that
      in xenograft models, daily administration of noscapine resulted in tumor growth
      delays of between 30-80% of the control tumor volumes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Through
      fiscal 2005, we have incurred approximately $812,200 of cost related to the
      development of CB-3304, of which $526,700 was incurred in fiscal 2005 and
      $285,500 was incurred in fiscal 2004. Currently, we anticipate that we will
      need
      to expend approximately an additional $2,000,000 to $2,600,000 in development
      costs in fiscal 2006 and at least an aggregate of approximately $50,000,000
      to
      $75,000,000 until we receive FDA approval for CB-3304. Should we choose to
      continued development we expect that it will take an additional 6 to 8 years
      before we complete development and obtain FDA approval of CB-3304, if
      ever.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CB-1089.
      In June 2005, we exclusively licensed the worldwide rights to CB-1089
      (seocalcitol), a synthetic vitamin D analog. In prostate cancer, clinical
      studies of a metabolite of vitamin D (calcitriol) given in combination with
      chemotherapy suggested that patients that received the combination of calcitriol
      plus chemotherapy had an improvement in their survival over the patients that
      received chemotherapy plus placebo without an increase in the toxicity of the
      chemotherapy. Preclinical studies in prostate cancer have shown that CB-1089
      is
      a more potent anti-cancer drug than calcitriol, which may result in better
      efficacy when used in combination therapy to treat prostrate cancer as opposed
      to calcitriol. We anticipate beginning a Phase II clinical trial of CB-1089
      in
      prostate cancer in the second half of 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Through
      fiscal 2005, we have incurred approximately $375,000 of cost related to the
      development of CB-1089, of which $375,000 was incurred in fiscal 2005 and $0
      was
      incurred in fiscal 2004. Currently, we anticipate that we will need to expend
      approximately an additional $1,900,000 to $2,400,000 in development costs in
      fiscal 2006 and at least an aggregate of approximately $50,000,000 to
      $75,000,000 until we receive FDA approval for CB-1089. Should we choose to
      continued development we expect that it will take an additional 6 to 8 years
      before we complete development and obtain FDA approval of CB-1089, if
      ever.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>License
      Agreement Obligations</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CB-3304.
      On February 23, 2004, we entered into a license agreement (the &#8220;License
      Agreement&#8221;) with Emory University (&#8220;Emory&#8221;) for the worldwide, exclusive rights
      to discover, develop, have made, use, sell, have sold, offer for sale and import
      the products described in Emory&#8217;s intellectual property portfolio for noscapine
      and analogs of noscapine. The License Agreement terminates upon the date of
      the
      last to expire patent contained in the licensed technology. In consideration
      for
      the rights under the License Agreement, we paid Emory an initial license fee
      of
      $72,435 in 2004. We sponsored a research project involving the licensed
      technology in the amount of approximately&#160;$114,000 of which $28,688 and
      $85,312 were paid in 2005 and 2004, respectively. In connection with the license
      agreement, we has agreed to future milestone payments to Emory for the first
      technology from the intellectual property portfolio in the aggregate of up
      to
      $3,500,000, payable upon the achievement of certain clinical and regulatory
      milestones. Should a product incorporating the licensed technology be
      commercialized, we will be obligated to pay to Emory an annual royalty based
      on
      net sales of the product. In the event that we sublicense the licensed
      technology to a third party, we will be obligated to pay royalties to Emory
      based on a fixed rate of fees or royalties received from the
      sublicense.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">24</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CB-7630.
      Effective April 20, 2004, we entered into a license agreement with BTG
      International, LTD. (&#8220;BTG&#8221;) for the exclusive worldwide rights to make, use,
      lease and sell abiraterone acetate. The agreement terminates upon the date
      of
      the last to expire patent contained in the licensed technology. In consideration
      for the rights under the BTG license agreement, we paid BTG an initial license
      fee of &#163;500,000 (currently, approximately $923,100) in 2004 and agreed to pay
      BTG an annual license maintenance fee of &#163;150,000 ($288,000) until the first
      commercial sale of the licensed product. In addition, the license agreement
      requires we to make aggregate milestone payments of up to &#163;9,000,000
      ($16,614,000), payable upon the achievement of certain clinical and regulatory
      milestones. Should abiraterone acetate become commercialized, we will be
      obligated to pay to BTG an annual royalty based on net sales of the product.
      In
      the event that we sublicenses abiraterone acetate to a third party, we is
      obligated to pay royalties to BTG based on a fixed rate of fees or royalties
      received from the sublicense.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CB-1089.
      Effective June 27, 2005, we entered into a license agreement with LEO Pharma
      A/S
      (&#8220;LEO&#8221;) for the exclusive worldwide right to make, use, lease and sell
      seocalcitol. The agreement terminates upon the later of the date of the last
      patent contained in the licensed technology to expire or twenty years. In
      consideration for the rights under the LEO license agreement, we paid LEO an
      initial license fee of $250,000 in 2005. In addition, the license agreement
      requires we to make aggregate milestone payments of up to $13,000,000, payable
      upon the achievement of certain clinical and regulatory milestones. Should
      seocalcitol become commercialized, we will be obligated to pay to LEO an annual
      royalty based on net sales of the product. In the event that we sublicenses
      seocalcitol to a third party, we is obligated to pay royalties to LEO based
      on a
      fixed rate of fees or royalties received from the sublicense.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Critical
      Accounting Policies</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      December 2001, the SEC request that all registrants discuss their most &#8220;critical
      accounting policies&#8221; in management&#8217;s discussion and analysis of financial
      condition and results of operations. The SEC indicated that a &#8220;critical
      accounting policy&#8221; is one which is both important to the portrayal of the
      company&#8217;s financial condition and results and requires management&#8217;s most
      difficult, subjective or complex judgments, often as a result of the need to
      make estimates about the effect of matters that are inherently
      uncertain.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Use
      of
      estimates:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect reported amounts of assets and liabilities
      as of the date of the balance sheet and reported amounts of expenses for the
      periods presented. Accordingly, actual results could differ from those
      estimates.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Net
      loss
      per share:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Basic
      net
      loss per share is computed by dividing net loss by the weighted-average number
      of common shares outstanding during the periods presented as required by SFAS
      No. 128, &#8220;Earnings Per Share&#8221;. Diluted earnings per share have not been
      presented because the assumed exercise of the Company&#8217;s outstanding options and
      warrants would have been anti-dilutive. Potentially dilutive securities excluded
      from the calculations amounted to 2,435,069 shares at December 31, 2005,
      comprised of 1,655,000 options and 780,069 of warrants, and 1,655,000 options
      at
      December 31, 2004.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">25</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock-based
          compensation:</font></div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SFAS
      No.
      123, &#8220;Accounting for Stock-Based Compensation&#8221; (&#8220;SFAS 123&#8221;), provides for the
      use of a fair value-based method of accounting for stock-based compensation.
      However, SFAS 123 allows an entity to continue to measure compensation cost
      for
      stock options granted to employees using the intrinsic value method of
      accounting prescribed by Accounting Principles Board Opinion No. 25 &#8220;Accounting
      for Stock Issued to Employees&#8221; (&#8220;APB 25&#8221;). The Company accounts for its employee
      and director stock options (except options issued to directors who are also
      scientific advisory board members or consultants) using the intrinsic value
      method in accordance with APB 25 and related interpretations. The Company
      measures compensation expense for employee and director stock options as the
      aggregate excess of the market value of its common stock over the exercise
      prices of the options on the date that both the number of shares the grantee
      is
      entitled to receive and the exercise prices are known. Such excess is amortized
      over the vesting period.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      accordance with the provisions of SFAS 123 and Emerging Issues Task Force
      (&#8220;EITF&#8221;) No. 96-18, &#8220;Accounting for Equity Instruments That are Issued to Other
      Than Employees for Acquiring or in Conjunction with Selling, Goods or Services,&#8221;
all other issuances of common stock, stock options or other equity instruments
      to non-employees (including consultants and all members of the Scientific
      Advisory Board) as the consideration for goods or services received by the
      Company are accounted for based on the fair value of the equity instruments
      issued (unless the fair value of the consideration received can be more reliably
      measured). Any options issued to non-employees are recorded in expense and
      additional paid-in capital in stockholders&#8217; equity (deficiency) over the
      applicable service periods using variable accounting through the vesting date
      based on the fair value of the options at the end of each period. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Debt
      and
      note issuance costs and debt discounts:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Debt
      and
      note issuance costs related to obtaining the line of credit and the issuance
      of
      notes and debt discounts attributable to the value of warrants issued with
      the
      notes are being amortized to interest expense over the terms of the related
      debt
      instruments on a straight-line basis, which approximates the effective interest
      method.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Warrants
        issued with debt instruments:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
        warrant and debt issuances in June 2005, the Company accounted for the value
        of
        warrants arising from the issuance of debt instruments pursuant to Accounting
        Principles Board Opinion No. 14, &#8220;Accounting for Convertible Debt and Debt
        Issued with Stock Purchase Warrants,&#8221; by allocating the proceeds from issuance
        to the debt instruments and the warrants based on their relative fair values.
        The fair value of the warrants is allocated to additional paid-in capital
        and to
        debt or note discount, which is amortized to interest expense over the term
        of
        the instrument on a straight-line basis, which approximates the effective
        interest method.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
        November 2005, the Company issued convertible notes payable and warrants.
        Since
        the conversion of the Company&#8217;s convertible notes payable could result in a
        conversion into an indeterminable number of common shares, the Company
        determined that under the guidance in EITF Issue No. 00-19 (&#8220;EITF 00-19&#8221;)
&#8220;Accounting for Derivative Financial Instruments Indexed to, and Potentially
        Settled in a Company&#8217;s Own Stock&#8221;, the Company was prohibited from concluding
        that the Company had sufficient authorized and unissued shares to net-share
        settle any warrants or options granted to non-employees. Therefore, on the
        date
        convertible notes were issued, the Company reclassified the related fair
        value
        of all warrants and options issued to non-employees that were outstanding
        from
        additional paid-in capital to current liabilities. Additionally, the Company
        retroactively revalued warrants issued in June 2005 to fair value in accordance
        with EITF 00-19. The fair value of all warrants is based on the Black-Scholes
        option pricing model and is marked to market at the end of each reporting
        period
        in which a change in fair value occurs. Changes in the fair value of warrants
        are recorded as interest expense. As a result of the change in valuation
        methods
        for the warrants issued in June 2005, a $20,000 charge was recorded to interest
        expense during 2005. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
        warrants and convertible notes payable issued in November 2005, the Company
        accounted for the value of the warrants arising from the issuance of debt
        instruments pursuant to EITF 00-19, by allocating the proceeds first to the
        fair
        value of warrants, and then any residual amounts to the debt instruments.
        The
        fair value of the warrants is allocated to liabilities and to note discount.
        Upon conversion of the convertible notes to stock, warrants and options
        classified as current liabilities may be reclassified to additional paid-capital
        in the balance sheet.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        Company accounts for the intrinsic value of beneficial conversion rights
        arising
        from the issuance of convertible debt instruments with nondetachable conversion
        rights that are in-the money at the commitment date pursuant to the consensus
        of
        EITF Issue No. 98-5, &#8220;Accounting for Convertible Securities with Beneficial
        Conversion Features or Contingently Adjustable Conversion Ratios&#8221; and EITF Issue
        No. 00-27 (&#8220;EITF00-27&#8221;), &#8220;Application of Issue No. 98-5 to Certain Convertible
        Instruments.&#8221; Such values are determined by first allocating an appropriate
        portion of the proceeds received from the debt instruments to the warrants
        included in the exchange based on the fair values of the warrants and the
        debt
        instruments as explained above. The intrinsic value of the beneficial conversion
        rights at the commitment date may also be recorded as additional paid-in
        capital
        or liabilities and debt discount as of that date or, if the terms of the
        debt
        instrument are contingently adjustable, may only be recorded if a triggering
        event occurs and the contingency is resolved. </font></div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">26</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
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        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Security
        Ownership of Certain Beneficial Owners and Management</em></strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        following table summarizes certain information regarding the beneficial
        ownership (as such term is defined in Rule 13d-3 under the Securities Exchange
        Act of 1934 (the &#8220;Exchange Act&#8221;)) of the Company&#8217;s outstanding Common Stock as
        of April 3, 2006 (after the Merger) by (i) each person known by the Company
        to
        be the beneficial owner of more than 5% of the Company&#8217;s outstanding Common
        Stock, (ii) each director of the Company, (iii) each of the Company&#8217;s named
        executive officers (as defined in Item 402(a)(3) of Regulation S-B under
        the
        Securities Act of 1933), and (iv) all executive officers and directors as
        a
        group. Except as indicated in the footnotes below, the security and stockholders
        listed below possess sole voting and investment power with respect to their
        shares. Except as otherwise indicated, the address of the security and
        stockholders listed below is 10990 Wilshire Boulevard, Suite 1200, Los Angeles,
        California 90024. Pursuant to the Certificate of Designations for our Preferred
        Stock, the number of shares of Common Stock listed below as being beneficially
        owned by any holder only includes that number of shares of Preferred Stock,
        on
        an as converted basis, to the extent that, and only to the extent that, as
        a
        result of such conversion, the total number of shares of Common Stock that
        such
        holder would then be deemed to beneficially own pursuant to Section 13(d)
        of the
        Exchange Act would exceed 9.99% of the total number of then issued and
        outstanding shares of Common Stock, as determined in accordance with Section
        13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
        </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

            <tr>
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              <td width="2%">&#160;</td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
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                  of
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              </td>
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              <td align="left" valign="bottom" width="1%">&#160;</td>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<strong><font size="2">Percentage
                  of
                  Common</font></strong></div>
              </td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="71%">&#160;</td>
              <td width="2%">&#160;</td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<strong><font size="2">Stock
                  Beneficially</font></strong></div>
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              <td align="left" valign="bottom" width="2%">&#160;</td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td align="right" valign="bottom" width="11%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<strong><font size="2">Stock
                  Beneficially</font></strong></div>
              </td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
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            <tr>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name
                  of Beneficial Owner</strong></font></div>
              </td>
              <td width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<strong><font size="2">Owned
                  (#)
                  (1)</font></strong></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Owned
                  (%) (1)</strong></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="71%">&#160;</td>
              <td width="2%">&#160;</td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td align="right" valign="bottom" width="11%">&#160;</td>
              <td align="left" valign="bottom" width="2%">&#160;</td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
              <td align="right" valign="bottom" width="11%">&#160;</td>
              <td align="left" valign="bottom" width="1%">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Alan
                  H. Auerbach</font></div>
              </td>
              <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">684,100
                  (2</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">13.67</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
              </td>
            </tr>
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              <td align="left" valign="bottom" width="71%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Arie
                  Belldegrun</font></div>
              </td>
              <td width="2%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">590,745
                  (3</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">11.61</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
              </td>
            </tr>
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              <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Charles
                  R. Eyler</font></div>
              </td>
              <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">19,206
                  (4</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">*</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>
            <tr bgcolor="white">
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              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
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              <td width="2%" style="border-bottom: white;">&#160;</td>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">109,460
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2.33</font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
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            </tr>
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              <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
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              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">45,293
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              <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">)</font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.97</font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
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              <td align="left" valign="bottom" width="71%" style="border-bottom: white;">
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">460,250
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">9.99</font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
              </td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Adage
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              </td>
              <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">460,250
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">360,797(11</font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">7.32</font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4.06</font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">460,250
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">460,250
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
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            </tr>
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              <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
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                  Judicial Drive: Suite 200</font></div>
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              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">399,652
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              <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">8.05</font></div>
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            </tr>
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              <td align="left" valign="bottom" width="71%" style="border-bottom: white;">
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">460,250
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">460,250
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              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">9.99</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
              </td>
            </tr>
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              <td align="left" valign="bottom" width="71%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
                  executive officers and directors as a group (7 persons)</font></div>
              </td>
              <td width="2%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4,827,541</font></div>
              </td>
              <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">82.51</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
              </td>
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      <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*
        Less
        than 1%.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="left">
            </div>
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          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">27</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
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          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="right">
            </div>
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
        <div align="center">
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              <tr bgcolor="white">
                <td valign="top" width="4%"><font size="2">(1)</font></td>
                <td width="1%">&#160;</td>
                <td width="90%"><font size="2">Beneficial ownership is determined
                  in
                  accordance with SEC rules, and includes any shares as to which
                  the
                  security or stockholder has sole or shared voting power or investment
                  power, and also any shares which the security or stockholder has
                  the right
                  to acquire within 60 days of the date hereof, whether through the
                  exercise
                  or conversion of any stock option, convertible security, warrant
                  or other
                  right. The indication herein that shares are beneficially owned
                  is not an
                  admission on the part of the security or stockholder that he, she
                  or it is
                  a direct or indirect beneficial owner of those shares.</font></td>
              </tr>
              <tr bgcolor="white">
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                <td width="90%"><font size="2">Includes shares of Common Stock
                  issuable upon
                  exercise of options to purchase an aggregate of 396,017 shares
                  of Common
                  Stock that are currently exercisable or will become exercisable
                  within the
                  next 60 days. </font></td>
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                <td valign="top" width="4%"><font size="2">(3)</font></td>
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                <td width="90%"><font size="2">Includes shares of Common Stock
                  issuable upon
                  exercise of options to purchase an aggregate of 440,031 shares
                  of Common
                  Stock and warrants to purchase 35,699 shares of Common Stock that
                  are
                  currently exercisable or will become exercisable within the next
                  60 days.
                  Does not include 167,506 shares of Common Stock beneficially owned
                  by the
                  Belldegrun&#8217;s Children Trust, for which Dr. Belldegrun disclaims any
                  beneficial ownership interest, except to the extent of his pecuniary
                  interest therein.</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="4%"><font size="2">(4)</font></td>
                <td width="1%">&#160;</td>
                <td width="90%"><font size="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                  shares of Common Stock issuable upon exercise of options to purchase
                  an
                  aggregate of 19,206 shares of Common Stock that are currently exercisable
                  or will become exercisable within the next 60 days.</font></font></td>
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                <td valign="top" width="4%"><font size="2">(5)</font></td>
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                <td width="90%"><font size="2">Includes shares of Common Stock
                  issuable upon
                  exercise of options to purchase an aggregate of 38,411 shares of
                  Common
                  Stock that are currently exercisable or will become exercisable
                  within the
                  next 60 days. </font></td>
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                <td valign="top" width="4%"><font size="2">(6)</font></td>
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                <td width="90%"><font size="2">Includes shares of Common Stock
                  issuable upon
                  exercise of options to purchase an aggregate of 25,607 shares of
                  Common
                  Stock that are currently exercisable or will become exercisable
                  within the
                  next 60 days.</font></td>
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                <td valign="top" width="4%"><font size="2">(7)</font></td>
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                <td width="90%"><font size="2">Represents (i) 3,184,903 shares
                  held by
                  Horizon BioMedical Ventures, LLC, of which Dr. Rosenwald is the
                  managing
                  member and (ii) warrants to purchase an aggregate of 284,568 shares
                  of
                  Common Stock issued to Dr. Rosenwald. Does not include 133,217
                  shares of
                  Common Stock beneficially owned by a trust established for the
                  benefit of
                  Dr. Rosenwald&#8217;s family, for which Dr. Rosenwald disclaims any beneficial
                  ownership interest, except to the extent of his pecuniary interest
                  therein.</font></td>
              </tr>

          </table>
        </div>
        <div align="center">
          <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

              <tr bgcolor="white">
                <td valign="top" width="4%"><font size="2">(8)</font></td>
                <td width="1%">&#160;</td>
                <td width="90%"><font size="2">Address is 201 Main Street, Suite
                  3200, Fort
                  Worth, TX 76102. BBT Fund, L.P., CAP Fund, L.P. and SRI Fund, L.P.
                  may be
                  deemed to be a &#8220;group&#8221; for reporting purposes pursuant to Section 13(d) of
                  the Exchange Act. Sid R. Bass, in his capacity as President and
                  sole
                  stockholder of the ultimate general partner of each of BBT Fund,
                  L.P., CAP
                  Fund, L.P. and SRI Fund, L.P., may be deemed to share voting or
                  investment
                  control over the securities held by these entities. Messr. Bass
                  disclaims
                  beneficial ownership of these securities.</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="4%">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font size="2">(9)</font></div>
                </td>
                <td width="1%">&#160;</td>
                <td width="90%"><font size="2">Domenic Ferrante, as the sole managing
                  member
                  of Brookside Capital Management, LLC (&#8220;BCM&#8221;), BCM, as the sole general
                  partner of Brookside Capital Investors, L.P. (&#8220;BCI&#8221;), and BCI, as the sole
                  general partner of Brookside Capital Partners Fund, L.P., may each
                  be
                  deemed to share voting or investment control over the shares of
                  Common
                  Stock held by Brookside Capital Partners Fund, L.P.</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="4%"><font size="2">(10)</font></td>
                <td width="1%">&#160;</td>
                <td width="90%"><font size="2">Adage Capital Partners GP, LLC,
                  a Delaware
                  limited liability company, serves as the general partner of Adage
                  Capital
                  Partners, L.P. (&#8220;Fund&#8221;), and as such has discretion over the portfolio
                  securities beneficially owned by the Fund. Adage Capital Partners
                  GP, LLC
                  disclaims beneficial ownership of these securities except to the
                  extent of
                  its pecuniary interest therein.</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="4%"><font size="2">(11)</font></td>
                <td width="1%">&#160;</td>
                <td width="90%"><font size="2">Hambrecht &amp; Quist Capital Management, LLC
                  is the investment advisor to H&amp;Q Healthcare Investors and H&amp;Q Life
                  Sciences Investors. Daniel R. Omstead, Ph.D., is President of Hambrecht
                  &amp; Quist Capital Management, LLC and a member of the portfolio
                  management team and, as such, has voting, dispositive and investment
                  control over the securities held by H&amp;Q Healthcare Investors Fund and
                  H&amp;Q Life Sciences Fund. Dr. Omstead disclaims beneficial ownership
                  of
                  these securities.</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="4%"><font size="2">(12)</font></td>
                <td width="1%">&#160;</td>
                <td width="90%"><font size="2">Includes 21,203 shares of Common
                  Stock issued
                  to Janus Aspen Global Life Sciences Fund. Thomas Malley is the
                  portfolio
                  manager of Janus Global Life Sciences Fund and Janus Aspen Global
                  Life
                  Sciences Fund, and, as such, may be deemed to share voting or investment
                  control over the securities held by these funds. </font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="4%"><font size="2">(13)</font></td>
                <td width="1%">&#160;</td>
                <td width="90%"><font size="2">Dominique Semon, as the managing
                  member of
                  the general partner of Merlin Nexus II, L.P., may be deemed to
                  share
                  voting or investment control over these securities. Mr. Semon disclaims
                  beneficial ownership of these securities.</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="4%"><font size="2">(14)</font></td>
                <td width="1%">&#160;</td>
                <td width="90%"><font size="2">Mr. Peter Kolchinsky, as the managing
                  director of RA Capital Management, LLC, the general partner of
                  RA Capital
                  Biotech Fund, LP, has shared voting and dispositive power with
                  respect to
                  these securities.</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="4%"><font size="2">(15)</font></td>
                <td width="1%">&#160;</td>
                <td width="90%"><font size="2">Shehan Dissanayake is the Chief
                  Executive
                  Officer of Tavistock Life Sciences, and as such may be deemed to
                  share
                  voting or investment control over these securities.</font></td>
              </tr>
              <tr bgcolor="white">
                <td valign="top" width="4%"><font size="2">(16)</font></td>
                <td width="1%">&#160;</td>
                <td width="90%"><font size="2">T. Rowe Price Associates, Inc. (&#8220;T. Rowe
                  Price Associates&#8221;) serves as investment adviser with power to direct
                  </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">investments
                  and/or sole power to vote the shares owned by the funds listed
                  under its
                  name in the table above, as well as shares owned by certain other
                  individual and institutional investors. For purposes of the reporting
                  requirements of the Securities Exchange Act of 1934, T. Rowe Price
                  Associates may be deemed to be the beneficial owner of all of the
                  shares
                  listed above; however, T. Rowe Price Associates expressly disclaims
                  that
                  it is, in fact, the beneficial owner of such securities. T. Rowe
                  Price
                  Associates is a wholly owned subsidiary of T. Rowe Price Group,
                  Inc.,
                  which is a publicly traded financial services holding
                  company.</font></td>
              </tr>
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                <td valign="top" width="4%"><font size="2">(17)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></td>
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                <td width="90%"><font size="2">Represents securities held by Visium
                  Long
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                  Offshore Fund,&#160;LTD and Visium Balanced Fund, LP, for which Visium
                  Capital Management, LLC is the investment advisor (&#8220;Visium Capital&#8221;).
                  Messrs.&#160;Jacob Gottlieb and Dmitry Balyasny, principals of Visium
                  Capital have shared voting and dispositive power with respect to
                  the
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              </tr>

          </table>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Management
      </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      the
      effective time of the Merger, the Company&#8217;s board of directors was reconstituted
      by the appointment of Arie S. Belldegrun, M.D., Alan H. Auerbach, Lindsay A.
      Rosenwald, M.D., David Tanen and Harold J. Meyers as directors (all of whom
      were
      directors of Cougar immediately prior to and after the Merger), and the
      resignations of Richard A. Rappaport and Anthony C. Pintsopoulos from their
      roles as directors of the Company. The Company&#8217;s executive management team was
      also reconstituted and Richard A. Rappaport resigned from his position as the
      Company&#8217;s President and Anthony C. Pintsopoulos resigned from his positions as
      the Chief Financial Officer and Secretary. The following table sets forth the
      name and position of each of the Company&#8217;s directors and executive officers
      after the Merger.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="justify" valign="top" width="30%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name</strong></font></div>
            </td>
            <td width="8%">&#160;</td>
            <td valign="top" width="9%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Age</strong></font></div>
            </td>
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            <td align="justify" valign="top" width="45%" style="border-bottom: black thin solid;">
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            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="justify" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Arie
                S. Belldegrun, M.D, FACS</font></div>
            </td>
            <td width="8%">&#160;</td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">56</font></div>
            </td>
            <td width="8%">&#160;</td>
            <td align="justify" valign="top" width="45%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director
                and Chairman of Scientific Advisory Board</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="justify" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Alan
                H. Auerbach</font></div>
            </td>
            <td width="8%">&#160;</td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">36</font></div>
            </td>
            <td width="8%">&#160;</td>
            <td align="justify" valign="top" width="45%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director,
                Chief Executive Officer and President</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="justify" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gloria
                T. Lee, M.D., Ph.D.</font></div>
            </td>
            <td width="8%">&#160;</td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">55</font></div>
            </td>
            <td width="8%">&#160;</td>
            <td align="justify" valign="top" width="45%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Vice
                President, Clinical Research and Development</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="justify" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Charles
                R. Eyler</font></div>
            </td>
            <td width="8%">&#160;</td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">58</font></div>
            </td>
            <td width="8%">&#160;</td>
            <td align="justify" valign="top" width="45%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Vice
                President, Finance, and Treasurer</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="justify" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lindsay
                A. Rosenwald, M.D.</font></div>
            </td>
            <td width="8%">&#160;</td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">50</font></div>
            </td>
            <td width="8%">&#160;</td>
            <td align="justify" valign="top" width="45%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="justify" valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">David
                M. Tanen</font></div>
            </td>
            <td width="8%">&#160;</td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">34</font></div>
            </td>
            <td width="8%">&#160;</td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director
                </font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Harold
                J. Meyers</font></div>
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            <td width="8%">&#160;</td>
            <td valign="top" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">73</font></div>
            </td>
            <td width="8%">&#160;</td>
            <td align="justify" valign="top" width="45%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">28</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Arie
      S. Belldegrun, M.D.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Dr.
      Belldegrun joined Cougar in December 2003 as Vice Chairman of the Board of
      Directors and Chairman of the Scientific Advisory Board. Dr. Belldegrun is
      Chief
      of the Division of Urologic Oncology and holds the Roy and Carol Doumani Chair
      in Urologic Oncology at the David Geffen School of Medicine at the University
      of
      California, Los Angeles (UCLA). He is also the Founder of Agensys, Inc., a
      privately held biotechnology company focused on the development of fully human
      monoclonal antibodies to treat solid tumor cancers based on Agensys&#8217; proprietary
      targets. Dr. Belldegrun served as founding Chairman of Agensys from 1997-2002
      and currently serves on Agensys&#8217; Board of Directors and as a consultant. Dr.
      Belldegrun completed his M.D. at the Hebrew University Hadassah Medical School
      in Jerusalem, his post graduate fellowship at the Weizmann Institute of Science
      and his residency in Urological Oncology at Harvard Medical School. Prior to
      UCLA, Dr. Belldegrun was at the National Cancer Institute/NIH as a research
      fellow in surgical oncology under Steven A. Rosenberg, M.D., Ph.D. He is
      certified by the American Board of Urology and is a Fellow of the American
      College of Surgeons. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Alan
      H. Auerbach.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Mr.
      Auerbach joined Cougar in May 2003 as Chief Executive Officer, President and
      a
      director. From June 1998 to April 2003, Mr. Auerbach was Vice President, Senior
      Research Analyst at Wells Fargo Securities where he was responsible for research
      coverage of small and middle capitalization biotechnology companies, with a
      focus on companies in the field of oncology. He had primary responsibility
      for
      technical, scientific and clinical due diligence as well as selection of
      biotechnology companies followed by Wells Fargo Securities. During 2002, Mr.
      Auerbach ranked second in the NASDAQ/Starmine survey of analyst performance
      for
      stock picking in biotechnology. From August 1997 to May 1998, Mr. Auerbach
      was
      Vice President, Research Analyst at the Seidler Companies, Inc., where he was
      responsible for research coverage of small capitalization biotechnology
      companies. Prior to his work as a biotechnology analyst, Mr. Auerbach worked
      for
      Diagnostic Products Corporation, where he designed and implemented clinical
      trials in the field of oncology. Mr. Auerbach received his B.S. in biomedical
      engineering from Boston University and his M.S. in biomedical engineering from
      the University of Southern California.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Gloria
      Lee, M.D, Ph.D.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Dr. Lee
      joined Cougar in November 2004 as Vice President of Clinical Research and
      Development. Prior to Cougar, Dr. Lee was Senior Director, Clinical
      Development-Oncology at Chiron Corporation since August 2003. Prior to Chiron,
      Dr. Lee was Senior Therapeutic Expert in Oncology at Hoffman La Roche from
      July
      1999 to August 2003. Dr. Lee also served in a variety of clinical development
      positions at Rhone Poulenc Rorer (now Aventis) from 1994 through 1999, including
      the position of Associate Director of Medical Affairs, where Dr. Lee was
      responsible for the clinical development of the anticancer drug Taxotere in
      breast cancer. Dr. Lee is a board certified medical oncologist and holds an
      M.D.
      from The University of Miami School of Medicine and a Ph.D. in molecular biology
      from Columbia University. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Charles
      R. Eyler.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Mr.
      Eyler joined Cougar in September 2004 as Vice President of Finance and became
      the Treasurer of the Company in April 2006. Prior to joining Cougar, Mr. Eyler
      served as Chief Financial Officer and Chief Operating Officer of Hayes Medical
      Inc. from March 1999 to January 2004. Prior to Hayes Medical, Mr. Eyler held
      several financial positions including Director of Finance and Administration
      at
      Alphatec Manufacturing, Inc., Division Controller at JBL Scientific, Inc.,
      Division Controller at Surgitek, Inc. and Financial Systems Director at Zimmer,
      Inc. Mr. Eyler received his B.S. from Drexel University and his M.B.A. from
      Saint Francis College.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">29</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Lindsay
      A. Rosenwald, M.D.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Dr.
      Rosenwald has been a director of Cougar since May 2003. Dr. Rosenwald has served
      as Chairman of Paramount BioCapital, Inc. since 1992, and Chairman of Paramount
      Capital Investments LLC, a merchant and investment bank, since 1995, and
      Chairman of Paramount Capital Asset Management, Inc. since 1994. Dr. Rosenwald
      also serves as a member of the Board of Directors of Keryx Biopharmaceuticals
      (NASDAQ: KERX). Dr. Rosenwald received his M.D. from Temple University School
      of
      Medicine and his B.S. in Finance from Pennsylvania State
      University.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>David
      M. Tanen.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Mr.
      Tanen has been a director of Cougar since its inception. Additionally, Mr.
      Tanen
      served as the Secretary of Cougar from its inception until April 3, 2006. Since
      September 2004, he has been a partner in Two River Group Holdings, LLC, a New
      York based venture capital group focused on creating new companies to in-license
      and develop novel technologies. From 1996 until September 2004, Mr. Tanen served
      as an associate director of Paramount Capital, Inc., where he has helped found
      other biotechnology companies. Mr. Tanen also serves as an officer and/or
      director of several other privately held development-stage biotechnology
      companies. Mr. Tanen received his B.A. degree from George Washington University,
      and his J.D. degree from Fordham University School of Law.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Harold
      J. Meyers.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Mr.
      Myers has been a director of since July 2003. Mr. Meyers&#8217; career encompasses
      over 45 years of professional experience in various aspects of the financial
      services industry, including being the founder of Los Angeles based H.J. Meyers
      and Company from 1982-1994, serving as Managing Director of Wells Fargo
      Investments (formerly Van Kasper &amp; Company) from 1995-2003 and serving in
      his current position as Senior Vice President of A.G. Edwards &amp; Sons, Inc.,
      since July 2003. Mr. Meyers holds a B.S. from the University of
      Denver.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Audit
      Committee</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has not yet formed an audit committee of the board of directors.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Executive
      Compensation</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Summary
      Compensation Table</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth the cash and non-cash compensation for awarded to
      or
      earned by (i) each individual serving as chief executive officer of Cougar
      since
      its inception in May 2003; and (ii) each other individual that served as an
      executive officer of Cougar at the conclusion of the fiscal year ended December
      31, 2005 and who received in excess of $100,000 in the form of salary and bonus
      during such fiscal year (collectively, the &#8220;named executives&#8221;).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="left">
      <table border="0" cellpadding="0" cellspacing="0" width="100%">

          <tr bgcolor="white">
            <td align="left" valign="top" width="22%">&#160;</td>
            <td width="1%">&#160;</td>
            <td colspan="3" valign="top" width="32%">&#160;</td>
            <td width="1%">&#160;</td>
            <td valign="top" width="24%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><strong><font size="2">Long-Term&#160;</font></strong>&#160;</div>
            </td>
            <td width="1%">&#160;</td>
            <td valign="top" width="19%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="22%">&#160;</td>
            <td width="1%">&#160;</td>
            <td colspan="3" valign="top" width="32%">&#160;</td>
            <td width="1%">&#160;</td>
            <td valign="top" width="24%">
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            </td>
            <td width="1%">&#160;</td>
            <td valign="top" width="19%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="22%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td colspan="3" valign="top" width="32%" style="border-bottom: black thin solid;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Annual
                Compensation</strong></font></div>
            </td>
            <td width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td valign="top" width="24%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Awards</strong></font>&#160;</div>
            </td>
            <td width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td valign="top" width="19%" style="border-bottom: #ffffff solid;">
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="22%">&#160;</td>
            <td width="1%">&#160;</td>
            <td valign="top" width="8%">&#160;</td>
            <td valign="top" width="12%">&#160;</td>
            <td valign="top" width="12%">&#160;</td>
            <td width="1%">&#160;</td>
            <td valign="top" width="24%">
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            <td width="1%">&#160;</td>
            <td valign="top" width="19%">
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                Other&#160;</font></strong>&#160;&#160;</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="22%">&#160;</td>
            <td width="1%">&#160;</td>
            <td valign="top" width="8%">&#160;</td>
            <td valign="top" width="12%">&#160;</td>
            <td valign="top" width="12%">&#160;</td>
            <td width="1%">&#160;</td>
            <td valign="top" width="24%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><strong><font size="2">Underlying</font></strong>&#160;</div>
            </td>
            <td width="1%">&#160;</td>
            <td valign="top" width="19%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><strong><font size="2">Compensation&#160;</font></strong>&#160;</div>
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          </tr>
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            <td align="left" valign="top" width="22%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name
                and Principal Position</strong></font></div>
            </td>
            <td width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td valign="top" width="8%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Year</strong></font>&#160;</div>
            </td>
            <td valign="top" width="12%" style="border-bottom: black thin solid;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Salary</strong></font></div>
            </td>
            <td valign="top" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Bonus
                ($)</strong></font>&#160;</div>
            </td>
            <td width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td valign="top" width="24%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Options
                (#)</strong></font>&#160;</div>
            </td>
            <td width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td valign="top" width="19%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>($)</strong></font>&#160;</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Alan
                H. Auerbach </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(1)</sup></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Executive Officer and </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">President</font></div>
            </td>
            <td width="1%">&#160;</td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2005</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2003</font></div>
            </td>
            <td valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$200,000</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$200,000</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$125,000</font></div>
            </td>
            <td valign="top" width="12%">
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            <td width="1%">&#160;</td>
            <td valign="top" width="24%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-0-</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-0-</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">750,000</font></div>
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            <td width="1%">&#160;</td>
            <td valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-0-</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-0-</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$131,625</font></div>
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            <td align="left" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gloria
                T. Y. Lee, M.D. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(2)</sup></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Vice
                President, Clinical </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Research
                and Development</font></div>
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            <td width="1%">&#160;</td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2005</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004</font></div>
            </td>
            <td valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$310,000</font></div>
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            <td valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-0-</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$37,500</font></div>
            </td>
            <td width="1%">&#160;</td>
            <td valign="top" width="24%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-0-</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">200,000</font></div>
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            <td width="1%">&#160;</td>
            <td valign="top" width="19%">
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$18,832</font></div>
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            <td align="left" valign="top" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Charles
                R. Eyler </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(3)</sup></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Vice
                President, Finance</font></div>
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                Treasurer</font></div>
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            <td width="1%">&#160;</td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2005</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004</font></div>
            </td>
            <td valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$140,000</font></div>
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            </td>
            <td valign="top" width="12%">
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            <td width="1%">&#160;</td>
            <td valign="top" width="24%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-0-</font></div>
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            <td width="1%">&#160;</td>
            <td valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-0-</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$14,300</font></div>
            </td>
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    <div align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">30</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div align="left">&#160;</div>
    <div align="left">
      <div align="center">
        <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

            <tr bgcolor="white">
              <td valign="top" width="4%"><font size="2">(1)</font></td>
              <td width="1%">&#160;</td>
              <td width="90%"><font size="2">Mr. Auerbach became the Chief Executive
                Officer and President of the Company effective as of the Merger.
                In 2004,
                Mr. Auerbach was paid a bonus in the aggregate amount of $300,000,
                which
                was comprised of a discretionary bonus of $150,000 and an additional
                $150,000 in connection with the in-licensing of certain of Cougar&#8217;s
                product candidates during such year. In February 2006, the Board
                of
                Directors of Cougar declared a bonus of $225,000 payable to Mr. Auerbach
                in consideration of services in fiscal year 2005, but the payment
                of such
                bonus did not take place until April 2006. </font></td>
            </tr>
            <tr bgcolor="white">
              <td valign="top" width="4%">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font size="2">(2)</font></div>
              </td>
              <td width="1%">&#160;</td>
              <td width="90%"><font size="2">Dr. Lee became the Vice President,
                Clinical
                Research and Development effective as of the Merger. Dr. Lee received
                a
                one-time bonus of $37,500 on execution of her employment agreement
                with
                Cougar in November 2004. Additionally, Dr. Lee received an advance
                payment
                of $96,000 upon execution of her employment agreement, but Dr. Lee
                is
                obligated to pay back 50% of this amount in the event her employment
                is
                terminated prior to her second anniversary with the Company. Dr.
                Lee
                received a moving reimbursement of $18,832<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">from
                Cougar upon execution of her employment agreement as reimbursement
                for
                expenses incurred in relocating to commence employment with
                Cougar.</font></font></td>
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            <tr bgcolor="white">
              <td valign="top" width="4%"><font size="2">(3)</font></td>
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              <td width="90%"><font size="2">Mr. Eyler became the Vice President,
                Finance,
                of the Company effective as of the Merger, and additionally was named
                Treasurer of the Company on such date. Mr. Eyler received a moving
                reimbursement of $14,300 from Cougar upon execution of his employment
                agreement as reimbursement for expenses incurred in relocating to
                commence
                employment with Cougar.</font></td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Executive
      Compensation under the 2003 Stock Option Plan</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Upon
      the
      Merger, the Company assumed Cougar&#8217;s 2003 Stock Option Plan as the Company&#8217;s
      Stock Option Plan. Since July 2003, Cougar has issued 2,9627,000 stock options
      under the 2003 Stock Option Plan, of which 1,706,000 have been issued to the
      named executives through March 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No
      options to purchase shares of the Company's Common Stock were granted by the
      Company during the fiscal year ended December 31, 2005. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Aggregated
      Option Exercises in Last Fiscal Year and Fiscal Year End Option
      Values</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No
      options to purchase shares of the Company's Common Stock were exercised by
      any
      of the named executive officers during the fiscal year ended December 31, 2005.
      As of December 31, 2005, the following options were held by Cougar named
      executive officers: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

          <tr>
            <td align="left" valign="bottom" width="25%">&#160;</td>
            <td width="1%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" colspan="4" valign="bottom" width="42%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Number
                of Unexercised </strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="28%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Value
                of Unexercised in-the-</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="25%">&#160;</td>
            <td width="1%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" colspan="4" valign="bottom" width="42%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Securities
                Underlying</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="28%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>money
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            </td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="25%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;&#160;
</td>
            <td align="right" colspan="4" valign="bottom" width="42%" style="border-bottom: black thin solid;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Options
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            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="right" valign="bottom" width="28%" style="border-bottom: #ffffff solid;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>End
                </strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="25%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name</strong></font></div>
            </td>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
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            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: black thin solid;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Unexercisable</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="28%" style="border-bottom: black thin solid;">
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            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="25%">&#160;</td>
            <td width="1%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="20%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="20%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="28%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="25%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Alan
                Auerbach</font></div>
            </td>
            <td width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">375,000</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">375,000</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="28%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$720,000
                  / $720,000</font></div>
              </div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
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          <tr bgcolor="white">
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
                Gloria T. Lee</font></div>
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            <td width="1%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">100,000</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">100,000</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="28%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$57,000
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              </div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="25%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Charles
                Eyler</font></div>
            </td>
            <td width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">50,000</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">50,000</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
            </td>
            <td align="right" valign="bottom" width="28%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$28,500
                  / $28,500</font></div>
              </div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div>
        <div align="center">
          <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

              <tr bgcolor="white">
                <td valign="top" width="4%"><font size="2">(1)</font></td>
                <td width="1%">&#160;</td>
                <td width="90%"><font size="2">The value of unexercised in-the-money
                  options
                  on December 31, 2005 is based on a $2.07 value of Cougar Biotechnology,
                  Inc. common stock on such date, as determined in the discretion
                  of the
                  Board of Directors on such date.
</font></td>
              </tr>

          </table>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">31</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
      <div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Compensation
          of Directors</em></strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior
      to
      the Merger, our directors received no compensation pursuant to any standard
      arrangement for their services as directors. Cougar has not previously had
      any
      standard arrangements pursuant to which directors have been compensated for
      their services. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has entered into a Scientific Advisory Agreement dated January 1, 2004,
      as amended August 24, 2004 (the &#8220;Scientific Advisory Agreement&#8221;), with Dr. Arie
      Belldegrun to serve as Chairman of its Scientific Advisory Board and as a member
      of its Board of Directors. Pursuant to the Scientific Advisory Agreement, Dr.
      Belldegrun receives an annual payment of $200,000 per year. Additionally, for
      each new technology that the Company in-licenses or otherwise acquires that
      are
      first introduced to the Company by or through Dr. Belldegrun, or for which
      Dr.
      Belldegrun actively participates in the evaluation process (as determined by
      Cougar&#8217;s Chief Executive Officer), the Company is to make milestone payments to
      Dr. Belldegrun ranging from $50,000 to $150,000 for each such technology,
      depending on the clinical phase trials such technology is undergoing or
      completed. Furthermore, the Company is to make a payment of $100,000 to Dr.
      Belldegrun in the event he assists in preparation for and participation in
      meetings with potential investors relating to an offering of securities with
      minimum proceeds to the Company of at least $5,000,000, provided, that only
      one
      such payment shall be made per year. The Scientific Advisory Agreement has
      a
      term of four years, and annually renews for one year periods thereafter unless
      either party gives the other thirty (30) days written notice prior to the end
      of
      term, or any renewal term, that such term is not to be extended. In the event
      we
      terminate the Scientific Advisory Agreement prior to the end of the initial
      term
      for any reason other than gross negligence, willful misconduct or fraud on
      the
      part of Dr. Belldegrun, we will be obligated to pay Dr. Belldegrun all amounts
      owed to him for the remainder of the calendar year in which the termination
      occurs, and all stock options that would otherwise have vested in such calendar
      year shall automatically vest upon such termination. The Scientific Advisory
      Agreement contains other customary terms and provisions that are standard in
      our
      industry. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      conjunction with the execution of the Scientific Advisory Agreement and the
      amendment thereto, Cougar granted Dr. Belldegrun options to purchase an
      aggregate of 500,000 shares of Cougar Common Stock, at an exercise price equal
      to $0.15 per share. These stock options vested upon completion of the Merger.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      February 2006, Cougar&#8217;s Board of Directors approved bonuses in the aggregate of
      $150,000 to Dr. Belldegrun, consisting of a $50,000 bonus in connection with
      the
      in-licensing of one of Cougar&#8217;s product candidates in 2005 and a $100,000 bonus
      in connection with Dr. Belldegrun&#8217;s participation in certain efforts of Cougar
      to obtain financing that closed in 2006. These bonuses were paid by the Company
      in April 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      February 2006, Cougar granted Dr. Belldegrun options to purchase an additional
      236,000 shares of Cougar Common Stock, at an exercise price equal to $1.85
      per
      share. Additionally, in March 2006, Cougar granted Dr. Belldegrun options to
      purchase an additional 420,000 shares of Cougar Common Stock at an exercise
      price of $1.73 per share. All of these options vested contemporaneously with
      completion of the Merger.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Upon
      his
      appointment as a director of Cougar in July 2003, Mr. Meyers was granted a
      stock
      option to purchase 100,000 shares of Cougar common stock at an exercise price
      of
      $.15 per share. The options vest annually in equal amounts over three years,
      so
      long as Mr. Meyers remains a director of Cougar.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">32</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Employment
          Agreements with Executives</em></strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>President
          and Chief Executive Officer</strong></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      May
      16, 2003, Cougar entered into an employment agreement with Alan Auerbach to
      act
      as its President and Chief Executive Officer, and to serve as a member of its
      Board of Directors. Mr. Auerbach receives an annual base salary of $200,000
      per
      year. Mr. Auerbach is also eligible for a annual bonus for each year of his
      employment term, at the discretion of the Company&#8217;s Board of Directors, of up to
      75% of his base salary. Additionally, for each new technology that the Company
      in-licenses or otherwise acquires that are first introduced to the Company
      by or
      through Mr. Auerbach, the Company pays a one time bonus of $75,000. In
      conjunction with the execution of his employment agreement, Mr. Auerbach also
      purchased 750,000 shares of Cougar Common Stock at a price of $0.001 per share
      pursuant to the terms and conditions of a stock purchase agreement. Mr.
      Auerbach&#8217;s employment agreement has a term of one year, and annually renews for
      one year periods thereafter unless either party gives the other sixty (60)
      days
      written notice prior to the end of term, or any renewal term, that such term
      is
      not to be extended. Under his employment agreement, Mr. Auerbach has also agreed
      to non-competition provisions. In consideration of this non-competition
      agreement, Cougar has agreed to make payments to Mr. Auerbach for up to 12
      months following the termination of his employment under certain circumstances.
      Mr. Auerbach&#8217;s employment agreement contains other customary terms and
      provisions that are standard in Cougar&#8217;s industry.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
      2004, Cougar paid Mr. Auerbach bonuses in the aggregate amount of $300,000,
      of
      which $150,000 represented a discretionary bonus for the first year of his
      employment term and $150,000 represented amounts payable to him in connection
      with the in-licensing of certain of Cougar&#8217;s product candidates. During fiscal
      year 2005, Cougar&#8217;s Board of Directors approved bonuses in the aggregate amount
      of $225,000, of which $150,000 represents a discretionary bonus payable to
      Mr.
      Auerbach for the second year of his employment term and $75,000 represents
      amounts payable in connection with the in-licensing of one of Cougar&#8217;s product
      candidates. This bonus was paid in April 2006. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      January 2004, Cougar granted Mr. Auerbach options to purchase 750,000 shares
      of
      Cougar Common Stock, at an exercise price of $0.15 per share. These stock
      options vest in four equal installments on each of the first four anniversaries
      of the date of grant. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      February 2006, Cougar granted Mr. Auerbach options to purchase an additional
      236,000 shares of Cougar Common Stock, at an exercise price equal to $1.85
      per
      share. Additionally, in March 2006, Cougar granted Mr. Auerbach options to
      purchase an additional 420,000 shares of Cougar Common Stock at an exercise
      price of $1.73 per share. All of these options vested contemporaneously with
      completion of the Merger. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Vice
      President of Finance</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      August
      5, 2004, Cougar entered into an employment offer letter with Charles Eyler
      to
      act as its Vice President of Finance. Mr. Eyler receives an annual base salary
      of $140,000 per year. Mr. Eyler is also eligible for a bonus each year, at
      the
      discretion of the Company&#8217;s Board of Directors, of up to 50% of his base salary.
      In conjunction with the execution of his employment offer letter, Mr. Eyler
      also
      received options to purchase 100,000 shares of Cougar Common Stock, at an
      exercise price equal to $1.50. The stock options vest in two equal installments
      on each of the first two anniversaries of Mr. Eyler&#8217;s employment with the
      Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Vice
      President of Clinical Development</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      October 21, 2004, Cougar entered into an employment offer letter with Gloria
      Tsi-Yie Lee, M.D., Ph.D. to act as its Vice President of Clinical Development.
      Dr. Lee receives an annual base salary of $310,000 per year. Dr. Lee is also
      eligible for a bonus each year, at the discretion of the Company&#8217;s Board of
      Directors, of up to 40% of her base salary. Dr. Lee received a one-time advance
      of $96,000 upon execution of her employment offer letter; provided that, if
      her
      employment with Cougar is terminated after the first anniversary but on or
      prior
      to the second anniversary thereof, Dr. Lee is obligated to repay 50% of such
      advance. In conjunction with the execution of her employment offer letter,
      Dr.
      Lee also received options to purchase 200,000 shares of Cougar Common Stock,
      at
      an exercise price equal to $1.50. These stock options vest annually in two
      equal
      installments on each of the first two anniversaries of Dr. Lee&#8217;s employment with
      the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
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      <div>&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Certain
      Relationships &amp; Transactions</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company engaged Paramount BioCapital, Inc., of which Lindsay A. Rosenwald,
      M.D.,
      a director of the Company, serves as Chairman and Chief Executive Officer,
      as
      one of the placement agents (together with Cowen &amp; Co., the &#8220;Placement
      Agents&#8221;) in a private placement offering of 22,919,075 Units, each consisting of
      0.9 shares of Cougar Preferred Stock and 0.1 shares of Cougar Common Stock
      (the
&#8220;Offering&#8221;). Horizon BioMedical Ventures, LLC, of which Dr. Rosenwald is the
      managing member, and which is an affiliate of Paramount BioCapital, is a
      substantial stockholder of the Company. In connection with the Offering, the
      Company and the Placement Agents entered into an exclusive Placement Agency
      Agreement dated as of June 16, 2005, as amended effective on December 16, 2005
      (the &#8220;Introduction Agreement&#8221;), pursuant to which the Company has agreed to pay
      each Placement Agent for its services compensation in the form of (a) cash
      commissions equal to 3.5% of the gross proceeds from the sale of the Units,
      and
      (b) warrants (the &#8220;Warrants&#8221;) to purchase that number of shares of common stock
      of the Company equal to 5% of the number of Units sold in the Offering. The
      Warrants will be exercisable for a period of five (5) years from the Closing
      Date. These commissions are also payable on additional sales by the Company
      of
      securities (other than in a public offering) to the investors introduced to
      the
      Company by the Placement Agents during the twelve (12) month period subsequent
      to the last closing of this Offering or the earlier termination of the Offering.
      The Company also agreed to pay to each Placement Agent an accountable expense
      allowance of up to $75,000 each to reimburse each Placement Agent for its
      out-of-pocket expenses. Cougar paid Cowen a non-refundable retainer of $50,000
      upon execution of the Placement Agency Agreement, to be credited against the
      first placement fee to be paid to SG Cowen. In addition, the Company has granted
      (a) Cowen the right of first refusal to act as the Company&#8217;s financial advisor
      or co-lead underwriter in relation to any restructuring transaction (through
      a
      recapitalization, extraordinary dividend, stock repurchase, spin-off, joint
      venture or otherwise), any acquisition or disposition transaction (including,
      without limitation, a merger, exchange offer, sale or purchase of assets or
      capital stock) or any public offering, and (b) the Placement Agents the right
      of
      first refusal to act as co-placement agents, in relation to any private
      placement of equity or debt securities under Rule 144A or otherwise, in each
      case initiated by the Company during the 12-month period following the date
      of
      the final closing of the Offering. Lastly, the Company has agreed to indemnify
      the Placement Agents against certain liabilities, including liabilities under
      the Securities Act.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cougar
      previously engaged Paramount BioCapital to serve as its exclusive placement
      agent in connection with a bridge offering of $6,145,120 in convertible
      promissory notes (the &#8220;Bridge Offering&#8221;) and paid a placement fee of
      approximately $430,000 and issued warrants to purchase an aggregate of 193,243
      shares of Cougar Common Stock at an exercise price of $3.18 to the placement
      agent. Cougar also agreed to pay similar percentage fees and warrants upon
      any
      investments made during the 12-month period following the final closing of
      the
      Bridge Offering by investors first introduced to it by Paramount BioCapital
      during the Bridge Offering. In addition, we have granted to Paramount BioCapital
      a right of first refusal to act as exclusive finder or placement agent in
      relating to any securities offerings on our behalf during the 24-month period
      following the date of the final closing of the Bridge Offering. Paramount
      BioCapital&#8217;s rights to receive payment on such subsequent investments and its
      right of first refusal are subject to our agreement with Cowen and Paramount
      BioCapital, Inc., which is described above.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">John
      Knox, who was the Treasurer of Cougar immediately prior to the Merger, is a
      full-time employee of Paramount BioCapital.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lindsay
      A. Rosenwald, M.D., a director of the Company, personally guaranteed our
      obligations under a $1,000,000 credit facility provided by Bank of America
      in
      consideration of Cougar&#8217;s agreement to grant Dr. Rosenwald warrants to purchase
      a number of shares of Cougar Common Stock based on how much of the line of
      credit facility was actually untilized. Prior to terminating the line of credit
      in April 2006, Cougar utilized $600,000 of such facility, and thereby granted
      Dr. Rosenwald warrants to purchase 82,613 shares of Cougar Common Stock at
      an
      exercise price of $3.18 per share.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      June
      2005, Cougar issued promissory notes to five individuals, including Arie S.
      Belldegrun, M.D., a director of the Company, for an aggregate of $1,000,000.
      In
      return for such loans, we granted Dr. Belldegrun and the four other individuals
      warrants to purchase an aggregate of 137,689 shares of Cougar Common Stock
      at an
      exercise price of $3.18 per share. $950,000 in principal balance of these notes,
      together with accrued and unpaid interest thereon, were converted into Cougar
      securities under the same terms as the Offering.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Description
      of Securities</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      currently have authorized capital of 110,000,000 shares, of which 100,000,000
      are designated as common stock, par value $.0001 per share (the &#8220;Common Stock&#8221;),
      and 10,000,000 shares are preferred stock, par value $.0001 per share (the
      &#8220;Preferred Stock&#8221;), all of which are currently designated as Series A Preferred
      Stock. Following completion of the Merger, the Company has outstanding 4,607,105
      shares of Common Stock and 9,486,752 shares of Series A Preferred Stock.
      Additionally, there are securities convertible or exercisable into an aggregate
      of 2,327,299 shares of Common Stock (excluding the Cougar Preferred
      Stock).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Common
      Stock</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      holders of Common Stock are entitled to one vote for each share held of record
      on all matters submitted to a vote of the stockholders and do not have
      cumulative voting rights. Upon liquidation, dissolution or winding up of the
      Company, holders of Common Stock will be entitled to share ratably in all of
      the
      Company&#8217;s assets that are legally available for distribution, after payment of
      all debts and other liabilities and the liquidation preference of any
      outstanding share of Preferred Stock. The holders of the Common Stock have
      no
      preemptive, subscription, redemption or conversion rights.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Series
      A Preferred Stock</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company filed a Certificate of Designation of the Series A Preferred Stock
      with
      the Secretary of State of Delaware on March 31, 2006. The following provides
      only a summary of certain of the terms of the Company&#8217;s Preferred Stock.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Voluntary
      Conversion</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Each
      share of the Preferred Stock will be convertible into Common Stock at any time
      at the option of the holder thereof at an initial conversion price equal to
      the
      stated value (initially equal to $4.50 per share, based on the stated value
      of
      the Cougar Preferred Stock of $1.73 divided by the Exchange Ratio), subject
      to
      adjustment (the &#8220;Stated Value&#8221;).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      event of a reclassification, capital reorganization or other similar change
      in
      the outstanding shares of Common Stock, the Preferred Stock will become
      convertible into the kind and number of shares of stock or other securities
      or
      property (including cash) that the holders of Preferred Stock would have
      received if the Preferred Stock had been converted into Common Stock immediately
      prior to such reclassification, capital reorganization or other
      change.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Mandatory
      Conversion</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      Company may require each holder of outstanding shares of Preferred Stock to
      convert such Preferred Stock into shares of Common Stock at the then-effective
      Conversion Ratio if the price per share of Common Stock trades at or above
      200%
      of the Conversion Price (which shall initially be equal to the Stated Value),
      as
      adjusted, for a period of twenty (20) consecutive trading days, on any
      securities exchange, automated quotation system (e.g., Nasdaq) or any other
      over-the-counter market, such as the OTCBB. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Redemption</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      holders of a majority of the issued and outstanding shares of Preferred Stock
      may require the Company to redeem such Preferred Stock at any time after the
      expiration of ten (10) years following the date of the final closing of the
      Offering, at a redemption price equal to the Purchase Price plus any accrued
      but
      unpaid dividends, payable quarterly over a three (3) year period. The Preferred
      Stock is not redeemable at the option of the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Voting</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      holders of Preferred Stock will vote together with all other holders of the
      Company&#8217;s voting stock on all matters submitted to a vote of holders generally,
      with the holder of each share of Preferred Stock being entitled to one vote
      for
      each share of Common Stock into which such shares of Preferred Stock could
      then
      be converted (regardless of the number of shares of Common Stock then authorized
      to be issued). So long as 50% of the Preferred Stock remains outstanding, the
      Company shall not, without the approval of at least two-thirds (2/3) of the
      shares of Preferred Stock, voting separately as a single class:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">authorize
                or issue any shares, or securities convertible into shares, having
                preference over or on a parity with the Preferred Stock with respect
                to
                the payment of dividends or rights upon a Liquidation Event (as defined
                below); or</font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
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            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)
                increase the number of shares of Preferred Stock or (b) amend, alter,
                or
                repeal any of the provisions of the Company&#8217;s certificate of incorporation
                in any manner which materially adversely affects the preferences,
                privileges, restrictions or other rights of the Preferred
                Stock.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Dividends</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Each
      share of Preferred Stock shall receive cumulative dividends, payable in cash
      or
      in kind at the option of the Company, at the rate of 4% per annum (computed
      on
      the basis of a 365-day year) of the Stated Value, payable annually in arrears.
      The holders of Preferred Stock will also be entitled to receive dividends on
      an
      equal basis with the holders of Common Stock and any other class or series
      of
      securities of the Company ranking junior to the Preferred Stock when, as and
      if
      declared by the Board of Directors, on an as converted basis. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Liquidation</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Upon
      any (i) liquidation, dissolution or winding up of the Company, whether
      voluntarily or involuntarily, or (ii) voluntary or involuntary bankruptcy of
      the
      Company (either of (i) or (ii), a &#8220;Liquidation Event&#8221;), each share of Preferred
      Stock will be entitled to be paid, prior to any distributions to any securities
      ranking junior to Preferred Stock, an amount equal to the greater of (x) the
      Stated Value of such shares of the Preferred Stock, plus any accrued and unpaid
      dividends thereon and (y) the amount the holder of such share would have been
      entitled to receive upon such Liquidation Event had the share been converted
      immediately prior to such Liquidation Event. A consolidation or merger of the
      Company with or into another company in which the Company is not the surviving
      entity or the shares of the Company&#8217;s capital stock constituting in excess of
      50% of the voting power of the Company are exchanged for or changed into other
      stock or securities, cash and/or any other property, or a sale of all or
      substantially all the assets of the Company, shall not be considered a
      Liquidation Event, although the Company will make appropriate provision to
      ensure that the terms of the Preferred Stock survive any such
      transaction.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Recent
      Sales of Unregistered Securities</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      sales
      of unregistered securities made by the Company since its inception in May 2005
      until the Merger, please refer to Registration Statement on Form 10-SB/A filed
      on August 29, 2005, our quarterly report on Form 10-QSB for the quarter ended
      September 30, 2005 filed on November 9, 2005, and our annual report on Form
      10-KSB for the year ended December 31, 2005, filed on March 6,
      2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following summarizes all sales of unregistered securities by Cougar since
      inception in May 2003. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      May
      2003, in connection with Cougar&#8217;s incorporation, Cougar issued an aggregate
      of&#160;5,000,002 shares of its Common Stock for aggregate consideration of
      $750,750. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      July
      2003, Cougar issued a director options to purchase 100,000 shares of Cougar
      Common Stock at an exercise price of $0.15 per share, such options vesting
      in
      equal amounts annually over three years. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      January 2004, Cougar issued options to purchase an aggregate of 1,150,000 shares
      of Cougar Common Stock, at an exercise price of $0.15 per share, to two
      directors, one of which is also an officer of the Company. These options vest
      in
      equal amounts annually over four years, subject to acceleration upon certain
      change in control events. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      March
      2004, Cougar issued an aggregate of&#160;4,250,003 shares of Cougar Common Stock
      to certain accredited investors for aggregate consideration of
      $4,250,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      June
      2004, Cougar issued a consultant an option to purchase 5,000 shares of Cougar
      Common Stock at an exercise price of $5.00 per share, such options vesting
      in
      equal amounts annually over three years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      August
      2004, Cougar issued a director an option to purchase 100,000 shares of Cougar
      Common Stock at an exercise price of $0.15 per share, such options vesting
      in
      equal amounts annually over four years, subject to acceleration upon certain
      change in control events.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      August
      2004, Cougar issued an officer an option to purchase 100,000 shares of Cougar
      Common Stock at an exercise price of $1.50 per share, such options vesting
      in
      equal amounts annually over two years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      November 2004, Cougar issued an officer an option to purchase 200,000 shares
      of
      Cougar Common Stock at an exercise price of $1.50 per share, such options
      vesting in equal amounts annually over two years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      October 31, 2005, Cougar issued to a director a warrant to purchase an aggregate
      of 82,613 shares of Cougar Common Stock at an exercise price of $3.18 per share
      in consideration of such director providing a guaranty of Cougar&#8217;s obligations
      under a $1,000,000 line of credit facility with Bank of America. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">37</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      June
      2005, Cougar issued warrants to purchase an aggregate of 137,689 shares of
      Cougar Common Stock at an exercise price of $3.18 per share to five individuals
      in consideration of loans from such individuals to Cougar in the aggregate
      amount of $1,000,000. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      two
      closings on November 23, 2005 and January 24, 2006, Cougar sold an aggregate
      of
      $6,145,120 in aggregate principal amount of senior convertible notes (the
&#8220;Bridge Notes&#8221;) to certain institutional and individual accredited investors in
      a private placement transaction (the &#8220;Bridge Offering&#8221;). Additionally, Cougar
      issued warrants to purchase an aggregate of 193,243 shares of Cougar Common
      Stock at an exercise price per share of $3.18 to our placement agents.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      February 2006, Cougar issued options to purchase an aggregate of 472,000 shares
      of Cougar Common Stock, at an exercise price of $1.85 per share, to two
      directors, one of which is also an officer of the Company. These options vested
      contemporaneously with the Merger. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      March
      2006, Cougar issued options to purchase an aggregate of 840,000 shares of Cougar
      Common Stock, at an exercise price of $1.73 per share, to two directors, one
      of
      which is also an officer of the Company. These options vested contemporaneously
      with the Merger.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      April
      3, 2006, Cougar completed a private placement offering to accredited investors
      (as that term is defined in Regulation D under the Securities Act of 1933,
      as
      amended (the &#8220;Securities Act&#8221;) of 22,919,075 Units, each Unit consisting of 0.9
      shares of Preferred Stock and 0.1 shares of Common Stock, at a price per Unit
      of
      $1.73. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additionally,
      Cougar converted the aggregate principal balance of $6,145,120, together with
      accrued and unpaid interest of $89,053 thereon, of the Bridge Notes into
      3,603,568 Units under the same terms as provided in the Offering. Accordingly,
      we issued an additional 360,357 shares of Cougar Common Stock and 3,243,211
      shares of Cougar Preferred Stock pursuant to the conversion of the Bridge Notes.
      The conversion of the Bridge Notes into Units was exempt from the registration
      requirements of the Securities Act pursuant to Section 3(a)(9) thereof, as
      the
      securities were exchanged for other securities of the issuer and no commission
      or other remuneration was paid in relation to such exchange.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cougar
      also issued Units, under the same terms as provided in the Offering, to a trust
      established for the benefit of the family of one of the directors of the Company
      for approximately $600,000 (the amount such director provided as a guaranty
      of a
      Cougar credit facility referenced above) and converted an aggregate of $950,000
      of notes, together with interest thereon, issued to five individuals, one of
      which was a director. Pursuant to the approximately $600,000 and the conversion
      of notes, Cougar issued an additional 919,898 Units, consisting of 91,989 shares
      of Cougar Common Stock and 827,909 shares of Cougar Preferred Stock.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Except
      as
      noted above, the sales of the securities identified above were made pursuant
      to
      privately negotiated transactions that did not involve a public offering of
      securities and, accordingly, Cougar believes that these transactions were exempt
      from the registration requirements of the Securities Act pursuant to Section
      4(2) thereof and rules promulgated thereunder. Each of the above-referenced
      investors in Cougar&#8217;s stock represented to Cougar in connection with their
      investment that they were &#8220;accredited investors&#8221; (as defined by Rule 501 under
      the Securities Act) and were acquiring the shares for investment and not
      distribution, that they could bear the risks of the investment and could hold
      the securities for an indefinite period of time. The investors received written
      disclosures that the securities had not been registered under the Securities
      Act
      and that any resale must be made pursuant to a registration or an available
      exemption from such registration. All of the foregoing securities are deemed
      restricted securities for purposes of the Securities Act.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">38</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Indemnification
      of Directors and Officers</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to our certificate of incorporation and bylaws, we may indemnify an officer
      or
      director who is made a party to any proceeding, because of his position as
      such,
      to the fullest extent authorized by Delaware General Corporation Law, as the
      same exists or may hereafter be amended. In certain cases, we may advance
      expenses incurred in defending any such proceeding.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      the
      extent that indemnification for liabilities arising under the Securities Act
      may
      be permitted to directors, officers or persons controlling our company pursuant
      to the foregoing provisions, we have been informed that, in the opinion of
      the
      SEC, such indemnification is against public policy as expressed in the
      Securities Act and is therefore unenforceable. If a claim for indemnification
      against such liabilities (other than the payment by us of expenses incurred
      or
      paid by a director, officer or controlling person of our company in the
      successful defense of any action, suit or proceeding) is asserted by any of
      our
      directors, officers or controlling persons in connection with the securities
      being registered, we will, unless in the opinion of our counsel the matter
      has
      been settled by controlling precedent, submit to a court of appropriate
      jurisdiction the question whether such indemnification by us is against public
      policy as expressed in the Securities Act and will be governed by the final
      adjudication of that issue.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      3.02. Unregistered Sales of Equity Securities.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      disclosed under Item 2.01 above, in connection with the Merger, the Company
      issued an aggregate of 4,607,105 shares of its Common Stock and 9,486,752 shares
      of its newly-designated Series A Preferred Stock to the former holders of Cougar
      capital stock, and other securities having the right to purchase approximately
      an additional 2,327,288 shares of our Common Stock, all of which were
      unregistered. For these issuances, the Company relied on the exemptions from
      the
      registration requirements of the Securities Act provided by Section 4(2) and
      Rule 506, as the securities were sold to 28 individuals, each of which the
      Company reasonably believes is either an &#8220;accredited investor,&#8221; as defined under
      Rule 502 of the Securities Act of 1933, as amended (the &#8220;Securities Act&#8221;), or
      such investor, either alone or through a purchaser representative, had knowledge
      and experience in financial and business matters such that each was capable
      of
      evaluating the risks of the investment, and had access to information regarding
      Cougar, the Company and the Merger transaction. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.01. Changes in Control of Registrant.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      disclosures set forth in Item 2.01 above are hereby incorporated by reference
      into this Item&#160;5.01.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.02. Departure of Directors or Principal Officers; Election of Directors;
      Appointment of Principal Officers.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      the
      effective time of the Merger, the Company&#8217;s board of directors was reconstituted
      by the appointment of Arie S. Belldegrun, M.D., Alan H. Auerbach, Lindsay A.
      Rosenwald, M.D., David M. Tanen and Harold J. Meyers as directors (all of whom
      were directors of Cougar immediately prior to and after the Merger), and the
      resignations of Richard A. Rappaport and Anthony C. Pintsopoulos from their
      roles as directors of the Company. Additionally, pursuant to an agreement with
      a
      certain investor in Cougar&#8217;s private placement offering of 22,919,075 Units of
      its securities as referenced in Item 2.01 above, the Company will increase
      the
      number of directors to serve on the Company&#8217;s Board by two members, and to elect
      to such Board two additional directors selected by the Company from candidates
      named by such investors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">39</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      the
      effective time of the Merger, the Company&#8217;s executive management team was also
      reconstituted and Richard A. Rappaport resigned from his position as the
      Company&#8217;s President and Anthony C. Pintsopoulos resigned from his positions as
      the Chief Financial Officer and Secretary. Upon the effective time of the
      Merger, the following individuals (all of whom were officers of Cougar prior
      to
      the Merger) took the positions set after their names: Alan H. Auerbach
      (President and Chief Executive Officer); Dr. Gloria T. Y. Lee (Vice President,
      Clinical Research and Development); and Charles R. Eyler (Treasurer and Vice
      President, Finance). Biographical and other information regarding these
      individuals is provided under the caption &#8220;Management&#8221; in Item 2.01 above, which
      is incorporated by reference into this Item 5.02. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
      Year.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      April
      6, 2006, the Company filed a Certificate of Ownership with the Secretary of
      State of the State of Delaware pursuant to which Cougar Biotechnology, Inc.,
      the
      Company&#8217;s wholly-owned subsidiary pursuant to the Merger, merged with and into
      the Company with the Company remaining as the surviving corporation to the
      merger (the &#8220;Short-Form Merger&#8221;). In connection with the Short-Form Merger, and
      as set forth in the Certificate of Ownership, the Company changed its corporate
      name to &#8220;Cougar Biotechnology, Inc.&#8221; The Certificate of Ownership is filed as
      Exhibit 3.2 to this current report.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.06. Change in Shell Company Status.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      described in Item 2.01 above, which is incorporated by reference into this
      Item
      5.06, the Company ceased being a shell company (as defined in Rule 12b-2 under
      the Exchange Act of 1934, as amended) upon completion of the
      Merger.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      9.01. Financial Statements and Exhibits.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of its acquisition of Cougar as described in Item 2.01, the registrant
      is
      filing Cougar&#8217;s audited financial information as Exhibit 99.1 to this current
      report.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pro
      forma
      financial information has not been included, as it would not be materially
      different from the financial information of Cougar as referenced in Item 9.01(a)
      above. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exhibits.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="8%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exhibit</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="90%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Description</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.1</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="90%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Agreement
                and Plan of Merger dated February 27, 2006, by and among the Company,
                SRKP
                Acquisition Corp., a Delaware corporation and wholly owned subsidiary
                of
                the Company, and Cougar Biotechnology, Inc., a Delaware corporation
                (incorporated by reference to exhibit 10.1 to the Company&#8217;s current report
                on Form 8-K filed on March 2, 2006).</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.1</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="90%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
                of Merger relating to the merger of SRKP Acquisition Corp. with and
                into
                Cougar Biotechnology, Inc.</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.2</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="90%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
                of Ownership relating to the merger of Cougar Biotechnology, Inc.
                with and
                into SRKP 4, Inc.</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.1</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="90%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Redemption
                Agreement (incorporated by reference to Exhibit 10.2 to the Company&#8217;s
                current report on Form 8-K filed on March 2, 2006).</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.2</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="90%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Indemnity
                Agreement dated as of April 3, 2006, between SRKP 4, Inc., Cougar
                Biotechnology, Inc., Anthony C. Pintsopoulos and Richard
                Rappaport.</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
            </td>
            <td width="2%">&#160;</td>
            <td align="left" valign="top" width="90%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Audited
                financial statements of Cougar Biotechnology, Inc. (pro forma financials
                are not included, as pro-forma would not be materially different
                from
                Cougar&#8217;s audited financial
                statements).</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">40</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SIGNATURE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <table align="center" bgcolor="#ffffff" border="0" cellpadding="0" cellspacing="0" width="100%">

          <tr valign="top" bgcolor="#ffffff">
            <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">COUGAR
              BIOTECHNOLOGY, INC.</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">Date:&#160;April
              7, 2006</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">By:&#160;&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">/s/&#160;Alan
              H.
              Auerbach</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2"><font style="FONT-FAMILY: " size="1">&#160;</font></td>
            <td align="left">
              <hr style="COLOR: black" align="left" noshade size="2" width="80%"><font size="2">Alan
              H. Auerbach</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">Chief
              Executive Officer and President</font></td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">41</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      INDEX</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr bgcolor="white">
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.1</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="90%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
                    of Merger relating to the merger of SRKP Acquisition Corp. with
                    and into
                    Cougar Biotechnology, Inc.</font></div>
                </div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="8%">&#160;</td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="90%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.2</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="90%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
                    of Ownership relating to the merger of Cougar Biotechnology,
                    Inc. with and
                    into SRKP 4, Inc.</font></div>
                </div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="8%">&#160;</td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="90%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.2</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="90%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Indemnity
                  Agreement dated as of April 3, 2006, between SRKP 4, Inc., Cougar
                  Biotechnology, Inc., Anthony C. Pintsopoulos and Richard Rappaport.<font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt" size="3">&#160;</font></font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="8%">&#160;</td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="90%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="90%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Audited
                    financial statements of Cougar Biotechnology, Inc. (pro forma
                    financials
                    are not included, as pro-forma would not be materially different
                    from
                    Cougar&#8217;s audited financial
                    statements).</font></div>
                </div>
              </td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">42</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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{"company-data": {"conformed-name": "SRKP 4 INC", "cik": "0001335102", "assigned-sic": "6770", "irs-number": "000000000", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-51473", "film-number": "06749127"}, "business-address": {"street1": "210 SOUTH FEDERAL HIGHWAY", "street2": "SUITE 205", "city": "DEERFIELD BEACH", "state": "FL", "zip": "33441", "phone": "310 203 2902"}, "mail-address": {"street1": "210 SOUTH FEDERAL HIGHWAY", "street2": "SUITE 205", "city": "DEERFIELD BEACH", "state": "FL", "zip": "33441"}}
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
WASHINGTON,
      D.C. 20549
FORM
      8-K
CURRENT
      REPORT
PURSUANT
      TO SECTION 13 OR 15(d) OF
THE
      SECURITIES EXCHANGE ACT OF 1934
Date
      of
      report (date of earliest event reported): April 3, 2006
COUGAR
      BIOTECHNOLOGY, INC.
(Exact
      name of registrant as specified in its charter)
Delaware
(State
      or
      other jurisdiction of incorporation)
000-51473
20-2903204
(Commission
                File Number)
(IRS
                Employer Identification No.)
10990
      Wilshire Blvd, Suite 1200
Los
      Angeles, CA 90024
(Address
      of principal executive offices) (Zip Code)
(310)
      943-8040
(Registrant's
      telephone number, including area code)
SRKP
      4, INC.
10940
        Wilshire Blvd, Suite 600
Los
        Angeles, CA 90024
(Former
      name or former address, if changed since last report)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions:
o
Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)
o
Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)
o
Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))
o
Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))
1
Item
      1.01. Entry into a Material Definitive Agreement.
The
      disclosures set forth under Item 2.01 hereof are hereby incorporated by
      reference in this Item 1.01.
Item
      2.01. Completion of Acquisition or Disposition of Assets.
Pursuant
      to an Agreement and Plan of Merger dated February 27, 2006 (the "
Merger
      Agreement
"),
      by
      and among SRKP 4, Inc. (referred to herein as the "
Company,
"
      "
SRKP
"
or
      the
"
Registrant
"),
      SRKP
      Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the
      Company ("
MergerCo
"),
      and
      Cougar Biotechnology, Inc., a Delaware corporation ("
Cougar
"),
      MergerCo merged with and into Cougar, with Cougar remaining as the surviving
      entity and a wholly owned operating subsidiary of the Company. This transaction
      is referred to throughout this report as the "Merger." The Merger was
      effective as of April 3, 2006, upon the filing of a certificate of merger with
      the Delaware Secretary of State.
At
      the
      effective time of the Merger, the legal existence of MergerCo ceased and all
      of
      the 11,994,229 shares of Cougar common stock, par value $.001 per share (the
      "
Cougar
      Common Stock
"),
      and
      24,698,022 shares of Cougar preferred stock, par value $.001 per share (the
      "
Cougar
      Preferred Stock
"),
      that
      were outstanding immediately prior to the Merger were cancelled, with one share
      of Cougar Common Stock issued to the Company. Simultaneously, the Company issued
      to the former holders of Cougar Common Stock and Cougar Preferred Stock, in
      consideration of their capital stock of Cougar, an aggregate of 4,607,105 shares
      of the Company's common stock, par value $.0001 per share ("
Common
      Stock
")
      and
      9,486,752 shares of the Company's Series A Preferred Stock, par value $.0001 per
      share ("
Preferred
      Stock
").
      In
      addition, all securities convertible or exercisable into shares of Cougar
      capital stock outstanding immediately prior to the Merger (excluding the Cougar
      Preferred Stock) were cancelled, and the holders thereof received similar
      securities for the purchase of an aggregate of 2,327,299 shares of the Common
      Stock.
Contemporaneously
      with the closing of the Merger, pursuant to the terms of a Redemption Agreement
      dated February 27, 2006 by and among the Company and its then-current
      stockholders, the Company completed the closing of a redemption of an aggregate
      of 2,700,000 shares of Common Stock (the "
Redemption
")
      from
      its former stockholders in consideration of an aggregate of $200,000 less (i)
      the aggregate amount of fees, costs and expenses of SRKP's attorneys,
      accountants and other service providers incurred by SRKP on or prior to the
      effective time ("
SRKP
      Professional Fees
")
      and
      (ii) an aggregate of $12,500 to be paid to such former stockholders on a pro
      rata basis in satisfaction of an outstanding obligation of the Company to such
      former stockholders. The 2,700,000 shares constituted all of the issued and
      outstanding shares of the Company's capital stock, on a fully-diluted basis,
      immediately prior to the Merger. The Company's entry into the Redemption
      Agreement was disclosed on the Company's Current Report on Form 8-K filed with
      the Securities and Exchange Commission on March 2, 2006, which is hereby
      incorporated by reference, including the copy of the Redemption Agreement filed
      as Exhibit 10.2 thereto.
As
      a
      condition to the Merger, SRKP entered into an Indemnity Agreement dated April
      3,
      2006 with its former officers and directors, pursuant to which the Company
      agreed to indemnify such former officers and directors for actions taken by
      such
      officers and directors in their official capacities relating to the
      consideration, approval and consummation of the Merger. A copy of the Indemnity
      Agreement is filed herewith as Exhibit 10.1, and is incorporated hereby by
      reference.
Upon
      completion of the Merger and the Redemption, the former stockholders of Cougar
      held 100% of the outstanding shares of capital stock of the Company.
      Accordingly, the Merger represents a change in control of the Company. As of
      the
      date of this report, there are 4,607,105 shares of Common Stock and 9,486,752
      shares of Preferred Stock outstanding.
2
For
      accounting purposes, the Merger has been accounted for as a reverse acquisition
      with Cougar as the accounting acquirer (legal acquiree) and SRKP as the
      accounting acquiree (legal acquiror). Upon effectiveness of the Merger, Cougar's
      business plan became the business plan of the Company.
The
      Merger Agreement was filed as Exhibit 10.1 to the Company's Current Report on
      Form 8-K filed with the Securities and Exchange Commission on March 2, 2006,
      and
      is incorporated herein by reference. The foregoing description of the Merger
      Agreement and the transactions contemplated thereby do not purport to be
      complete and are qualified in their entireties by reference to the Merger
      Agreement.
On
      April
      6, 2006, the Company's Board of Directors approved a transaction pursuant to
      which Cougar merged with and into the Company, leaving the Company as the
      surviving corporation. In connection with this merger, the Company relinquished
      its corporate name and assumed in its place the name "Cougar Biotechnology,
      Inc." The merger and name change became effective on April 6, 2006, upon the
      filing of a Certificate of Ownership with the Delaware Secretary of State. 
The Certificate of Ownership is filed as Exhibit 3.2 hereto, and is incorporated
      herein by reference.
Unless
      otherwise provided in this current report, all references in this current report
      to "we," "us," "our company," "our," or the "Company" refer to the combined
      Cougar Biotechnology, Inc. entity.
Description
      of Business of Cougar Biotechnology, Inc.
Cougar
      was incorporated in Delaware on May 14, 2003, and is a development stage
      biopharmaceutical company based in Los Angeles, California that in-licenses
      and
      develops novel therapeutics for the treatment of cancer. Cougar's strategy is to
      license technologies that have previously been tested in clinical trials,
      enabling it to obtain an initial indication of the drug's safety and biological
      activity in humans before committing capital to the drug's development. Cougar
      does not conduct any drug discovery activities and limits its involvement with
      preclinical research activity. Cougar currently owns the rights to three
      clinical stage oncology drug candidates. Cougar has attracted a management
      team,
      Board of Directors and Scientific Advisory Board experienced in biotechnology,
      pharmaceuticals and cancer treatment.
CB7630
In
      April
      2004, Cougar exclusively licensed the worldwide rights to CB7630 (abiraterone
      acetate) from BTG plc. CB7630 is an orally active targeted inhibitor of the
      steroidal enzyme 17
a
-hydroxylase/C17,20
      lyase, a cytochrome p450 complex that is involved in testosterone production.
      In
      preclinical studies, CB7630 has demonstrated the ability to selectively inhibit
      the target enzyme, reducing levels of testosterone production in both the
      adrenals and the testes that is believed to stimulate the growth of prostrate
      cancer cells.
In
      Phase
      I trials performed by the Centre for Cancer Therapeutics, Institute of Cancer
      Research (Sutton, United Kingdom), and Royal Marsden NHS Trust (Sutton, United
      Kingdom), CB7630 was administered as a single agent to 26 patients with prostate
      cancer. Cougar believes that the data from these clinical studies indicate
      that:
      1) CB7630, at an oral dose of 800mg, can successfully suppress testosterone
      levels to the castrate range; 2) CB7630 can suppress testosterone produced
      by
      both the testes and the adrenals; and 3) CB7630 is well tolerated with an
      acceptable toxicity profile. The results from these Phase I studies of CB7630
      were published in the British Journal of Cancer in June 2004.
3
In
      December 2005, Cougar initiated a Phase I/II trial of CB7630 for the treatment
      of advanced prostate cancer. The Phase I/II trial is being conducted at The
      Institute of Cancer Research, in the Cancer Research UK Centre for Cancer
      Therapeutics, and at The Royal Marsden Hospital in the United Kingdom. The
      Phase
      I/II study is an open label, dose escalating study to evaluate the safety and
      efficacy of CB7630 administered daily to patients with chemotherapy-naïve
      hormone refractory prostate cancer (HRPC) with a rising PSA (prostate specific
      antigen) despite hormonal therapy.
In
      addition, in February 2006, Cougar announced that its Investigational New Drug
      Application for CB7630 had been approved by the US Food and Drug Administration.
      The Company anticipates that a Phase I trial of CB7630 as a second line hormonal
      agent for advanced prostate cancer patients that have failed treatment with
      first line hormone therapy will be initiated in the first half of
      2006.
Additional
      clinical studies are currently being planned.
CB3304
In
      March
      2004, Cougar exclusively licensed the worldwide rights to CB3304 (noscapine),
      an
      orally active alkaloid derived from opium. Preclinical studies have demonstrated
      that CB3304 has anti-tumor activity and acts as an inhibitor of microtubule
      dynamics. Therefore, Cougar believes that CB3304 has potential applications
      in
      the treatment of a number of different tumor types where tubulin binding agents
      are known to have activity. These tumor types include, but are not limited
      to,
      non-Hodgkin's lymphoma, multiple myeloma, breast cancer, lung cancer, ovarian
      cancer and prostate cancer.
In
      December 2005, Cougar announced positive interim data from an ongoing Phase
      I
      trial of CB3304 in patients with relapsed or refractory non-Hodgkin's lymphoma.
      The trial is an open label dose escalating study, being conducted at the
      University of Southern California Norris Comprehensive Cancer Center, where
      cohorts of patients with relapsed/refractory non-Hodgkin's lymphoma (NHL) or
      chronic lymphocytic leukemia (CLL/SLL) were treated at one of three different
      dose levels involving total daily doses of 1 g, 2 g, and 3 g per day. At each
      dose level, noscapine was administered orally on a three times a day schedule
      for 49 days. In the trial, responses for NHL patients were evaluated using
      the
      International Working Group Response Criteria for NHL and responses for CLL
      patients were evaluated using the NCI Working Group criteria. For both NHL
      and
      CLL patients, toxicity was graded according to the NCI common toxicity criteria
      (CTC).
At
      this
      interim analysis, 12 patients with a median age of 65 years (range 38-71) have
      been accrued. Four subjects had CLL/SLL, 2 had mantle cell lymphoma, one had
      follicular grade III-lymphoma, 4 had diffuse large cell lymphoma (DLC), and
      one
      had lymphoplasmacytic low grade lymphoma. These interim results suggest:
·
Of
                the 10 patients that are evaluable for response, one patient with
                follicular grade III disease has had a partial response. This patient
                initially demonstrated stabilization of their disease for a period
                of
                approximately four years before achieving a partial response. In
                addition,
                two patients, one with mantle cell lymphoma and one with DLC have
                demonstrated stable disease of duration 30 days and 77 days,
                respectively.
·
CB3304
                has been well tolerated, with no grade 3 or 4 hematological toxicities.
                One grade 3 neurotoxicity consisting of depressed level of consciousness
                was experienced at the 3 gram dose level.
·
A
                larger study of noscapine is warranted to evaluate the efficacy of
                the
                compound in patients with lymphoma.
4
In
      December 2005, Cougar also announced results from preclinical experiments that
      it believes demonstrate the effectiveness of CB3304 for the treatment of NHL
      and
      multiple myeloma and that warrant continued development of the drug in
      hematological malignancies. The preclinical studies demonstrate that CB3304
      exhibits potent antitumor activity against NHL and myeloma in vitro, as well
      as
      in vivo in xenograft models. More specifically, the in vitro studies
      demonstrated that following exposure to CB3304, the OPM2 (multiple myeloma),
      H9
      (T cell lymphoma) and RL (B cell lymphoma) tumor cell lines exhibited an IC50
      of
      approximately 30 nM, 700 nM, and 500 nM for the OPM2, H9 and RL lines,
      respectively. Treatment with noscapine resulted in the induction of apoptosis
      in
      each of the cell lines tested. Additionally, in vivo studies demonstrated that
      in xenograft models, daily administration of noscapine resulted in tumor growth
      delays of between 30-80% of the control tumor volumes.
Due
      to
      the results of these preclinical studies, the clinical protocol for the ongoing
      Phase I trial of CB3304 has been amended in order to allow multiple myeloma
      patients to be enrolled in the trial in addition to NHL patients.
CB1089
In
      June
      2005, Cougar exclusively licensed the worldwide rights to CB1089 (seocalcitol),
      a synthetic vitamin D analog. In prostate cancer clinical studies of a
      metabolite of vitamin D (calcitriol) given in combination with chemotherapy
      suggested that patients that received the combination of calcitriol plus
      chemotherapy had an improvement in their survival over the patients that
      received chemotherapy plus placebo without an increase in the toxicity of the
      chemotherapy. Preclinical studies in prostate cancer have shown that CB1089
      is a
      more potent anti-cancer drug than calcitriol, which may result in better
      efficacy when used in combination therapy to treat prostrate cancer as opposed
      to calcitriol. We anticipate beginning clinical trials of CB1089 in prostate
      cancer in the second half of 2006.
Competition
The
      development and commercialization for new products to treat cancer is highly
      competitive, and there will be considerable competition from major
      pharmaceutical, biotechnology, and specialty cancer companies. Many of our
      competitors have substantially more resources than the Company, including both
      financial and technical. In addition, many of these companies have more
      experience than the Company in preclinical and clinical development,
      manufacturing, regulatory, and global commercialization. The Company is also
      competing with academic institutions, governmental agencies and private
      organizations that are conducting research in the field of cancer. Competition
      for highly qualified employees is intense.
Potential
      competitors to Cougar include, but are not limited to, Abbott Labs, Astrazeneca,
      Bristol Myers Squibb, Roche, Genzyme, Novacea, Kosan, Dendreon and Cell Genesys.
License
      Agreements and Intellectual Property
Our
      goal
      is to obtain, maintain and enforce patent protection for our products,
      formulations, processes, methods and other proprietary technologies, preserve
      our trade secrets, and operate without infringing on the proprietary rights
      of
      other parties, both in the United States and in other countries. Our policy
      is
      to actively seek to obtain, where appropriate, the broadest intellectual
      property protection possible for our current product candidates (CB7630, CB3304,
      CB1089, CB6604 and the noscapine analogs) and any future product candidates,
      proprietary information and proprietary technology through a combination of
      contractual arrangements and patents, both in the U.S. and abroad. However,
      even
      patent protection may not always afford us with complete protection against
      competitors who seek to circumvent our patents. See "Risk Factors - Risks
      Relating to Our Business - If we fail to adequately protect or enforce our
      intellectual property rights or secure rights to patents of others, the value
      of
      our intellectual property rights would diminish," below.
5
We
      will
      continue to depend upon the skills, knowledge and experience of our scientific
      and technical personnel, as well as that of our advisors, consultants and other
      contractors, none of which is patentable. To help protect our proprietary
      know-how, which is not patentable, and for inventions for which patents may
      be
      difficult to enforce, we currently rely and will in the future rely on trade
      secret protection and confidentiality agreements to protect our interests.
      To
      this end, we require all of our employees, consultants, advisors and other
      contractors to enter into confidentiality agreements that prohibit the
      disclosure of confidential information and, where applicable, require disclosure
      and assignment to us of the ideas, developments, discoveries and inventions
      important to our business.
License
      Agreements
In
      April
      2004, Cougar entered into an exclusive, worldwide license agreement with BTG
      plc
      for CB7630 (abiraterone acetate). Specifically, Cougar licensed US Patent No.
      5,604,213, dated February 18, 1997 entitled "17-Substituted Steroids Useful in
      Cancer Treatment", US Patent No. 5,618,807, dated April 8, 1997 entitled "Method
      for Preparing 17-Substituted Steroids useful in Cancer Treatment", the
      corresponding foreign patents and two additional US patent applications. As
      consideration for the rights to abiraterone acetate, Cougar paid BTG an initial
      license fee of $923,100 and agreed to pay BTG an annual license maintenance
      fee
      of 150,000 pounds sterling (currently, approximately $288,000) until the first
      commercial sale of the licensed product. In addition, the license agreement
      requires the Company to make substantial payments upon the achievement of
      certain clinical and regulatory milestones. Should abiraterone acetate become
      commercialized, the Company will be obligated to pay to BTG an annual royalty
      based on net sales of the product. In the event that the Company sublicenses
      abiraterone acetate to a third party, the Company is obligated to pay royalties
      to BTG based on a fixed rate of fees or royalties received from the sublicense.
      The license agreement contains other customary clauses and terms as are common
      in similar agreements in the industry.
In
      March
      2004, Cougar entered into an exclusive, worldwide license agreement with Emory
      University for CB3304 (noscapine), CB6604 and the noscapine analogs.
      Specifically, Cougar licensed US Patent No. 6,376,516, dated April 23, 2002
      entitled "Noscapine Derivatives, Useful as Anticancer Agents", US Patent No.
      6,673,814, dated January 6, 2004 entitled "Delivery Systems and Methods for
      Noscapine and Noscapine Derivatives, Useful as Anticancer Agents", the
      corresponding foreign patent applications and additional US patent applications.
      As consideration for the rights to noscapine and the analogs of noscapine,
      Cougar paid Emory University an initial license fee of $72,435 and agreed to
      sponsor a Research Project involving the licensed technology in the amount
      of approximately $114,000. In connection with the License Agreement, the
      Company has agreed to make substantial payments to Emory University, payable
      upon the achievement of certain clinical and regulatory milestones. Should
      a
      product incorporating the licensed technology be commercialized, the Company
      will be obligated to pay to Emory University an annual royalty based on net
      sales of the product. In the event that the Company sublicenses the licensed
      technology to a third party, the Company will be obligated to pay royalties
      to
      Emory University based on a fixed rate of fees or royalties received from the
      sublicense. The license agreement contains other customary clauses and terms
      as
      are common in similar agreements in the industry.
In
      June
      2005, Cougar entered into an exclusive, worldwide license agreement with LEO
      Pharma A/S for CB1089 (seocalcitrol). Specifically, Cougar licensed US Patent
      No. 5,190,934, dated April 7, 1990, US Patent No. 6,310,226, dated October
      30,
      2001, the corresponding foreign patents and certain additional foreign patent
      applications. As consideration for the rights to seocalcitrol, Cougar paid
      LEO
      Pharma A/S an initial license fee of $250,000. In addition, the license
      agreement requires the Company to make substantial payments upon the achievement
      of certain clinical and regulatory milestones. Should seocalcitrol become
      commercialized, the Company will be obligated to pay to LEO Pharma A/S an annual
      royalty based on net sales of the product. In the event that the Company
      sublicenses seocalcitrol to a third party, the Company is obligated to pay
      royalties to LEO Pharma A/S based on a fixed rate of fees or royalties received
      from the sublicense. The license agreement contains other customary clauses
      and
      terms as are common in similar agreements in the industry.
6
Government
      Regulation
The
      research, development, testing, manufacture, labeling, promotion, advertising,
      distribution, and marketing, among other things, of our products are extensively
      regulated by governmental authorities in the United States and other countries.
      In the United States, the FDA regulates drugs under the Federal Food, Drug,
      and
      Cosmetic Act, or the "FDCA," and its implementing regulations. Failure to comply
      with the applicable U.S. requirements may subject us to administrative or
      judicial sanctions, such as FDA refusal to approve pending New Drug
      Applications, warning letters, product recalls, product seizures, total or
      partial suspension of production or distribution, injunctions, and/or criminal
      prosecution.
Drug
      Approval Process
.
      None of
      our drugs may be marketed in the U.S. until the drug has received FDA approval.
      The steps required before a drug may be marketed in the U.S.
      include:
·
preclinical
                laboratory tests, animal studies, and formulation
                studies;
·
submission
                to the FDA of an IND for human clinical testing, which must become
                effective before human clinical trials may
                begin;
·
adequate
                and well-controlled human clinical trials to establish the safety
                and
                efficacy of the drug for each
                indication;
·
submission
                to the FDA of an NDA;
·
satisfactory
                completion of an FDA inspection of the manufacturing facility or
                facilities at which the drug is produced to assess compliance with
                current
                good manufacturing practices, or "cGMPs";
                and
·
FDA
                review and approval of the NDA.
Preclinical
      tests include laboratory evaluation of product chemistry, toxicity, and
      formulation, as well as animal studies. The conduct of the preclinical tests
      and
      formulation of the compounds for testing must comply with federal regulations
      and requirements. The results of the preclinical tests, together with
      manufacturing information and analytical data, are submitted to the FDA as
      part
      of an IND, which must become effective before human clinical trials may begin.
      An IND will automatically become effective 30 days after receipt by the FDA,
      unless before that time the FDA raises concerns or questions about issues such
      as the conduct of the trials as outlined in the IND. In such a case, the IND
      sponsor and the FDA must resolve any outstanding FDA concerns or questions
      before clinical trials can proceed. The Company cannot be sure that submission
      of an IND will result in the FDA allowing clinical trials to begin.
Clinical
      trials involve the administration of the investigational drug to human subjects
      under the supervision of qualified investigators. Clinical trials are conducted
      under protocols detailing the objectives of the study, the parameters to be
      used
      in monitoring safety, and the effectiveness criteria to be evaluated. Each
      protocol must be submitted to the FDA as part of the IND.
7
Clinical
      trials typically are conducted in three sequential Phases, but the Phases may
      overlap. The study protocol and informed consent information for study subjects
      in clinical trials must also be approved by an Institutional Review Board for
      each institution where the trials will be conducted. Study subjects must sign
      an
      informed consent form before participating in a clinical trial. Phase I usually
      involves the initial introduction of the investigational drug into people to
      evaluate its short-term safety, dosage tolerance, metabolism, pharmacokinetics
      and pharmacologic actions, and, if possible, to gain an early indication of
      its
      effectiveness. Phase II usually involves trials in a limited patient population
      to (i) evaluate dosage tolerance and appropriate dosage; (ii) identify possible
      adverse effects and safety risks; and (iii) evaluate preliminarily the efficacy
      of the drug for specific indications. Phase III trials usually further evaluate
      clinical efficacy and test further for safety by using the drug in its final
      form in an expanded patient population. There can be no assurance that Phase
      I,
      Phase II, or Phase III testing will be completed successfully within any
      specified period of time, if at all. Furthermore, the Company or the FDA may
      suspend clinical trials at any time on various grounds, including a finding
      that
      the subjects or patients are being exposed to an unacceptable health
      risk.
The
      FDCA
      permits FDA and the IND sponsor to agree in writing on the design and size
      of
      clinical studies intended to form the primary basis of an effectiveness claim
      in
      an NDA application. This process is known as Special Protocol Assessment. These
      agreements may not be changed after the clinical studies begin, except in
      limited circumstances.
Assuming
      successful completion of the required clinical testing, the results of the
      preclinical studies and of the clinical studies, together with other detailed
      information, including information on the manufacture and composition of the
      drug, are submitted to the FDA in the form of an NDA requesting approval to
      market the product for one or more indications. The testing and approval process
      requires substantial time, effort, and financial resources. The agencies review
      the application and may deem it to be inadequate to support the registration,
      and companies cannot be sure that any approval will be granted on a timely
      basis, if at all. The FDA may also 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 recommendations of the advisory committee.
The
      FDA
      has various programs, including fast track, priority review, and accelerated
      approval, that are intended to expedite or simplify the process for reviewing
      drugs, and/or provide for approval on the basis surrogate endpoints. Generally,
      drugs that may be eligible for one or more of these programs are those for
      serious or life-threatening conditions, those with the potential to address
      unmet medical needs, and those that provide meaningful benefit over existing
      treatments. A company cannot be sure that any of its drugs will qualify for
      any
      of these programs, or that, if a drug does qualify, that the review time will
      be
      reduced.
Section
      505(b)(2) of the FDCA allows the FDA to approve a follow-on drug on the basis
      of
      data in the scientific literature or a prior FDA approval of an NDA for a
      related drug. This procedure potentially makes it easier for generic drug
      manufacturers to obtain rapid approval of new forms of drugs based on
      proprietary data of the original drug manufacturer.
Before
      approving an NDA, the FDA usually will inspect the facility or the facilities
      at
      which the drug is manufactured and will not approve the product unless cGMP
      compliance is satisfactory. If the FDA evaluates the NDA and the manufacturing
      facilities as acceptable, 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 post-marketing testing and
      surveillance to monitor the drug's safety or efficacy, or impose other
      conditions.
8
After
      approval, certain changes to the approved product, such as adding new
      indications, making certain manufacturing changes, or making certain additional
      labeling claims, are subject to further FDA review and approval. Before a
      company can market products for additional indications, it must obtain
      additional approvals from FDA. Obtaining approval for a new indication generally
      requires that additional clinical studies be conducted. A company cannot be
      sure
      that any additional approval for new indications for any product candidate
      will
      be approved on a timely basis, or at all.
Post-Approval
      Requirements
.
      Often
      times, even after a drug has been approved by the FDA for sale, the FDA may
      require that certain post-approval requirements be satisfied, including the
      conduct of additional clinical studies. If such post-approval conditions are
      not
      satisfied, the FDA may withdraw its approval of the drug. In addition, holders
      of an approved NDA are required to: (i) report certain adverse reactions to
      the
      FDA, (ii) comply with certain requirements concerning advertising and
      promotional labeling for their products, and (iii) continue to have quality
      control and manufacturing procedures conform to cGMP after approval. The FDA
      periodically inspects the sponsor's records related to safety reporting and/or
      manufacturing facilities; this latter effort includes assessment of compliance
      with cGMP. Accordingly, manufacturers must continue to expend time, money,
      and
      effort in the area of production and quality control to maintain cGMP
      compliance. We intend to use third party manufacturers to produce our products
      in clinical and commercial quantities, and future FDA inspections may identify
      compliance issues at the facilities of our contract manufacturers that may
      disrupt production or distribution, or require substantial resources to correct.
      In addition, discovery of problems with a product after approval may result
      in
      restrictions on a product, manufacturer, or holder of an approved NDA, including
      withdrawal of the product from the market.
Employees
As
      of the
      date of this Report, Cougar had 3 employees, all of which are full-time. Cougar
      anticipates hiring up to 7 additional full-time employees devoted to research
      and development activities and up to 3 additional part-time employees for
      general and administrative activities over the next few years.
Description
      of Property
Commencing
      April 8, 2006, the Company's corporate offices will be located at 10990 Wilshire
      Boulevard, Suite 1200, Los Angeles, California 90024. Pursuant to an Office
      Lease dated October 31, 2005 by and between Cougar and Douglas Emmett Realty
      Fund 1997, we are required to make monthly lease payments of $18,671, with
      annual increases of approximately 3%. The office space is approximately 7,300
      square feet, and the lease expires on February 28, 2011.
Legal
      Proceedings
Cougar
      is
      not currently involved in any material legal proceedings.
Cautionary
      Note Regarding Forward-Looking Statements
This
      report contains certain statements that are "forward-looking statements,"
including, among other things, discussions of our business strategies, future
      operations and capital resources. Words such as, but not limited to, "may,"
"likely," "anticipate," "expect" and "believes" indicate forward-looking
      statements.
9
Forward-looking
      statements are included in the section of this report entitled "Description of
      Business of Cougar Biotechnology, Inc." Although we believe that the
      expectations reflected in such forward-looking statements are generally
      reasonable, we cannot assure you that such expectations will ultimately prove
      to
      be correct. Generally, these statements relate to our business plans and
      strategies, projected or anticipated benefits or other consequences of market
      conditions and opportunities, business plans or strategies, projections
      involving anticipated sales and revenues, expenses, projected future earnings
      and other aspects of operational results. All phases of our operations are
      subject to a number of uncertainties, risks and other influences, most of which
      are outside our control, and any one or combination of which could materially
      and adversely affect the results of our operations, and also, could affect
      whether any such forward-looking statements contained herein ultimately prove
      to
      be accurate. Important factors that could cause actual results to differ
      materially from our current expectations are summarized in the section captioned
      "Risk Factors" immediately following.
Risk
      Factors
We
      currently have no product revenues and will need to raise additional capital
      to
      operate our business
.
      To
      date, we have generated no product revenues
.
Until,
      and unless, we receive approval from the U.S. Food and Drug Administration,
      or
      FDA, and other regulatory authorities for our product candidates, we cannot
      sell
      our drugs and will not have product revenues. Currently, our only product
      candidates are CB7630, CB3304, CB6604, the noscapine analogs and CB1089, and
      none of these products is approved by the FDA for sale. Therefore, for the
      foreseeable future, we will have to fund all of our operations and capital
      expenditures from cash on hand, licensing fees and grants, and potentially,
      future offerings. Currently, we believe we have cash on hand to fund our
      operations through December 2007. However, changes may occur that would consume
      our available capital before that time, including changes in and progress of
      our
      development activities, acquisitions of additional candidates and changes in
      regulation. We will need to seek additional sources of financing, which may
      not
      be available on favorable terms, if at all. If we do not succeed in raising
      additional funds on acceptable terms, we may be unable to complete planned
      pre-clinical and clinical trials or obtain approval of any product candidates
      from the FDA and other regulatory authorities. In addition, we could be forced
      to discontinue product development, reduce or forego sales and marketing efforts
      and forego attractive business opportunities. Any additional sources of
      financing will likely involve the issuance of our equity securities, which
      will
      have a dilutive effect on our stockholders.
We
      are not currently profitable and may never become
      profitable
.
We have
      a history of losses and expect to incur substantial losses and negative
      operating cash flow for the foreseeable future, and we may never achieve or
      maintain profitability. For the twelve months ended December 31, 2005, we had
      a
      net loss of $7,811,338 and since our inception in May 2003 through December
      31,
      2005, we have incurred a net loss of $11,349,849. Even if we succeed in
      developing and commercializing one or more product candidates, we expect to
      incur substantial losses for the foreseeable future and may never become
      profitable. We also expect to continue to incur significant operating and
      capital expenditures and anticipate that our expenses will increase
      substantially in the foreseeable future as we:
·
continue
                to undertake pre-clinical development and clinical trials for product
                candidates;
·
seek
                regulatory approvals for product
                candidates;
·
implement
                additional internal systems and infrastructure;
                and
10
·
hire
                additional personnel.
We
      also
      expect to experience negative cash flow for the foreseeable future as we fund
      our operating losses and capital expenditures. As a result, we will need to
      generate significant revenues in order to achieve and maintain profitability.
      We
      may not be able to generate these revenues or achieve profitability in the
      future. Our failure to achieve or maintain profitability could negatively impact
      the value of our securities.
We
      have a limited operating history upon which to base an investment
      decision
.
We are a
      development-stage company and have not demonstrated an ability to perform the
      functions necessary for the successful commercialization of any product
      candidates. The successful commercialization of any product candidates will
      require us to perform a variety of functions, including:
·
continuing
                to undertake pre-clinical development and clinical
                trials;
·
participating
                in regulatory approval processes;
·
formulating
                and manufacturing products; and
·
conducting
                sales and marketing activities.
Our
      operations have been limited to organizing and staffing our Company, acquiring,
      developing and securing our proprietary technology and undertaking pre-clinical
      trials of our product candidates. These operations provide a limited basis
      for
      you to assess our ability to commercialize our product candidates and the
      advisability of investing in our securities.
If
      we do not obtain the necessary U.S. or worldwide regulatory approvals to
      commercialize any product candidate, we will not be able to sell our product
      candidates
.
We
      cannot assure you that we will receive the approvals necessary to commercialize
      any of our product candidates (CB7630, CB3304, CB6604, the noscapine analogs
      and
      CB1089), or any product candidate we acquire or develop in the future. We will
      need FDA approval to commercialize our product candidate in the U.S. and
      approvals from the FDA-equivalent regulatory authorities in foreign
      jurisdictions to commercialize our product candidate in those jurisdictions.
      In
      order to obtain FDA approval of any product candidate, we must submit to the
      FDA
      a New Drug Application, or NDA, demonstrating that the product candidate is
      safe
      for humans and effective for its intended use. This demonstration requires
      significant research and animal tests, which are referred to as pre-clinical
      studies, as well as human tests, which are referred to as clinical trials.
      Satisfaction of the FDA's regulatory requirements typically takes many years,
      depends upon the type, complexity and novelty of the product candidate and
      requires substantial resources for research, development and testing. We cannot
      predict whether our research and clinical approaches will result in drugs that
      the FDA considers safe for humans and effective for indicated uses. The FDA
      has
      substantial discretion in the drug approval process and may require us to
      conduct additional pre-clinical and clinical testing or to perform
      post-marketing studies. The approval process may also be delayed by changes
      in
      government regulation, future legislation or administrative action or changes
      in
      FDA policy that occur prior to or during our regulatory review. Delays in
      obtaining regulatory approvals may:
·
delay
                commercialization of, and our ability to derive product revenues
                from, our
                product candidate;
·
impose
                costly procedures on us; and
11
·
diminish
                any competitive advantages that we may otherwise
                enjoy.
Even
      if
      we comply with all FDA requests, the FDA may ultimately reject one or more
      of
      our NDAs. We may never obtain regulatory clearance for any of our product
      candidates (CB7630, CB3304, CB6604, the noscapine analogs and CB1089). Failure
      to obtain FDA approval of any of our product candidates will severely undermine
      our business by leaving us without a saleable product, and therefore without
      any
      source of revenues, until another product candidate can be developed. There
      is
      no guarantee that we will ever be able to develop or acquire another product
      candidate.
In
      foreign jurisdictions, we must receive approval from the appropriate regulatory
      authorities before we can commercialize any drugs. Foreign regulatory approval
      processes generally include all of the risks associated with the FDA approval
      procedures described above. We cannot assure you that we will receive the
      approvals necessary to commercialize our product candidate for sale outside
      the
      United States.
Our
      product candidates are in early stages of clinical
      trials
.
Each of
      our product candidates (CB7630, CB3304, CB6604, the noscapine analogs and
      CB1089), are in early stages of development and requires extensive pre-clinical
      and clinical testing. We cannot predict with any certainty if or when we might
      submit an NDA for regulatory approval for any of our product candidate or
      whether any such NDA will be accepted.
Clinical
      trials are very expensive, time-consuming and difficult to design and
      implement
.
Human
      clinical trials are very expensive and difficult to design and implement, in
      part because they are subject to rigorous regulatory requirements. The clinical
      trial process is also time consuming. We estimate that clinical trials of our
      product candidate will take at least several years to complete. Furthermore,
      failure can occur at any stage of the trials, and we could encounter problems
      that cause us to abandon or repeat clinical trials. The commencement and
      completion of clinical trials may be delayed by several factors,
      including:
·
unforeseen
                safety issues;
·
determination
                of dosing issues;
·
lack
                of effectiveness during clinical
                trials;
·
slower
                than expected rates of patient
                recruitment;
·
inability
                to monitor patients adequately during or after treatment;
                and
·
inability
                or unwillingness of medical investigators to follow our clinical
                protocols.
In
      addition, we or the FDA may suspend our clinical trials at any time if it
      appears that we are exposing participants to unacceptable health risks or if
      the
      FDA finds deficiencies in our Investigational New Drug, or IND, submissions
      or
      the conduct of these trials. Therefore, we cannot predict with any certainty
      the
      schedule for future clinical trials.
The
      results of our clinical trials may not support our product candidate
      claims
.
Even if
      our clinical trials are completed as planned, we cannot be certain that their
      results will support our product candidate claims. Success in pre-clinical
      testing and early clinical trials does not ensure that later clinical trials
      will be successful, and we cannot be sure that the results of later clinical
      trials will replicate the results of prior clinical trials and pre-clinical
      testing. The clinical trial process may fail to demonstrate that our product
      candidates are safe for humans and effective for indicated uses. This failure
      would cause us to abandon a product candidate and may delay development of
      other
      product candidates. Any delay in, or termination of, our clinical trials will
      delay the filing of our NDAs with the FDA and, ultimately, our ability to
      commercialize our product candidates and generate product revenues. In addition,
      our clinical trials involve a small patient population. Because of the small
      sample size, the results of these clinical trials may not be indicative of
      future results. In addition, the initial clinical trial for CB7630 was performed
      outside the United States, and therefore, may not have been performed in
      accordance with standards normally required by the FDA and other regulatory
      agencies.
12
Physicians
      and patients may not accept and use our drugs
.
Even if
      the FDA approves one or more of our product candidates, physicians and patients
      may not accept and use it. Acceptance and use of our product will depend upon
      a
      number of factors including:
·
perceptions
                by members of the health care community, including physicians, about
                the
                safety and effectiveness of our
                drug;
·
cost-effectiveness
                of our product relative to competing
                products;
·
availability
                of reimbursement for our product from government or other healthcare
                payers; and
·
effectiveness
                of marketing and distribution efforts by us and our licensees and
                distributors, if any.
Because
      we expect sales of our current product candidates, if approved, to generate
      substantially all of our product revenues for the foreseeable future, the
      failure of these drugs to find market acceptance would harm our business and
      could require us to seek additional financing.
Our
      drug-development program depends upon third-party researchers who are outside
      our control
.
We
      depend upon independent investigators and collaborators, such as universities
      and medical institutions, to conduct our pre-clinical and clinical trials under
      agreements with us. These collaborators are not our employees and we cannot
      control the amount or timing of resources that they devote to our programs.
      These investigators may not assign as great a priority to our programs or pursue
      them as diligently as we would if we were undertaking such programs ourselves.
      If outside collaborators fail to devote sufficient time and resources to our
      drug-development programs, or if their performance is substandard, the approval
      of our FDA applications, if any, and our introduction of new drugs, if any,
      will
      be delayed. These collaborators may also have relationships with other
      commercial entities, some of whom may compete with us. If our collaborators
      assist our competitors at our expense, our competitive position would be
      harmed.
We
      will rely exclusively on third parties to formulate and manufacture our product
      candidate
.
We have
      no experience in drug formulation or manufacturing and do not intend to
      establish our own manufacturing facilities. We lack the resources and expertise
      to formulate or manufacture our own product candidates. We currently have no
      agreements for the commercial scale manufacture of our product candidates.
      We
      intend to enter into agreements with one or more manufacturers to manufacture,
      supply, store and distribute drug supplies for our clinical trials. If any
      of
      our current product candidates or any product candidates we may develop or
      acquire in the future receive FDA approval, we will rely on one or more
      third-party contractors to manufacture our drugs. Our anticipated future
      reliance on a limited number of third-party manufacturers exposes us to the
      following risks:
13
·
We
                may be unable to identify manufacturers on acceptable terms or at
                all
                because the number of potential manufacturers is limited and the
                FDA must
                approve any replacement contractor. This approval would require new
                testing and compliance inspections. In addition, a new manufacturer
                would
                have to be educated in, or develop substantially equivalent processes
                for,
                production of our products after receipt of FDA approval, if
                any.
·
Our
                third-party manufacturers might be unable to formulate and manufacture
                our
                drugs in the volume and of the quality required to meet our clinical
                needs
                and commercial needs, if any.
·
Our
                future contract manufacturers may not perform as agreed or may not
                remain
                in the contract manufacturing business for the time required to supply
                our
                clinical trials or to successfully produce, store and distribute
                our
                products.
·
Drug
                manufacturers are subject to ongoing periodic unannounced inspection
                by
                the FDA, the Drug Enforcement Administration, and corresponding state
                agencies to ensure strict compliance with good manufacturing practice
                and
                other government regulations and corresponding foreign standards.
                We do
                not have control over third-party manufacturers' compliance with these
                regulations and standards.
·
If
                any third-party manufacturer makes improvements in the manufacturing
                process for our products, we may not own, or may have to share, the
                intellectual property rights to the
                innovation.
Each
      of
      these risks could delay our clinical trials, the approval, if any, of our
      product candidates by the FDA or the commercialization of our product candidates
      or result in higher costs or deprive us of potential product
      revenues.
We
      have no experience selling, marketing or distributing products and no internal
      capability to do so
.
We
      currently have no sales, marketing or distribution capabilities. We do not
      anticipate having the resources in the foreseeable future to allocate to the
      sales and marketing of our proposed products. Our future success depends, in
      part, on our ability to enter into and maintain collaborative relationships
      for
      such capabilities, the collaborator's strategic interest in the products under
      development and such collaborator's ability to successfully market and sell any
      such products. We intend to pursue collaborative arrangements regarding the
      sales and marketing of our products, however, there can be no assurance that
      we
      will be able to establish or maintain such collaborative arrangements, or if
      able to do so, that they will have effective sales forces. To the extent that
      we
      decide not to, or are unable to, enter into collaborative arrangements with
      respect to the sales and marketing of our proposed products, significant capital
      expenditures, management resources and time will be required to establish and
      develop an in-house marketing and sales force with technical expertise. There
      can also be no assurance that we will be able to establish or maintain
      relationships with third party collaborators or develop in-house sales and
      distribution capabilities. To the extent that we depend on third parties for
      marketing and distribution, any revenues we receive will depend upon the efforts
      of such third parties, and there can be no assurance that such efforts will
      be
      successful. In addition, there can also be no assurance that we will be able
      to
      market and sell our products in the United States or overseas.
If
      we cannot compete successfully for market share against other drug companies,
      we
      may not achieve sufficient product revenues and our business will
      suffer
.
The
      market for our product candidates is characterized by intense competition and
      rapid technological advances. If any of our product candidates receives FDA
      approval, it will compete with a number of existing and future drugs and
      therapies developed, manufactured and marketed by others. Existing or future
      competing products may provide greater therapeutic convenience or clinical
      or
      other benefits for a specific indication than our products, or may offer
      comparable performance at a lower cost. If our products fail to capture and
      maintain market share, we may not achieve sufficient product revenues and our
      business will suffer.
14
We
      will
      compete against fully integrated pharmaceutical companies and smaller companies
      that are collaborating with larger pharmaceutical companies, academic
      institutions, government agencies and other public and private research
      organizations. Many of these competitors have oncology compounds already
      approved or in development. In addition, many of these competitors, either
      alone
      or together with their collaborative partners, operate larger research and
      development programs or have substantially greater financial resources than
      we
      do, as well as significantly greater experience in:
·
developing
                drugs;
·
undertaking
                pre-clinical testing and human clinical
                trials;
·
obtaining
                FDA and other regulatory approvals of
                drugs;
·
formulating
                and manufacturing drugs; and
·
launching,
                marketing and selling drugs.
Developments
      by competitors may render our products or technologies obsolete or
      non-competitive
.
The
      biotechnology and pharmaceutical industries are intensely competitive and
      subject to rapid and significant technological change. Some of the drugs that
      we
      are attempting to develop, such as CB7630, CB3304, CB6604, the noscapine analogs
      and CB1089, will have to compete with existing therapies. In addition, a large
      number of companies are pursuing the development of pharmaceuticals that target
      the same diseases and conditions that we are targeting. We face competition
      from
      pharmaceutical and biotechnology companies in the United States and abroad.
      In
      addition, companies pursuing different but related fields represent substantial
      competition. Many of these organizations competing with us have substantially
      greater capital resources, larger research and development staffs and
      facilities, longer drug development history in obtaining regulatory approvals
      and greater manufacturing and marketing capabilities than we do. These
      organizations also compete with us to attract qualified personnel and parties
      for acquisitions, joint ventures or other collaborations.
If
      we fail to adequately protect or enforce our intellectual property rights or
      secure rights to patents of others, the value of our intellectual property
      rights would diminish
.
Our
      success, competitive position and future revenues will depend in part on our
      ability and the abilities of our licensors to obtain and maintain patent
      protection for our products, methods, processes and other technologies, to
      preserve our trade secrets, to prevent third parties from infringing on our
      proprietary rights and to operate without infringing the proprietary rights
      of
      third parties.
To
      date,
      we hold certain exclusive patent rights, including rights under U.S. patent
      Nos.
      5,604,213, 5,618,807, 6,376,516, 6,673,814, 5,190,935, 6,310,226 and U.S. patent
      applications as well as rights under foreign patents and patent applications.
      See "License Agreements & Intellectual Property" below. We anticipate filing
      additional patent applications both in the U.S. and in other countries, as
      appropriate. However, we cannot predict:
15
·
the
                degree and range of protection any patents will afford us against
                competitors, including whether third parties will find ways to invalidate
                or otherwise circumvent our
                patents;
·
if
                and when patents will issue;
·
whether
                or not others will obtain patents claiming aspects similar to those
                covered by our patents and patent applications;
                or
·
whether
                we will need to initiate litigation or administrative proceedings
                which
                may be costly whether we win or
                lose.
Our
      success also depends upon the skills, knowledge and experience of our scientific
      and technical personnel, our consultants and advisors as well as our licensors
      and contractors. To help protect our proprietary know-how and our inventions
      for
      which patents may be unobtainable or difficult to obtain, we rely on trade
      secret protection and confidentiality agreements. To this end, it is our policy
      to require all of our employees, consultants, advisors and contractors to enter
      into agreements which prohibit the disclosure of confidential information and,
      where applicable, require disclosure and assignment to us of the ideas,
      developments, discoveries and inventions important to our business. These
      agreements may not provide adequate protection for our trade secrets, know-how
      or other proprietary information in the event of any unauthorized use or
      disclosure or the lawful development by others of such information. If any
      of
      our trade secrets, know-how or other proprietary information is disclosed,
      the
      value of our trade secrets, know-how and other proprietary rights would be
      significantly impaired and our business and competitive position would
      suffer.
If
      we infringe the rights of third parties we could be prevented from selling
      products, forced to pay damages, and defend against
      litigation
.
If our
      products, methods, processes and other technologies infringe the proprietary
      rights of other parties, we could incur substantial costs and we may have
      to:
·
obtain
                licenses, which may not be available on commercially reasonable terms,
                if
                at all;
·
abandon
                an infringing drug candidate;
·
redesign
                our products or processes to avoid
                infringement;
·
stop
                using the subject matter claimed in the patents held by
                others;
·
pay
                damages; or
·
defend
                litigation or administrative proceedings which may be costly whether
                we
                win or lose, and which could result in a substantial diversion of
                our
                financial and management resources.
Our
      ability to generate product revenues will be diminished if our drugs sell for
      inadequate prices or patients are unable to obtain adequate levels of
      reimbursement
.
Our
      ability to commercialize our drugs, alone or with collaborators, will depend
      in
      part on the extent to which reimbursement will be available from:
·
government
                and health administration
                authorities;
16
·
private
                health maintenance organizations and health insurers;
                and
·
other
                healthcare payers.
Significant
      uncertainty exists as to the reimbursement status of newly approved healthcare
      products. Healthcare payers, including Medicare, are challenging the prices
      charged for medical products and services. Government and other healthcare
      payers increasingly attempt to contain healthcare costs by limiting both
      coverage and the level of reimbursement for drugs. Even if one of our product
      candidates is approved by the FDA, insurance coverage may not be available,
      and
      reimbursement levels may be inadequate, to cover such drug. If government and
      other healthcare payers do not provide adequate coverage and reimbursement
      levels for one of our products, once approved, market acceptance of such product
      could be reduced.
We
      may not successfully manage our growth
.
Our
      success will depend upon the expansion of our operations and the effective
      management of our growth, which will place a significant strain on our
      management and on our administrative, operational and financial resources.
      To
      manage this growth, we must expand our facilities, augment our operational,
      financial and management systems and hire and train additional qualified
      personnel. If we are unable to manage our growth effectively, our business
      would
      be harmed.
We
      may be exposed to liability claims associated with the use of hazardous
      materials and chemicals
.
Our
      research and development activities may involve the controlled use of hazardous
      materials and chemicals. Although we believe that our safety procedures for
      using, storing, handling and disposing of these materials comply with federal,
      state and local laws and regulations, we cannot completely eliminate the risk
      of
      accidental injury or contamination from these materials. In the event of such
      an
      accident, we could be held liable for any resulting damages and any liability
      could materially adversely affect our business, financial condition and results
      of operations. In addition, the federal, state and local laws and regulations
      governing the use, manufacture, storage, handling and disposal of hazardous
      or
      radioactive materials and waste products may require us to incur substantial
      compliance costs that could materially adversely affect our business, financial
      condition and results of operations.
We
      rely on key executive officers and scientific and medical advisors, and their
      knowledge of our business and technical expertise would be difficult to
      replace
.
We are
      highly dependent on our principal scientific, regulatory and medical advisors.
      We do not have "key person" life insurance policies for any of our officers. The
      loss of the technical knowledge and management and industry expertise of any
      of
      our key personnel could result in delays in product development, loss of
      customers and sales and diversion of management resources, which could adversely
      affect our operating results.
If
      we are unable to hire additional qualified personnel, our ability to grow our
      business may be harmed
.
We will
      need to hire additional qualified personnel with expertise in pre-clinical
      testing, clinical research and testing, government regulation, formulation
      and
      manufacturing and sales and marketing. In particular, over the next 12 months,
      we expect to hire up to seven new employees devoted to research and development.
      We expect that the hiring of such additional personnel will increase our annual
      expenditures by approximately $1,040,000. We compete for qualified individuals
      with numerous biopharmaceutical companies, universities and other research
      institutions. Competition for such individuals is intense, and we cannot be
      certain that our search for such personnel will be successful. Attracting and
      retaining qualified personnel will be critical to our success.
We
      may incur substantial liabilities and may be required to limit commercialization
      of our products in response to product liability
      lawsuits
.
The
      testing and marketing of medical products entail an inherent risk of product
      liability. If we cannot successfully defend ourselves against product liability
      claims, we may incur substantial liabilities or be required to limit
      commercialization of our products. Our inability to obtain sufficient product
      liability insurance at an acceptable cost to protect against potential product
      liability claims could prevent or inhibit the commercialization of
      pharmaceutical products we develop, alone or with collaborators.
17
Management's
      Discussion and Analysis or Plan of Operation
The
      following discussion of the financial condition and results of operation of
      Cougar Biotechnology, Inc. should read in conjunction with the financial
      statements and the notes to those statements included in this 8-K. This
      discussion includes forward-looking statements that involve risk and
      uncertainties. As a result of many factors, such as those set forth under "Risk
      Factors," actual results may differ materially from those anticipated in these
      forward-looking statements.
Overview
Since
      the
      inception of Cougar Biotechnology, Inc. in May 2003, our efforts and resources
      have been focused primarily on acquiring and developing our pharmaceutical
      technologies, raising capital and recruiting personnel. We are a development
      stage company and have no product sales to date and we will not receive any
      product sales until we receive approval from the FDA or equivalent foreign
      regulatory bodies to begin selling our pharmaceutical candidates. Developing
      pharmaceutical products, however, is a lengthy and very expensive process.
      Assuming we do not encounter any unforeseen safety issues during the course
      of
      developing our product candidates, we do not expect to complete the development
      of a product candidate until approximately 2011. Currently, a large portion
      of
      the development expenses have related to our lead product candidate, CB-7630.
      As
      we proceed with the clinical development of CB-7630 and as we further develop
      CB-3304 and CB-1089, our second and third product candidates, respectively,
      our
      research and development expenses will further increase. To the extent we are
      successful in acquiring additional product candidates for our development
      pipeline, our need to finance further research and development will continue
      increasing. Accordingly, our success depends not only on the safety and efficacy
      of our product candidates, but also on our ability to finance the development
      of
      the products. Our major sources of working capital have been proceeds from
      various private financings, primarily private sales of our common stock and
      other equity securities.
On
      April
      3, 2006, SRKP Acquisition Corp., a Delaware corporation and a wholly owned
      subsidiary of SRKP 4, Inc., a Delaware corporation ("SRKP"), merged with and
      into Cougar (the "Merger"), with Cougar remaining as the surviving corporation
      and a wholly owned subsidiary of SRKP 4, Inc. Cougar stockholders received,
      in
      exchange for all of the outstanding shares of capital stock in Cougar, shares
      of
      capital stock of SRKP representing 100% of the outstanding capital stock of
      SRKP, on a fully-diluted basis, after giving effect to the Merger and a
      redemption, contemporaneous with the closing of the Merger, of all shares of
      SRKP capital stock held by SRKP's former stockholders immediately prior to the
      Merger. In addition, at the time of effectiveness of the Merger, the board
      of
      directors of SRKP was reconstituted, such that the directors of SRKP immediately
      prior to the Merger resigned and were replaced by the directors of Cougar
      immediately prior to the Merger. Further, upon the effective time of the Merger,
      the business of SRKP was abandoned and the business plan of Cougar was adopted.
      The transaction was therefore accounted for as a reverse acquisition with Cougar
      as the acquiring party and SRKP as the acquired party.
On
      April
      6, 2006, our Board of Directors approved a merger of Cougar into the Company
      and
      changing our name to "Cougar Biotechnology, Inc."  This merger was effected
      on April 6, 2006 upon the filing of a Certificate of Ownership with the
      Secretary of State of Delaware.  Accordingly, when we refer to our business
      and financial information relating to periods prior to the Merger, we are
      referring to the business and financial information of Cougar, unless otherwise
      indicated.
Research
      and development expenses consist primarily of salaries and related personnel
      costs, fees paid to consultants and outside service providers for regulatory
      and
      quality assurance support, licensing of drug compounds, and other expenses
      relating to the manufacture, development, testing and enhancement of our product
      candidates. We expense our research and development costs as they are
      incurred.
18
General
      and administrative expenses consist primarily of salaries and related expense
      for executive, finance and other administrative personnel, professional fees,
      business insurance, rent, general legal activities, and other corporate
      expenses.
Our
      results include non-cash compensation expense as a result of the issuance of
      stock and stock option grants. Compensation expense for options granted to
      employees and directors (excluding directors who are also scientific advisory
      board member or consultants) represents the difference between the fair value
      of
      our common stock and the exercise price of the options at the date of grant.
      We
      account for stock-based employee compensation arrangements in accordance with
      the provisions of Accounting Principles Board Opinion No. 25, "Accounting for
      Stock Issued to Employees" and comply with the disclosure provisions of
      Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
      Compensation." Compensation for options granted to consultants has been
      determined in accordance with SFAS No. 123 as the fair value of the equity
      instruments issued. The expense is included in the respective categories of
      expense in the statement of operations. We expect to record additional non-cash
      compensation expense in the future, which may be significant.
Results
      of Operations
Years
      Ended December 31, 2005 and 2004
General
      and administrative expenses
:
      For the
      year ended December 31, 2005, general and administrative expense was $1,266,620
      compared to $2,162,018 for the year ended December 31, 2004. This decrease
      of
      $895,398 is attributable to a decrease in licensing fees of $923,100, a
      reduction in payroll costs, including bonus, of $75,000 and a
      reduction in recruiting fees of approximately $42,000. The reduction in bonus
      expense resulted from one licensing agreement signed in 2005 compared to two
      agreements signed in 2004. The reduction in recruiting fees resulted from not
      hiring additional staff in 2005. We recorded a full year of directors and
      officers insurance and added general liability and clinical liability insurance
      in 2005, compared to only two months of directors and officers insurance in
      2004, resulting in additional expenses of approximately $55,800. In late 2004
      we
      increased the amount of office space rented as additional employees were hired,
      resulting in an increase in rent expense of approximately $25,800. In 2005
      we
      incurred expenses of approximately $60,000 relating to a potential merger
      compared to $0 expense for that purpose in 2004.
Research
      and development expenses
:
      For the
      year ended December 31, 2005, research and development expense was $6,256,700
      compared to $1,018,171 for the year ended December 31, 2004, representing an
      increase of $5,238,529. For the year ended December 31, 2005, we incurred
      professional contract services associated with the development of our three
      lead
      compounds of approximately $4,404,450 compared to approximately $452,300 in
      2004. Licensing fees of approximately $539,500 were incurred in 2005 resulting
      from the licensing of one compound ($250,000) and the payment of a license
      maintenance fee ($289,500). For year ended December 31, 2005, we recorded
      approximately $445,150 of stock-based compensation for consultants compared
      to
      approximately $14,700 in 2004. Payroll cost for the year ended December 31,
      2005
      increased approximately $259,600 resulting from a full year of payroll related
      expenses compared only 1.5 months of payroll related expenses in 2004. Also,
      in
      2005 we forgave $48,000 of an employee advance made in 2004. Bonus expense
      for
      the year ended December 31, 2005 increased approximately $116,300 due to only
      recording 1.5 months of bonus expense in 2004. Scientific Advisory Board fees
      increased approximately $31,800 for the year ended December 31, 2005. Partially
      off-setting these increases was a reduction in recruiting fees of approximately
      $143,200 as no additional staff was hired in 2005.
19
Interest
      expense
:
      For the
      year ended December 31, 2005 interest expense was approximately $299,300 as
      compared to $0 for the year ended December 31, 2004. During 2005 we sold
      promissory notes with warrants, convertible notes with warrants and secured
      a
      revolving credit facility. The interest expense includes a non-cash charge
      for
      amortization of note discounts of approximately $130,100, a non-cash charge
      for
      amortization of debt and note issuance cost of approximately $89,600 and accrued
      interest on the notes of approximately $51,400, interest charged by vendors
      of
      approximately $18,100 and interest on the credit facility of approximately
      $10,100.
Liquidity
      and Capital resources
From
      inception to December 31, 2005, we have incurred an aggregate net loss of
      $11,349,849, primarily as a result of expenses incurred through a combination
      of
      research and development activities related to the various technologies under
      our control and expenses supporting those activities.
We
      have
      financed our operations since inception primarily through equity and debt
      financing. During the year ended December 31, 2005, we experienced a decrease
      in
      cash and cash equivalents of $797,730. This decrease primarily resulted from
      net
      cash used on operating activities of $5,577,227 and net cash used in the
      purchase of fixed assets being partially offset by net proceeds of $4,784,162
      from debt and note financing. Total cash resources as of December 31, 2005
      were
      $1,040,864 compared to $1,838,594 at December 31, 2004.
Our
      continued operations will depend on whether we are able to raise additional
      funds through various potential sources, such as equity and debt financing.
      Through December 31, 2005, a significant portion of our financing has been
      through private placements of common stock and debt financing. We will continue
      to fund operations from cash on hand and through the similar sources of capital
      previously described. We can give no assurances that any additional capital
      that
      we are able to obtain will be sufficient to meet our needs. Based on our
      resources at April 4, 2006, we believe that we have sufficient capital to fund
      our operations through December 2007, but will need additional financing
      thereafter until we can achieve profitability, if ever.
Financings
On
      July
      15, 2005, we entered into a credit facility with a commercial bank that allows
      for borrowing under a line of credit of up to $1,000,000. The credit facility
      is
      guaranteed by a stockholder and member of our Board of Directors. In return
      for
      such guaranty, we granted the stockholder warrants to purchase a number of
      shares of Cougar common stock based on amount of the credit facility used by
      the
      Company. Prior to terminating the credit facility in 2006, we utilized up to
      $600,000 of the credit facility, and issued the stockholder a five-year warrant
      to purchase 82,613 shares of Cougar common stock at an exercise price of $3.18
      per share in consideration of the guaranty.
On
      June
      30, 2005, we issued unsecured promissory notes to six individuals, including
      a
      member of our Board of Directors, in the aggregate amount of $1,000,000 in
      consideration for aggregate proceeds to the Company of $1,000,000. In addition
      to the promissory notes, we issued the six individuals five-year warrants to
      purchase an aggregate of 137,689 shares of Cougar common stock at an exercise
      price of $3.18 per share.
In
      two
      closings on November 23, 2005 and January 24, 2006, Cougar sold an aggregate
      of
      $6,145,120 in aggregate principal amount of senior convertible notes (the
"Bridge Notes") to certain institutional and individual accredited investors in
      a private placement transaction (the "Bridge Offering"). Additionally, Cougar
      issued warrants to purchase an aggregate of 193,243 shares of Cougar Common
      Stock at an exercise price per share of $3.18 to our placement agents, and
      paid
      commissions and other offering-related expenses aggregating approximately
      $326,000. The principal balance of $6,145,120, together with accrued and unpaid
      interest of approximately $89,000 thereon, was automatically converted into
      Units of Cougar securities on April 3, 2006 at a price per share of $1.73,
      pursuant to the terms of the Private Placement described
      below. Accordingly, the holders of the Bridge Notes received an aggregate
      of 360,356 shares of Cougar Common Stock and 3,243,217 shares of Cougar
      Preferred Stock upon conversion. The holders of the Bridge Securities are
      entitled to piggy-back registration rights with respect to the shares of Cougar
      Common Stock issued or issuable upon conversion of such securities.
20
Contemporaneously
      with the closing of the Merger, we completed a private placement offering
      whereby we raised gross proceeds of approximately $39,650,000 through the sale
      of 20,939,034 shares of Series A Convertible Preferred Stock and 2,326,561
      shares of Common Stock (the "Offering"). Additionally, on terms similar to that
      in the Offering, we sold 91,989 shares of Common Stock and 827,909 shares of
      Series A Preferred Stock in consideration of cash in the amount of approximately
      $600,000 and the cancellation of certain note obligations of the Company in
      the
      aggregate amount of  approximately $990,000, including principal and
      interest. Each share of the Series A Convertible Preferred Stock will be
      convertible, in whole or in part, at the option of the holder at any into shares
      of our common stock initially on a one-for-one basis and at an initial
      conversion price of $4.50 per share (as adjusted for the Merger). At our
      election, we may require each holder to convert its outstanding shares of the
      Series A Convertible Preferred Stock into shares of our common stock if the
      price per share of common stock trades at or above 200% of the Purchase price
      for a period of twenty consecutive trading days on any securities exchange,
      automated quotation system or any other over-the-counter market.
Current
      and Future Financing Needs
We
      have
      incurred negative cash flow from operations since we started our business.
      We
      have spent, and expect to continue to spend, substantial amounts in connection
      with implementing our business strategy, including our planned product
      development efforts, our clinical trials, and our research and discovery
      efforts. Given the current and desired pace of clinical development of our
      three
      product candidates, over the next 12 months we estimate that that our research
      and development expenses will be approximately $12.8 million. We will need
      approximately $2.7 million for general administrative expenses for
      2006.
However,
      the actual amount of funds we will need to operate is subject to many factors,
      some of which are beyond our control. These factors include the
      following:
·
The
                progress of our research
                activities;
·
the
                number and scope of our research
                programs;
·
the
                progress of our pre-clinical and clinical development
                activities;
·
the
                progress of the development efforts of parties with whom we have
                entered
                into research and development
                agreements;
·
our
                ability to maintain current research and development programs and
                to
                establish new research and development and licensing
                arrangements;
·
the
                cost involved in prosecuting and enforcing patent claims and other
                intellectual property rights; and
21
·
the
                cost and timing of regulatory
                approvals.
We
      have
      based our estimate on assumptions that may prove to be wrong. We may need to
      obtain additional funds sooner then planned or in greater amounts than we
      currently anticipate. Potential sources of financing include strategic
      relationships, public or private sales of equity or debt and other sources.
      We
      may seek to access the public or private equity markets when conditions are
      favorable due to our long-term capital requirements. We do not have any
      committed sources of financing at this time, and it is uncertain whether
      additional funding will be available when we need it on terms that will be
      acceptable to us, or at all. If we raise funds by selling additional shares
      of
      common stock or other securities convertible into common stock, the ownership
      interest of our existing stockholders will be diluted. If we are not able to
      obtain financing when needed, we may be unable to carry out our business plan.
      As a result, we may have to significantly limit our operations and our business,
      financial condition and results of operations would be materially
      harmed.
Plan
      of Operation
Our
      plan
      of operation for the year ending December 31, 2006 is to continue implementing
      our business strategy, including the clinical development of our three product
      candidates. We also intend to expand our drug candidate portfolio by acquiring
      additional drug technologies for development. We expect our principal
      expenditures during the next 12 months to include:
·
Operating
                expenses, including expanded research and development and general
                and
                administrative expenses; and
·
product
                development expenses, including the costs incurred with respect to
                applications to conduct clinical trials in the United States for
                our three
                products.
As
      part
      of our planned expansion, we anticipate hiring up to 7 additional full-time
      employees devoted to research and development activities and up to 3 additional
      full-time employees for general and administrative activities. In addition,
      we
      intend to use clinical research organizations and third parties to perform
      our
      clinical studies and manufacturing. As indicated above, at our current and
      desired pace of clinical development of our three product candidates, during
      2006 we expect to spend approximately $12.8 million on clinical development
      and
      research and development activities and expend approximately $2.5 million on
      general and administrative expenses and $242,000 on facilities
      rent.
Research
      and Development Projects
CB-7630.
      In April 2004, we exclusively licensed the worldwide rights to CB-7630
      (abiraterone
acetate)
      from BTG plc. CB-7630 is an orally active targeted inhibitor of the steroidal
      enzyme 17α-hydroxylase/C17,20 lyase, a cytochrome p450 complex that is involved
      in testosterone production. In preclinical studies, CB-7630 has demonstrated
      the
      ability
to
      selectively inhibit the target enzyme, reducing levels of testosterone
      production in both the adrenals and the testes that is believed to stimulate
      the
      growth of prostrate cancer cells.
In
      Phase
      I trials performed by the Centre for Cancer Therapeutics, Institute of Cancer
      Research (Sutton, United Kingdom), and Royal Marsden NHS Trust (Sutton, United
      Kingdom), CB-7630 was administered as a single agent to 26 patients with
      prostate cancer. We believe that the data from these clinical studies indicate
      that: 1) CB-7630, at an oral dose of 800mg, can successfully suppress
      testosterone levels to the castrate range; 2) CB-7630 can suppress testosterone
      produced by both the testes and the adrenals; and 3) CB-7630 is well tolerated
      with an acceptable toxicity profile. The results from these Phase I studies
      of
      CB-7630 were published in the British Journal of Cancer in June
      2004.
22
In
      December 2005, we initiated a Phase I/II trial of CB-7630 for the treatment
      of
      advanced prostate cancer. The Phase I/II trial is being conducted at The
      Institute of Cancer Research, in the Cancer Research UK Centre for Cancer
      Therapeutics, and at The Royal Marsden Hospital in the United Kingdom. The
      Phase
      I/II study is an open label, dose escalating study to evaluate the safety and
      efficacy of CB-7630 administered daily to patients with chemotherapy-naïve
      hormone refractory prostate cancer (HRPC) with a rising PSA (prostate specific
      antigen) despite hormonal therapy.
Through
      fiscal 2005, we have incurred approximately $5,962,700 of cost related to the
      development of CB-7630, of which $4,270,700 was incurred in fiscal 2005 and
      $1,692,000 was incurred in fiscal 2004. Currently, we anticipate that we will
      need to expend approximately an additional $4,900,000 to $5,400,000 in
      development costs in fiscal 2006 and at least an aggregate of approximately
      $50,000,000 to $75,000,000 until we receive FDA approval for CB-7630. Should
      we
      choose to continued development we expect that it will take an additional 6
      to 8
      years before we complete development and obtain FDA approval of CB-7630, if
      ever.
CB-3304.
      In March 2004, we exclusively licensed the worldwide rights to CB-3304
      (noscapine), an orally active alkaloid derived from opium. Preclinical studies
      have demonstrated that CB-3304 has anti-tumor activity and acts as an inhibitor
      of microtubule dynamics. Therefore, we believe that CB-3304 has potential
      applications in the treatment of a number of different tumor types where tubulin
      binding agents are known to have activity. These tumor types include, but are
      not limited to, non-Hodgkin's lymphoma, multiple myeloma, breast cancer, lung
      cancer, ovarian cancer and prostate cancer.
In
      December 2005, we announced positive interim data from an ongoing Phase I trial
      of CB-3304 in patients with relapsed or refractory non-Hodgkin's lymphoma. The
      trial is an open label dose escalating study, being conducted at the University
      of Southern California Norris Comprehensive Cancer Center, where cohorts of
      patients with relapsed/refractory non-Hodgkin's lymphoma (NHL) or chronic
      lymphocytic leukemia (CLL/SLL) were treated at one of three different dose
      levels involving total daily doses of 1 g, 2 g, and 3 g per day. At each dose
      level, noscapine was administered orally on a three times a day schedule for
      49
      days. In the trial, responses for NHL patients were evaluated using the
      International Working Group Response Criteria for NHL and responses for CLL
      patients were evaluated using the NCI Working Group criteria. For both NHL
      and
      CLL patients, toxicity was graded according to the NCI common toxicity criteria
      (CTC).
At
      this
      interim analysis, 12 patients with a median age of 65 years (range 38-71) have
      been accrued. Four subjects had CLL/SLL, 2 had mantle cell lymphoma, one had
      follicular grade III lymphoma, 4 had diffuse large cell lymphoma (DLC), and
      one
      had lymphoplasmacytic low grade lymphoma. These interim results
      suggest:
·
Of
                the 10 patients that are evaluable for response, one patient with
                follicular grade III disease has had a partial response. This patient
                initially demonstrated stabilization of their disease for a period
                of
                approximately four years before achieving a partial response. In
                addition,
                two patients, one with mantle cell lymphoma and one with DLC have
                demonstrated stable disease of duration 30 days and 77 days,
                respectively.
·
CB-3304
                has been well tolerated, with no grade 3 or 4 hematological toxicities.
                One grade 3 neurotoxicity consisting of depressed level of consciousness
                was experienced at the 3 gram dose
                level.
·
A
                larger study of noscapine is warranted to evaluate the efficacy of
                the
                compound in patients with lymphoma.
23
In
      December 2005, we also announced results from preclinical experiments that
      we
      believe demonstrate the effectiveness of CB-3304 for the treatment of NHL and
      multiple myeloma and that warrant our continued development of the drug in
      hematological malignancies. The preclinical studies demonstrate that CB-3304
      exhibits potent antitumor activity against NHL and myeloma in vitro, as well
      as
      in vivo in xenograft models. More specifically, the in vitro studies
      demonstrated that following exposure to CB-3304, the OPM2 (multiple myeloma),
      H9
      (T cell lymphoma) and RL (B cell lymphoma) tumor cell lines exhibited an IC50
      of
      approximately 30 nM, 700 nM, and 500 nM for the OPM2, H9 and RL lines,
      respectively. Treatment with noscapine resulted in the induction of apoptosis
      in
      each of the cell lines tested. Additionally, in vivo studies demonstrated that
      in xenograft models, daily administration of noscapine resulted in tumor growth
      delays of between 30-80% of the control tumor volumes.
Through
      fiscal 2005, we have incurred approximately $812,200 of cost related to the
      development of CB-3304, of which $526,700 was incurred in fiscal 2005 and
      $285,500 was incurred in fiscal 2004. Currently, we anticipate that we will
      need
      to expend approximately an additional $2,000,000 to $2,600,000 in development
      costs in fiscal 2006 and at least an aggregate of approximately $50,000,000
      to
      $75,000,000 until we receive FDA approval for CB-3304. Should we choose to
      continued development we expect that it will take an additional 6 to 8 years
      before we complete development and obtain FDA approval of CB-3304, if
      ever.
CB-1089.
      In June 2005, we exclusively licensed the worldwide rights to CB-1089
      (seocalcitol), a synthetic vitamin D analog. In prostate cancer, clinical
      studies of a metabolite of vitamin D (calcitriol) given in combination with
      chemotherapy suggested that patients that received the combination of calcitriol
      plus chemotherapy had an improvement in their survival over the patients that
      received chemotherapy plus placebo without an increase in the toxicity of the
      chemotherapy. Preclinical studies in prostate cancer have shown that CB-1089
      is
      a more potent anti-cancer drug than calcitriol, which may result in better
      efficacy when used in combination therapy to treat prostrate cancer as opposed
      to calcitriol. We anticipate beginning a Phase II clinical trial of CB-1089
      in
      prostate cancer in the second half of 2006.
Through
      fiscal 2005, we have incurred approximately $375,000 of cost related to the
      development of CB-1089, of which $375,000 was incurred in fiscal 2005 and $0
      was
      incurred in fiscal 2004. Currently, we anticipate that we will need to expend
      approximately an additional $1,900,000 to $2,400,000 in development costs in
      fiscal 2006 and at least an aggregate of approximately $50,000,000 to
      $75,000,000 until we receive FDA approval for CB-1089. Should we choose to
      continued development we expect that it will take an additional 6 to 8 years
      before we complete development and obtain FDA approval of CB-1089, if
      ever.
License
      Agreement Obligations
CB-3304.
      On February 23, 2004, we entered into a license agreement (the "License
      Agreement") with Emory University ("Emory") for the worldwide, exclusive rights
      to discover, develop, have made, use, sell, have sold, offer for sale and import
      the products described in Emory's intellectual property portfolio for noscapine
      and analogs of noscapine. The License Agreement terminates upon the date of
      the
      last to expire patent contained in the licensed technology. In consideration
      for
      the rights under the License Agreement, we paid Emory an initial license fee
      of
      $72,435 in 2004. We sponsored a research project involving the licensed
      technology in the amount of approximately $114,000 of which $28,688 and
      $85,312 were paid in 2005 and 2004, respectively. In connection with the license
      agreement, we has agreed to future milestone payments to Emory for the first
      technology from the intellectual property portfolio in the aggregate of up
      to
      $3,500,000, payable upon the achievement of certain clinical and regulatory
      milestones. Should a product incorporating the licensed technology be
      commercialized, we will be obligated to pay to Emory an annual royalty based
      on
      net sales of the product. In the event that we sublicense the licensed
      technology to a third party, we will be obligated to pay royalties to Emory
      based on a fixed rate of fees or royalties received from the
      sublicense.
24
CB-7630.
      Effective April 20, 2004, we entered into a license agreement with BTG
      International, LTD. ("BTG") for the exclusive worldwide rights to make, use,
      lease and sell abiraterone acetate. The agreement terminates upon the date
      of
      the last to expire patent contained in the licensed technology. In consideration
      for the rights under the BTG license agreement, we paid BTG an initial license
      fee of £500,000 (currently, approximately $923,100) in 2004 and agreed to pay
      BTG an annual license maintenance fee of £150,000 ($288,000) until the first
      commercial sale of the licensed product. In addition, the license agreement
      requires we to make aggregate milestone payments of up to £9,000,000
      ($16,614,000), payable upon the achievement of certain clinical and regulatory
      milestones. Should abiraterone acetate become commercialized, we will be
      obligated to pay to BTG an annual royalty based on net sales of the product.
      In
      the event that we sublicenses abiraterone acetate to a third party, we is
      obligated to pay royalties to BTG based on a fixed rate of fees or royalties
      received from the sublicense.
CB-1089.
      Effective June 27, 2005, we entered into a license agreement with LEO Pharma
      A/S
      ("LEO") for the exclusive worldwide right to make, use, lease and sell
      seocalcitol. The agreement terminates upon the later of the date of the last
      patent contained in the licensed technology to expire or twenty years. In
      consideration for the rights under the LEO license agreement, we paid LEO an
      initial license fee of $250,000 in 2005. In addition, the license agreement
      requires we to make aggregate milestone payments of up to $13,000,000, payable
      upon the achievement of certain clinical and regulatory milestones. Should
      seocalcitol become commercialized, we will be obligated to pay to LEO an annual
      royalty based on net sales of the product. In the event that we sublicenses
      seocalcitol to a third party, we is obligated to pay royalties to LEO based
      on a
      fixed rate of fees or royalties received from the sublicense.
Critical
      Accounting Policies
In
      December 2001, the SEC request that all registrants discuss their most "critical
      accounting policies" in management's discussion and analysis of financial
      condition and results of operations. The SEC indicated that a "critical
      accounting policy" is one which is both important to the portrayal of the
      company's financial condition and results and requires management's most
      difficult, subjective or complex judgments, often as a result of the need to
      make estimates about the effect of matters that are inherently
      uncertain.
Use
      of
      estimates:
The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect reported amounts of assets and liabilities
      as of the date of the balance sheet and reported amounts of expenses for the
      periods presented. Accordingly, actual results could differ from those
      estimates.
Net
      loss
      per share:
Basic
      net
      loss per share is computed by dividing net loss by the weighted-average number
      of common shares outstanding during the periods presented as required by SFAS
      No. 128, "Earnings Per Share". Diluted earnings per share have not been
      presented because the assumed exercise of the Company's outstanding options and
      warrants would have been anti-dilutive. Potentially dilutive securities excluded
      from the calculations amounted to 2,435,069 shares at December 31, 2005,
      comprised of 1,655,000 options and 780,069 of warrants, and 1,655,000 options
      at
      December 31, 2004.
25
Stock-based
          compensation:
SFAS
      No.
      123, "Accounting for Stock-Based Compensation" ("SFAS 123"), provides for the
      use of a fair value-based method of accounting for stock-based compensation.
      However, SFAS 123 allows an entity to continue to measure compensation cost
      for
      stock options granted to employees using the intrinsic value method of
      accounting prescribed by Accounting Principles Board Opinion No. 25 "Accounting
      for Stock Issued to Employees" ("APB 25"). The Company accounts for its employee
      and director stock options (except options issued to directors who are also
      scientific advisory board members or consultants) using the intrinsic value
      method in accordance with APB 25 and related interpretations. The Company
      measures compensation expense for employee and director stock options as the
      aggregate excess of the market value of its common stock over the exercise
      prices of the options on the date that both the number of shares the grantee
      is
      entitled to receive and the exercise prices are known. Such excess is amortized
      over the vesting period.
In
      accordance with the provisions of SFAS 123 and Emerging Issues Task Force
      ("EITF") No. 96-18, "Accounting for Equity Instruments That are Issued to Other
      Than Employees for Acquiring or in Conjunction with Selling, Goods or Services,"
all other issuances of common stock, stock options or other equity instruments
      to non-employees (including consultants and all members of the Scientific
      Advisory Board) as the consideration for goods or services received by the
      Company are accounted for based on the fair value of the equity instruments
      issued (unless the fair value of the consideration received can be more reliably
      measured). Any options issued to non-employees are recorded in expense and
      additional paid-in capital in stockholders' equity (deficiency) over the
      applicable service periods using variable accounting through the vesting date
      based on the fair value of the options at the end of each period.
Debt
      and
      note issuance costs and debt discounts:
Debt
      and
      note issuance costs related to obtaining the line of credit and the issuance
      of
      notes and debt discounts attributable to the value of warrants issued with
      the
      notes are being amortized to interest expense over the terms of the related
      debt
      instruments on a straight-line basis, which approximates the effective interest
      method.
Warrants
        issued with debt instruments:
For
        warrant and debt issuances in June 2005, the Company accounted for the value
        of
        warrants arising from the issuance of debt instruments pursuant to Accounting
        Principles Board Opinion No. 14, "Accounting for Convertible Debt and Debt
        Issued with Stock Purchase Warrants," by allocating the proceeds from issuance
        to the debt instruments and the warrants based on their relative fair values.
        The fair value of the warrants is allocated to additional paid-in capital
        and to
        debt or note discount, which is amortized to interest expense over the term
        of
        the instrument on a straight-line basis, which approximates the effective
        interest method.
In
        November 2005, the Company issued convertible notes payable and warrants.
        Since
        the conversion of the Company's convertible notes payable could result in a
        conversion into an indeterminable number of common shares, the Company
        determined that under the guidance in EITF Issue No. 00-19 ("EITF 00-19")
"Accounting for Derivative Financial Instruments Indexed to, and Potentially
        Settled in a Company's Own Stock", the Company was prohibited from concluding
        that the Company had sufficient authorized and unissued shares to net-share
        settle any warrants or options granted to non-employees. Therefore, on the
        date
        convertible notes were issued, the Company reclassified the related fair
        value
        of all warrants and options issued to non-employees that were outstanding
        from
        additional paid-in capital to current liabilities. Additionally, the Company
        retroactively revalued warrants issued in June 2005 to fair value in accordance
        with EITF 00-19. The fair value of all warrants is based on the Black-Scholes
        option pricing model and is marked to market at the end of each reporting
        period
        in which a change in fair value occurs. Changes in the fair value of warrants
        are recorded as interest expense. As a result of the change in valuation
        methods
        for the warrants issued in June 2005, a $20,000 charge was recorded to interest
        expense during 2005.
For
        warrants and convertible notes payable issued in November 2005, the Company
        accounted for the value of the warrants arising from the issuance of debt
        instruments pursuant to EITF 00-19, by allocating the proceeds first to the
        fair
        value of warrants, and then any residual amounts to the debt instruments.
        The
        fair value of the warrants is allocated to liabilities and to note discount.
        Upon conversion of the convertible notes to stock, warrants and options
        classified as current liabilities may be reclassified to additional paid-capital
        in the balance sheet.
The
        Company accounts for the intrinsic value of beneficial conversion rights
        arising
        from the issuance of convertible debt instruments with nondetachable conversion
        rights that are in-the money at the commitment date pursuant to the consensus
        of
        EITF Issue No. 98-5, "Accounting for Convertible Securities with Beneficial
        Conversion Features or Contingently Adjustable Conversion Ratios" and EITF Issue
        No. 00-27 ("EITF00-27"), "Application of Issue No. 98-5 to Certain Convertible
        Instruments." Such values are determined by first allocating an appropriate
        portion of the proceeds received from the debt instruments to the warrants
        included in the exchange based on the fair values of the warrants and the
        debt
        instruments as explained above. The intrinsic value of the beneficial conversion
        rights at the commitment date may also be recorded as additional paid-in
        capital
        or liabilities and debt discount as of that date or, if the terms of the
        debt
        instrument are contingently adjustable, may only be recorded if a triggering
        event occurs and the contingency is resolved.
26
Security
        Ownership of Certain Beneficial Owners and Management
The
        following table summarizes certain information regarding the beneficial
        ownership (as such term is defined in Rule 13d-3 under the Securities Exchange
        Act of 1934 (the "Exchange Act")) of the Company's outstanding Common Stock as
        of April 3, 2006 (after the Merger) by (i) each person known by the Company
        to
        be the beneficial owner of more than 5% of the Company's outstanding Common
        Stock, (ii) each director of the Company, (iii) each of the Company's named
        executive officers (as defined in Item 402(a)(3) of Regulation S-B under
        the
        Securities Act of 1933), and (iv) all executive officers and directors as
        a
        group. Except as indicated in the footnotes below, the security and stockholders
        listed below possess sole voting and investment power with respect to their
        shares. Except as otherwise indicated, the address of the security and
        stockholders listed below is 10990 Wilshire Boulevard, Suite 1200, Los Angeles,
        California 90024. Pursuant to the Certificate of Designations for our Preferred
        Stock, the number of shares of Common Stock listed below as being beneficially
        owned by any holder only includes that number of shares of Preferred Stock,
        on
        an as converted basis, to the extent that, and only to the extent that, as
        a
        result of such conversion, the total number of shares of Common Stock that
        such
        holder would then be deemed to beneficially own pursuant to Section 13(d)
        of the
        Exchange Act would exceed 9.99% of the total number of then issued and
        outstanding shares of Common Stock, as determined in accordance with Section
        13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
Shares
                  of
                  Common
Percentage
                  of
                  Common
Stock
                  Beneficially
Stock
                  Beneficially
Name
                  of Beneficial Owner
Owned
                  (#)
                  (1)
Owned
                  (%) (1)
Alan
                  H. Auerbach
684,100
                  (2
)
13.67
%
Arie
                  Belldegrun
590,745
                  (3
)
11.61
%
Charles
                  R. Eyler
19,206
                  (4
)
*
Gloria
                  T. Lee
38,411
                  (5
)
*
Harold
                  J. Meyers
270
                  S. Canyon View Drive
Los
                  Angeles, CA 90049
25,607
                  (6
)
*
Lindsay
                  A. Rosenwald
787
                  Seventh Avenue, 48
th
Floor
New
                  York, NY 10019
3,469,471
                  (7
)
74.95
%
David
                  M. Tanen
689
                  Fifth Avenue, 12
th
Floor
New
                  York, NY 10022
-0-
-0-
Horizon
                  BioMedical Ventures, LLC
787
                  Seventh Avenue, 48
th
Floor
New
                  York, NY 10019
3,184,903
69.13
%
BBT
                  Fund, L.P.
222,695
                  (8
)
4.63
%
CAP
                  Fund, L.P.
109,460
                  (8
)
2.33
%
SRI
                  Fund, L.P.
45,293
                  (8
)
0.97
%
Brookside
                  Capital Partners Fund, L.P
111
                  Huntington Avenue
Boston,
                  MA 02199
460,250
                  (9
)
9.99
%
Adage
                  Capital Partners, L.P.
200
                  Clarendon Street; 52
nd
Floor
Boston,
                  MA 02116
460,250
                  (10
)
9.99
%
H&Q
                  Healthcare Investors
c/o
                  Hambrecht & Quist Capital Management LLC
30
                  Rowes Wharf; Suite 430
Boston,
                  MA 02110
360,797(11
)
7.32
%
H&Q
                  Life Sciences Investors
c/o
                  Hambrecht & Quist Capital Management LLC
30
                  Rowes Wharf; Suite 430
Boston,
                  MA 02110
194,276
                  (11
)
4.06
%
Janus
                  Global Life Sciences Fund
151
                  Detroit Street
Denver,
                  CO 90206
460,250
                  (12
)
9.99
%
Merlin
                  Nexus II, LP
230
                  Park Avenue; Suite 928
New
                  York, NY 10169
444,058
                  (13
)
8.87
%
RA
                  Capital Biotech Fund, LP
111
                  Huntington Avenue; Suite 610
Boston,
                  MA 02199
460,250
                  (14
)
9.99
%
Tavistock
                  Life Sciences
9381
                  Judicial Drive: Suite 200
San
                  Diego, CA 92121
399,652
                  (15
)
8.05
%
T.
                  Rowe Price Associates, Inc.
100
                  East Pratt Street
Baltimore,
                  MD 21202
460,250
                  (16
)
9.99
%
Visium
                  Capital Management, LLC
c/o
                  Balyasny Asset Management, LP
650
                  Madison Avenue
New
                  York, NY 10022
460,250
                  (17
)
9.99
%
All
                  executive officers and directors as a group (7 persons)
4,827,541
82.51
%
*
        Less
        than 1%.
27
(1)
Beneficial ownership is determined
                  in
                  accordance with SEC rules, and includes any shares as to which
                  the
                  security or stockholder has sole or shared voting power or investment
                  power, and also any shares which the security or stockholder has
                  the right
                  to acquire within 60 days of the date hereof, whether through the
                  exercise
                  or conversion of any stock option, convertible security, warrant
                  or other
                  right. The indication herein that shares are beneficially owned
                  is not an
                  admission on the part of the security or stockholder that he, she
                  or it is
                  a direct or indirect beneficial owner of those shares.
(2)
Includes shares of Common Stock
                  issuable upon
                  exercise of options to purchase an aggregate of 396,017 shares
                  of Common
                  Stock that are currently exercisable or will become exercisable
                  within the
                  next 60 days.
(3)
Includes shares of Common Stock
                  issuable upon
                  exercise of options to purchase an aggregate of 440,031 shares
                  of Common
                  Stock and warrants to purchase 35,699 shares of Common Stock that
                  are
                  currently exercisable or will become exercisable within the next
                  60 days.
                  Does not include 167,506 shares of Common Stock beneficially owned
                  by the
                  Belldegrun's Children Trust, for which Dr. Belldegrun disclaims any
                  beneficial ownership interest, except to the extent of his pecuniary
                  interest therein.
(4)
Includes
                  shares of Common Stock issuable upon exercise of options to purchase
                  an
                  aggregate of 19,206 shares of Common Stock that are currently exercisable
                  or will become exercisable within the next 60 days.
(5)
Includes shares of Common Stock
                  issuable upon
                  exercise of options to purchase an aggregate of 38,411 shares of
                  Common
                  Stock that are currently exercisable or will become exercisable
                  within the
                  next 60 days.
(6)
Includes shares of Common Stock
                  issuable upon
                  exercise of options to purchase an aggregate of 25,607 shares of
                  Common
                  Stock that are currently exercisable or will become exercisable
                  within the
                  next 60 days.
(7)
Represents (i) 3,184,903 shares
                  held by
                  Horizon BioMedical Ventures, LLC, of which Dr. Rosenwald is the
                  managing
                  member and (ii) warrants to purchase an aggregate of 284,568 shares
                  of
                  Common Stock issued to Dr. Rosenwald. Does not include 133,217
                  shares of
                  Common Stock beneficially owned by a trust established for the
                  benefit of
                  Dr. Rosenwald's family, for which Dr. Rosenwald disclaims any beneficial
                  ownership interest, except to the extent of his pecuniary interest
                  therein.
(8)
Address is 201 Main Street, Suite
                  3200, Fort
                  Worth, TX 76102. BBT Fund, L.P., CAP Fund, L.P. and SRI Fund, L.P.
                  may be
                  deemed to be a "group" for reporting purposes pursuant to Section 13(d) of
                  the Exchange Act. Sid R. Bass, in his capacity as President and
                  sole
                  stockholder of the ultimate general partner of each of BBT Fund,
                  L.P., CAP
                  Fund, L.P. and SRI Fund, L.P., may be deemed to share voting or
                  investment
                  control over the securities held by these entities. Messr. Bass
                  disclaims
                  beneficial ownership of these securities.
(9)
Domenic Ferrante, as the sole managing
                  member
                  of Brookside Capital Management, LLC ("BCM"), BCM, as the sole general
                  partner of Brookside Capital Investors, L.P. ("BCI"), and BCI, as the sole
                  general partner of Brookside Capital Partners Fund, L.P., may each
                  be
                  deemed to share voting or investment control over the shares of
                  Common
                  Stock held by Brookside Capital Partners Fund, L.P.
(10)
Adage Capital Partners GP, LLC,
                  a Delaware
                  limited liability company, serves as the general partner of Adage
                  Capital
                  Partners, L.P. ("Fund"), and as such has discretion over the portfolio
                  securities beneficially owned by the Fund. Adage Capital Partners
                  GP, LLC
                  disclaims beneficial ownership of these securities except to the
                  extent of
                  its pecuniary interest therein.
(11)
Hambrecht & Quist Capital Management, LLC
                  is the investment advisor to H&Q Healthcare Investors and H&Q Life
                  Sciences Investors. Daniel R. Omstead, Ph.D., is President of Hambrecht
                  & Quist Capital Management, LLC and a member of the portfolio
                  management team and, as such, has voting, dispositive and investment
                  control over the securities held by H&Q Healthcare Investors Fund and
                  H&Q Life Sciences Fund. Dr. Omstead disclaims beneficial ownership
                  of
                  these securities.
(12)
Includes 21,203 shares of Common
                  Stock issued
                  to Janus Aspen Global Life Sciences Fund. Thomas Malley is the
                  portfolio
                  manager of Janus Global Life Sciences Fund and Janus Aspen Global
                  Life
                  Sciences Fund, and, as such, may be deemed to share voting or investment
                  control over the securities held by these funds.
(13)
Dominique Semon, as the managing
                  member of
                  the general partner of Merlin Nexus II, L.P., may be deemed to
                  share
                  voting or investment control over these securities. Mr. Semon disclaims
                  beneficial ownership of these securities.
(14)
Mr. Peter Kolchinsky, as the managing
                  director of RA Capital Management, LLC, the general partner of
                  RA Capital
                  Biotech Fund, LP, has shared voting and dispositive power with
                  respect to
                  these securities.
(15)
Shehan Dissanayake is the Chief
                  Executive
                  Officer of Tavistock Life Sciences, and as such may be deemed to
                  share
                  voting or investment control over these securities.
(16)
T. Rowe Price Associates, Inc. ("T. Rowe
                  Price Associates") serves as investment adviser with power to direct
investments
                  and/or sole power to vote the shares owned by the funds listed
                  under its
                  name in the table above, as well as shares owned by certain other
                  individual and institutional investors. For purposes of the reporting
                  requirements of the Securities Exchange Act of 1934, T. Rowe Price
                  Associates may be deemed to be the beneficial owner of all of the
                  shares
                  listed above; however, T. Rowe Price Associates expressly disclaims
                  that
                  it is, in fact, the beneficial owner of such securities. T. Rowe
                  Price
                  Associates is a wholly owned subsidiary of T. Rowe Price Group,
                  Inc.,
                  which is a publicly traded financial services holding
                  company.
(17)
Represents securities held by Visium
                  Long
                  Bias Offshore Fund, LTD, Visium Long Bias Fund, LP, Visium Balanced
                  Offshore Fund, LTD and Visium Balanced Fund, LP, for which Visium
                  Capital Management, LLC is the investment advisor ("Visium Capital").
                  Messrs. Jacob Gottlieb and Dmitry Balyasny, principals of Visium
                  Capital have shared voting and dispositive power with respect to
                  the
                  securities held by these entities.
Management
At
      the
      effective time of the Merger, the Company's board of directors was reconstituted
      by the appointment of Arie S. Belldegrun, M.D., Alan H. Auerbach, Lindsay A.
      Rosenwald, M.D., David Tanen and Harold J. Meyers as directors (all of whom
      were
      directors of Cougar immediately prior to and after the Merger), and the
      resignations of Richard A. Rappaport and Anthony C. Pintsopoulos from their
      roles as directors of the Company. The Company's executive management team was
      also reconstituted and Richard A. Rappaport resigned from his position as the
      Company's President and Anthony C. Pintsopoulos resigned from his positions as
      the Chief Financial Officer and Secretary. The following table sets forth the
      name and position of each of the Company's directors and executive officers
      after the Merger.
Name
Age
Positions
Arie
                S. Belldegrun, M.D, FACS
56
Director
                and Chairman of Scientific Advisory Board
Alan
                H. Auerbach
36
Director,
                Chief Executive Officer and President
Gloria
                T. Lee, M.D., Ph.D.
55
Vice
                President, Clinical Research and Development
Charles
                R. Eyler
58
Vice
                President, Finance, and Treasurer
Lindsay
                A. Rosenwald, M.D.
50
Director
David
                M. Tanen
34
Director
Harold
                J. Meyers
73
Director
28
Arie
      S. Belldegrun, M.D.
Dr.
      Belldegrun joined Cougar in December 2003 as Vice Chairman of the Board of
      Directors and Chairman of the Scientific Advisory Board. Dr. Belldegrun is
      Chief
      of the Division of Urologic Oncology and holds the Roy and Carol Doumani Chair
      in Urologic Oncology at the David Geffen School of Medicine at the University
      of
      California, Los Angeles (UCLA). He is also the Founder of Agensys, Inc., a
      privately held biotechnology company focused on the development of fully human
      monoclonal antibodies to treat solid tumor cancers based on Agensys' proprietary
      targets. Dr. Belldegrun served as founding Chairman of Agensys from 1997-2002
      and currently serves on Agensys' Board of Directors and as a consultant. Dr.
      Belldegrun completed his M.D. at the Hebrew University Hadassah Medical School
      in Jerusalem, his post graduate fellowship at the Weizmann Institute of Science
      and his residency in Urological Oncology at Harvard Medical School. Prior to
      UCLA, Dr. Belldegrun was at the National Cancer Institute/NIH as a research
      fellow in surgical oncology under Steven A. Rosenberg, M.D., Ph.D. He is
      certified by the American Board of Urology and is a Fellow of the American
      College of Surgeons.
Alan
      H. Auerbach.
Mr.
      Auerbach joined Cougar in May 2003 as Chief Executive Officer, President and
      a
      director. From June 1998 to April 2003, Mr. Auerbach was Vice President, Senior
      Research Analyst at Wells Fargo Securities where he was responsible for research
      coverage of small and middle capitalization biotechnology companies, with a
      focus on companies in the field of oncology. He had primary responsibility
      for
      technical, scientific and clinical due diligence as well as selection of
      biotechnology companies followed by Wells Fargo Securities. During 2002, Mr.
      Auerbach ranked second in the NASDAQ/Starmine survey of analyst performance
      for
      stock picking in biotechnology. From August 1997 to May 1998, Mr. Auerbach
      was
      Vice President, Research Analyst at the Seidler Companies, Inc., where he was
      responsible for research coverage of small capitalization biotechnology
      companies. Prior to his work as a biotechnology analyst, Mr. Auerbach worked
      for
      Diagnostic Products Corporation, where he designed and implemented clinical
      trials in the field of oncology. Mr. Auerbach received his B.S. in biomedical
      engineering from Boston University and his M.S. in biomedical engineering from
      the University of Southern California.
Gloria
      Lee, M.D, Ph.D.
Dr. Lee
      joined Cougar in November 2004 as Vice President of Clinical Research and
      Development. Prior to Cougar, Dr. Lee was Senior Director, Clinical
      Development-Oncology at Chiron Corporation since August 2003. Prior to Chiron,
      Dr. Lee was Senior Therapeutic Expert in Oncology at Hoffman La Roche from
      July
      1999 to August 2003. Dr. Lee also served in a variety of clinical development
      positions at Rhone Poulenc Rorer (now Aventis) from 1994 through 1999, including
      the position of Associate Director of Medical Affairs, where Dr. Lee was
      responsible for the clinical development of the anticancer drug Taxotere in
      breast cancer. Dr. Lee is a board certified medical oncologist and holds an
      M.D.
      from The University of Miami School of Medicine and a Ph.D. in molecular biology
      from Columbia University.
Charles
      R. Eyler.
Mr.
      Eyler joined Cougar in September 2004 as Vice President of Finance and became
      the Treasurer of the Company in April 2006. Prior to joining Cougar, Mr. Eyler
      served as Chief Financial Officer and Chief Operating Officer of Hayes Medical
      Inc. from March 1999 to January 2004. Prior to Hayes Medical, Mr. Eyler held
      several financial positions including Director of Finance and Administration
      at
      Alphatec Manufacturing, Inc., Division Controller at JBL Scientific, Inc.,
      Division Controller at Surgitek, Inc. and Financial Systems Director at Zimmer,
      Inc. Mr. Eyler received his B.S. from Drexel University and his M.B.A. from
      Saint Francis College.
29
Lindsay
      A. Rosenwald, M.D.
Dr.
      Rosenwald has been a director of Cougar since May 2003. Dr. Rosenwald has served
      as Chairman of Paramount BioCapital, Inc. since 1992, and Chairman of Paramount
      Capital Investments LLC, a merchant and investment bank, since 1995, and
      Chairman of Paramount Capital Asset Management, Inc. since 1994. Dr. Rosenwald
      also serves as a member of the Board of Directors of Keryx Biopharmaceuticals
      (NASDAQ: KERX). Dr. Rosenwald received his M.D. from Temple University School
      of
      Medicine and his B.S. in Finance from Pennsylvania State
      University.
David
      M. Tanen.
Mr.
      Tanen has been a director of Cougar since its inception. Additionally, Mr.
      Tanen
      served as the Secretary of Cougar from its inception until April 3, 2006. Since
      September 2004, he has been a partner in Two River Group Holdings, LLC, a New
      York based venture capital group focused on creating new companies to in-license
      and develop novel technologies. From 1996 until September 2004, Mr. Tanen served
      as an associate director of Paramount Capital, Inc., where he has helped found
      other biotechnology companies. Mr. Tanen also serves as an officer and/or
      director of several other privately held development-stage biotechnology
      companies. Mr. Tanen received his B.A. degree from George Washington University,
      and his J.D. degree from Fordham University School of Law.
Harold
      J. Meyers.
Mr.
      Myers has been a director of since July 2003. Mr. Meyers' career encompasses
      over 45 years of professional experience in various aspects of the financial
      services industry, including being the founder of Los Angeles based H.J. Meyers
      and Company from 1982-1994, serving as Managing Director of Wells Fargo
      Investments (formerly Van Kasper & Company) from 1995-2003 and serving in
      his current position as Senior Vice President of A.G. Edwards & Sons, Inc.,
      since July 2003. Mr. Meyers holds a B.S. from the University of
      Denver.
Audit
      Committee
The
      Company has not yet formed an audit committee of the board of directors.
Executive
      Compensation
Summary
      Compensation Table
The
      following table sets forth the cash and non-cash compensation for awarded to
      or
      earned by (i) each individual serving as chief executive officer of Cougar
      since
      its inception in May 2003; and (ii) each other individual that served as an
      executive officer of Cougar at the conclusion of the fiscal year ended December
      31, 2005 and who received in excess of $100,000 in the form of salary and bonus
      during such fiscal year (collectively, the "named executives").
Long-Term
Compensation
Annual
                Compensation
Awards
Securities
All
                Other
Underlying
Compensation
Name
                and Principal Position
Year
Salary
Bonus
                ($)
Options
                (#)
($)
Alan
                H. Auerbach
(1)
Chief
                Executive Officer and
President
2005
2004
2003
$200,000
$200,000
$125,000
$225,000
$300,000
-0-
-0-
-0-
750,000
-0-
-0-
$131,625
Gloria
                T. Y. Lee, M.D.
(2)
Vice
                President, Clinical
Research
                and Development
2005
2004
$310,000
$45,790
-0-
$37,500
-0-
200,000
-0-
$18,832
Charles
                R. Eyler
(3)
Vice
                President, Finance
and
                Treasurer
2005
2004
$140,000
$50,346
-0-
-0-
-0-
100,000
-0-
$14,300
30
(1)
Mr. Auerbach became the Chief Executive
                Officer and President of the Company effective as of the Merger.
                In 2004,
                Mr. Auerbach was paid a bonus in the aggregate amount of $300,000,
                which
                was comprised of a discretionary bonus of $150,000 and an additional
                $150,000 in connection with the in-licensing of certain of Cougar's
                product candidates during such year. In February 2006, the Board
                of
                Directors of Cougar declared a bonus of $225,000 payable to Mr. Auerbach
                in consideration of services in fiscal year 2005, but the payment
                of such
                bonus did not take place until April 2006.
(2)
Dr. Lee became the Vice President,
                Clinical
                Research and Development effective as of the Merger. Dr. Lee received
                a
                one-time bonus of $37,500 on execution of her employment agreement
                with
                Cougar in November 2004. Additionally, Dr. Lee received an advance
                payment
                of $96,000 upon execution of her employment agreement, but Dr. Lee
                is
                obligated to pay back 50% of this amount in the event her employment
                is
                terminated prior to her second anniversary with the Company. Dr.
                Lee
                received a moving reimbursement of $18,832
from
                Cougar upon execution of her employment agreement as reimbursement
                for
                expenses incurred in relocating to commence employment with
                Cougar.
(3)
Mr. Eyler became the Vice President,
                Finance,
                of the Company effective as of the Merger, and additionally was named
                Treasurer of the Company on such date. Mr. Eyler received a moving
                reimbursement of $14,300 from Cougar upon execution of his employment
                agreement as reimbursement for expenses incurred in relocating to
                commence
                employment with Cougar.
Executive
      Compensation under the 2003 Stock Option Plan
Upon
      the
      Merger, the Company assumed Cougar's 2003 Stock Option Plan as the Company's
      Stock Option Plan. Since July 2003, Cougar has issued 2,9627,000 stock options
      under the 2003 Stock Option Plan, of which 1,706,000 have been issued to the
      named executives through March 2006.
No
      options to purchase shares of the Company's Common Stock were granted by the
      Company during the fiscal year ended December 31, 2005.
Aggregated
      Option Exercises in Last Fiscal Year and Fiscal Year End Option
      Values
No
      options to purchase shares of the Company's Common Stock were exercised by
      any
      of the named executive officers during the fiscal year ended December 31, 2005.
      As of December 31, 2005, the following options were held by Cougar named
      executive officers:
Number
                of Unexercised
Value
                of Unexercised in-the-
Securities
                Underlying
money
                Options at Fiscal Year
Options
                at FY-End (#)
End
Name
Exercisable
Unexercisable
(Exercisable/Unexercisable)
(1)
Alan
                Auerbach
375,000
375,000
$720,000
                  / $720,000
Dr.
                Gloria T. Lee
100,000
100,000
$57,000
                  / $57,000
Charles
                Eyler
50,000
50,000
$28,500
                  / $28,500
(1)
The value of unexercised in-the-money
                  options
                  on December 31, 2005 is based on a $2.07 value of Cougar Biotechnology,
                  Inc. common stock on such date, as determined in the discretion
                  of the
                  Board of Directors on such date.
31
Compensation
          of Directors
Prior
      to
      the Merger, our directors received no compensation pursuant to any standard
      arrangement for their services as directors. Cougar has not previously had
      any
      standard arrangements pursuant to which directors have been compensated for
      their services.
The
      Company has entered into a Scientific Advisory Agreement dated January 1, 2004,
      as amended August 24, 2004 (the "Scientific Advisory Agreement"), with Dr. Arie
      Belldegrun to serve as Chairman of its Scientific Advisory Board and as a member
      of its Board of Directors. Pursuant to the Scientific Advisory Agreement, Dr.
      Belldegrun receives an annual payment of $200,000 per year. Additionally, for
      each new technology that the Company in-licenses or otherwise acquires that
      are
      first introduced to the Company by or through Dr. Belldegrun, or for which
      Dr.
      Belldegrun actively participates in the evaluation process (as determined by
      Cougar's Chief Executive Officer), the Company is to make milestone payments to
      Dr. Belldegrun ranging from $50,000 to $150,000 for each such technology,
      depending on the clinical phase trials such technology is undergoing or
      completed. Furthermore, the Company is to make a payment of $100,000 to Dr.
      Belldegrun in the event he assists in preparation for and participation in
      meetings with potential investors relating to an offering of securities with
      minimum proceeds to the Company of at least $5,000,000, provided, that only
      one
      such payment shall be made per year. The Scientific Advisory Agreement has
      a
      term of four years, and annually renews for one year periods thereafter unless
      either party gives the other thirty (30) days written notice prior to the end
      of
      term, or any renewal term, that such term is not to be extended. In the event
      we
      terminate the Scientific Advisory Agreement prior to the end of the initial
      term
      for any reason other than gross negligence, willful misconduct or fraud on
      the
      part of Dr. Belldegrun, we will be obligated to pay Dr. Belldegrun all amounts
      owed to him for the remainder of the calendar year in which the termination
      occurs, and all stock options that would otherwise have vested in such calendar
      year shall automatically vest upon such termination. The Scientific Advisory
      Agreement contains other customary terms and provisions that are standard in
      our
      industry.
In
      conjunction with the execution of the Scientific Advisory Agreement and the
      amendment thereto, Cougar granted Dr. Belldegrun options to purchase an
      aggregate of 500,000 shares of Cougar Common Stock, at an exercise price equal
      to $0.15 per share. These stock options vested upon completion of the Merger.
In
      February 2006, Cougar's Board of Directors approved bonuses in the aggregate of
      $150,000 to Dr. Belldegrun, consisting of a $50,000 bonus in connection with
      the
      in-licensing of one of Cougar's product candidates in 2005 and a $100,000 bonus
      in connection with Dr. Belldegrun's participation in certain efforts of Cougar
      to obtain financing that closed in 2006. These bonuses were paid by the Company
      in April 2006.
In
      February 2006, Cougar granted Dr. Belldegrun options to purchase an additional
      236,000 shares of Cougar Common Stock, at an exercise price equal to $1.85
      per
      share. Additionally, in March 2006, Cougar granted Dr. Belldegrun options to
      purchase an additional 420,000 shares of Cougar Common Stock at an exercise
      price of $1.73 per share. All of these options vested contemporaneously with
      completion of the Merger.
Upon
      his
      appointment as a director of Cougar in July 2003, Mr. Meyers was granted a
      stock
      option to purchase 100,000 shares of Cougar common stock at an exercise price
      of
      $.15 per share. The options vest annually in equal amounts over three years,
      so
      long as Mr. Meyers remains a director of Cougar.
32
Employment
          Agreements with Executives
President
          and Chief Executive Officer
On
      May
      16, 2003, Cougar entered into an employment agreement with Alan Auerbach to
      act
      as its President and Chief Executive Officer, and to serve as a member of its
      Board of Directors. Mr. Auerbach receives an annual base salary of $200,000
      per
      year. Mr. Auerbach is also eligible for a annual bonus for each year of his
      employment term, at the discretion of the Company's Board of Directors, of up to
      75% of his base salary. Additionally, for each new technology that the Company
      in-licenses or otherwise acquires that are first introduced to the Company
      by or
      through Mr. Auerbach, the Company pays a one time bonus of $75,000. In
      conjunction with the execution of his employment agreement, Mr. Auerbach also
      purchased 750,000 shares of Cougar Common Stock at a price of $0.001 per share
      pursuant to the terms and conditions of a stock purchase agreement. Mr.
      Auerbach's employment agreement has a term of one year, and annually renews for
      one year periods thereafter unless either party gives the other sixty (60)
      days
      written notice prior to the end of term, or any renewal term, that such term
      is
      not to be extended. Under his employment agreement, Mr. Auerbach has also agreed
      to non-competition provisions. In consideration of this non-competition
      agreement, Cougar has agreed to make payments to Mr. Auerbach for up to 12
      months following the termination of his employment under certain circumstances.
      Mr. Auerbach's employment agreement contains other customary terms and
      provisions that are standard in Cougar's industry.
During
      2004, Cougar paid Mr. Auerbach bonuses in the aggregate amount of $300,000,
      of
      which $150,000 represented a discretionary bonus for the first year of his
      employment term and $150,000 represented amounts payable to him in connection
      with the in-licensing of certain of Cougar's product candidates. During fiscal
      year 2005, Cougar's Board of Directors approved bonuses in the aggregate amount
      of $225,000, of which $150,000 represents a discretionary bonus payable to
      Mr.
      Auerbach for the second year of his employment term and $75,000 represents
      amounts payable in connection with the in-licensing of one of Cougar's product
      candidates. This bonus was paid in April 2006.
In
      January 2004, Cougar granted Mr. Auerbach options to purchase 750,000 shares
      of
      Cougar Common Stock, at an exercise price of $0.15 per share. These stock
      options vest in four equal installments on each of the first four anniversaries
      of the date of grant.
In
      February 2006, Cougar granted Mr. Auerbach options to purchase an additional
      236,000 shares of Cougar Common Stock, at an exercise price equal to $1.85
      per
      share. Additionally, in March 2006, Cougar granted Mr. Auerbach options to
      purchase an additional 420,000 shares of Cougar Common Stock at an exercise
      price of $1.73 per share. All of these options vested contemporaneously with
      completion of the Merger.
Vice
      President of Finance
On
      August
      5, 2004, Cougar entered into an employment offer letter with Charles Eyler
      to
      act as its Vice President of Finance. Mr. Eyler receives an annual base salary
      of $140,000 per year. Mr. Eyler is also eligible for a bonus each year, at
      the
      discretion of the Company's Board of Directors, of up to 50% of his base salary.
      In conjunction with the execution of his employment offer letter, Mr. Eyler
      also
      received options to purchase 100,000 shares of Cougar Common Stock, at an
      exercise price equal to $1.50. The stock options vest in two equal installments
      on each of the first two anniversaries of Mr. Eyler's employment with the
      Company.
Vice
      President of Clinical Development
On
      October 21, 2004, Cougar entered into an employment offer letter with Gloria
      Tsi-Yie Lee, M.D., Ph.D. to act as its Vice President of Clinical Development.
      Dr. Lee receives an annual base salary of $310,000 per year. Dr. Lee is also
      eligible for a bonus each year, at the discretion of the Company's Board of
      Directors, of up to 40% of her base salary. Dr. Lee received a one-time advance
      of $96,000 upon execution of her employment offer letter; provided that, if
      her
      employment with Cougar is terminated after the first anniversary but on or
      prior
      to the second anniversary thereof, Dr. Lee is obligated to repay 50% of such
      advance. In conjunction with the execution of her employment offer letter,
      Dr.
      Lee also received options to purchase 200,000 shares of Cougar Common Stock,
      at
      an exercise price equal to $1.50. These stock options vest annually in two
      equal
      installments on each of the first two anniversaries of Dr. Lee's employment with
      the Company.
33
Certain
      Relationships & Transactions
The
      Company engaged Paramount BioCapital, Inc., of which Lindsay A. Rosenwald,
      M.D.,
      a director of the Company, serves as Chairman and Chief Executive Officer,
      as
      one of the placement agents (together with Cowen & Co., the "Placement
      Agents") in a private placement offering of 22,919,075 Units, each consisting of
      0.9 shares of Cougar Preferred Stock and 0.1 shares of Cougar Common Stock
      (the
"Offering"). Horizon BioMedical Ventures, LLC, of which Dr. Rosenwald is the
      managing member, and which is an affiliate of Paramount BioCapital, is a
      substantial stockholder of the Company. In connection with the Offering, the
      Company and the Placement Agents entered into an exclusive Placement Agency
      Agreement dated as of June 16, 2005, as amended effective on December 16, 2005
      (the "Introduction Agreement"), pursuant to which the Company has agreed to pay
      each Placement Agent for its services compensation in the form of (a) cash
      commissions equal to 3.5% of the gross proceeds from the sale of the Units,
      and
      (b) warrants (the "Warrants") to purchase that number of shares of common stock
      of the Company equal to 5% of the number of Units sold in the Offering. The
      Warrants will be exercisable for a period of five (5) years from the Closing
      Date. These commissions are also payable on additional sales by the Company
      of
      securities (other than in a public offering) to the investors introduced to
      the
      Company by the Placement Agents during the twelve (12) month period subsequent
      to the last closing of this Offering or the earlier termination of the Offering.
      The Company also agreed to pay to each Placement Agent an accountable expense
      allowance of up to $75,000 each to reimburse each Placement Agent for its
      out-of-pocket expenses. Cougar paid Cowen a non-refundable retainer of $50,000
      upon execution of the Placement Agency Agreement, to be credited against the
      first placement fee to be paid to SG Cowen. In addition, the Company has granted
      (a) Cowen the right of first refusal to act as the Company's financial advisor
      or co-lead underwriter in relation to any restructuring transaction (through
      a
      recapitalization, extraordinary dividend, stock repurchase, spin-off, joint
      venture or otherwise), any acquisition or disposition transaction (including,
      without limitation, a merger, exchange offer, sale or purchase of assets or
      capital stock) or any public offering, and (b) the Placement Agents the right
      of
      first refusal to act as co-placement agents, in relation to any private
      placement of equity or debt securities under Rule 144A or otherwise, in each
      case initiated by the Company during the 12-month period following the date
      of
      the final closing of the Offering. Lastly, the Company has agreed to indemnify
      the Placement Agents against certain liabilities, including liabilities under
      the Securities Act.
Cougar
      previously engaged Paramount BioCapital to serve as its exclusive placement
      agent in connection with a bridge offering of $6,145,120 in convertible
      promissory notes (the "Bridge Offering") and paid a placement fee of
      approximately $430,000 and issued warrants to purchase an aggregate of 193,243
      shares of Cougar Common Stock at an exercise price of $3.18 to the placement
      agent. Cougar also agreed to pay similar percentage fees and warrants upon
      any
      investments made during the 12-month period following the final closing of
      the
      Bridge Offering by investors first introduced to it by Paramount BioCapital
      during the Bridge Offering. In addition, we have granted to Paramount BioCapital
      a right of first refusal to act as exclusive finder or placement agent in
      relating to any securities offerings on our behalf during the 24-month period
      following the date of the final closing of the Bridge Offering. Paramount
      BioCapital's rights to receive payment on such subsequent investments and its
      right of first refusal are subject to our agreement with Cowen and Paramount
      BioCapital, Inc., which is described above.
34
John
      Knox, who was the Treasurer of Cougar immediately prior to the Merger, is a
      full-time employee of Paramount BioCapital.
Lindsay
      A. Rosenwald, M.D., a director of the Company, personally guaranteed our
      obligations under a $1,000,000 credit facility provided by Bank of America
      in
      consideration of Cougar's agreement to grant Dr. Rosenwald warrants to purchase
      a number of shares of Cougar Common Stock based on how much of the line of
      credit facility was actually untilized. Prior to terminating the line of credit
      in April 2006, Cougar utilized $600,000 of such facility, and thereby granted
      Dr. Rosenwald warrants to purchase 82,613 shares of Cougar Common Stock at
      an
      exercise price of $3.18 per share.
In
      June
      2005, Cougar issued promissory notes to five individuals, including Arie S.
      Belldegrun, M.D., a director of the Company, for an aggregate of $1,000,000.
      In
      return for such loans, we granted Dr. Belldegrun and the four other individuals
      warrants to purchase an aggregate of 137,689 shares of Cougar Common Stock
      at an
      exercise price of $3.18 per share. $950,000 in principal balance of these notes,
      together with accrued and unpaid interest thereon, were converted into Cougar
      securities under the same terms as the Offering.
Description
      of Securities
We
      currently have authorized capital of 110,000,000 shares, of which 100,000,000
      are designated as common stock, par value $.0001 per share (the "Common Stock"),
      and 10,000,000 shares are preferred stock, par value $.0001 per share (the
      "Preferred Stock"), all of which are currently designated as Series A Preferred
      Stock. Following completion of the Merger, the Company has outstanding 4,607,105
      shares of Common Stock and 9,486,752 shares of Series A Preferred Stock.
      Additionally, there are securities convertible or exercisable into an aggregate
      of 2,327,299 shares of Common Stock (excluding the Cougar Preferred
      Stock).
Common
      Stock
The
      holders of Common Stock are entitled to one vote for each share held of record
      on all matters submitted to a vote of the stockholders and do not have
      cumulative voting rights. Upon liquidation, dissolution or winding up of the
      Company, holders of Common Stock will be entitled to share ratably in all of
      the
      Company's assets that are legally available for distribution, after payment of
      all debts and other liabilities and the liquidation preference of any
      outstanding share of Preferred Stock. The holders of the Common Stock have
      no
      preemptive, subscription, redemption or conversion rights.
Series
      A Preferred Stock
The
      Company filed a Certificate of Designation of the Series A Preferred Stock
      with
      the Secretary of State of Delaware on March 31, 2006. The following provides
      only a summary of certain of the terms of the Company's Preferred Stock.
Voluntary
      Conversion
.
      Each
      share of the Preferred Stock will be convertible into Common Stock at any time
      at the option of the holder thereof at an initial conversion price equal to
      the
      stated value (initially equal to $4.50 per share, based on the stated value
      of
      the Cougar Preferred Stock of $1.73 divided by the Exchange Ratio), subject
      to
      adjustment (the "Stated Value").
In
      the
      event of a reclassification, capital reorganization or other similar change
      in
      the outstanding shares of Common Stock, the Preferred Stock will become
      convertible into the kind and number of shares of stock or other securities
      or
      property (including cash) that the holders of Preferred Stock would have
      received if the Preferred Stock had been converted into Common Stock immediately
      prior to such reclassification, capital reorganization or other
      change.
35
Mandatory
      Conversion
.
      The
      Company may require each holder of outstanding shares of Preferred Stock to
      convert such Preferred Stock into shares of Common Stock at the then-effective
      Conversion Ratio if the price per share of Common Stock trades at or above
      200%
      of the Conversion Price (which shall initially be equal to the Stated Value),
      as
      adjusted, for a period of twenty (20) consecutive trading days, on any
      securities exchange, automated quotation system (e.g., Nasdaq) or any other
      over-the-counter market, such as the OTCBB.
Redemption
.
      The
      holders of a majority of the issued and outstanding shares of Preferred Stock
      may require the Company to redeem such Preferred Stock at any time after the
      expiration of ten (10) years following the date of the final closing of the
      Offering, at a redemption price equal to the Purchase Price plus any accrued
      but
      unpaid dividends, payable quarterly over a three (3) year period. The Preferred
      Stock is not redeemable at the option of the Company.
Voting
.
      The
      holders of Preferred Stock will vote together with all other holders of the
      Company's voting stock on all matters submitted to a vote of holders generally,
      with the holder of each share of Preferred Stock being entitled to one vote
      for
      each share of Common Stock into which such shares of Preferred Stock could
      then
      be converted (regardless of the number of shares of Common Stock then authorized
      to be issued). So long as 50% of the Preferred Stock remains outstanding, the
      Company shall not, without the approval of at least two-thirds (2/3) of the
      shares of Preferred Stock, voting separately as a single class:
·
authorize
                or issue any shares, or securities convertible into shares, having
                preference over or on a parity with the Preferred Stock with respect
                to
                the payment of dividends or rights upon a Liquidation Event (as defined
                below); or
·
(a)
                increase the number of shares of Preferred Stock or (b) amend, alter,
                or
                repeal any of the provisions of the Company's certificate of incorporation
                in any manner which materially adversely affects the preferences,
                privileges, restrictions or other rights of the Preferred
                Stock.
Dividends
.
      Each
      share of Preferred Stock shall receive cumulative dividends, payable in cash
      or
      in kind at the option of the Company, at the rate of 4% per annum (computed
      on
      the basis of a 365-day year) of the Stated Value, payable annually in arrears.
      The holders of Preferred Stock will also be entitled to receive dividends on
      an
      equal basis with the holders of Common Stock and any other class or series
      of
      securities of the Company ranking junior to the Preferred Stock when, as and
      if
      declared by the Board of Directors, on an as converted basis.
Liquidation
.
      Upon
      any (i) liquidation, dissolution or winding up of the Company, whether
      voluntarily or involuntarily, or (ii) voluntary or involuntary bankruptcy of
      the
      Company (either of (i) or (ii), a "Liquidation Event"), each share of Preferred
      Stock will be entitled to be paid, prior to any distributions to any securities
      ranking junior to Preferred Stock, an amount equal to the greater of (x) the
      Stated Value of such shares of the Preferred Stock, plus any accrued and unpaid
      dividends thereon and (y) the amount the holder of such share would have been
      entitled to receive upon such Liquidation Event had the share been converted
      immediately prior to such Liquidation Event. A consolidation or merger of the
      Company with or into another company in which the Company is not the surviving
      entity or the shares of the Company's capital stock constituting in excess of
      50% of the voting power of the Company are exchanged for or changed into other
      stock or securities, cash and/or any other property, or a sale of all or
      substantially all the assets of the Company, shall not be considered a
      Liquidation Event, although the Company will make appropriate provision to
      ensure that the terms of the Preferred Stock survive any such
      transaction.
36
Recent
      Sales of Unregistered Securities
For
      sales
      of unregistered securities made by the Company since its inception in May 2005
      until the Merger, please refer to Registration Statement on Form 10-SB/A filed
      on August 29, 2005, our quarterly report on Form 10-QSB for the quarter ended
      September 30, 2005 filed on November 9, 2005, and our annual report on Form
      10-KSB for the year ended December 31, 2005, filed on March 6,
      2006.
The
      following summarizes all sales of unregistered securities by Cougar since
      inception in May 2003.
In
      May
      2003, in connection with Cougar's incorporation, Cougar issued an aggregate
      of 5,000,002 shares of its Common Stock for aggregate consideration of
      $750,750.
In
      July
      2003, Cougar issued a director options to purchase 100,000 shares of Cougar
      Common Stock at an exercise price of $0.15 per share, such options vesting
      in
      equal amounts annually over three years.
In
      January 2004, Cougar issued options to purchase an aggregate of 1,150,000 shares
      of Cougar Common Stock, at an exercise price of $0.15 per share, to two
      directors, one of which is also an officer of the Company. These options vest
      in
      equal amounts annually over four years, subject to acceleration upon certain
      change in control events.
In
      March
      2004, Cougar issued an aggregate of 4,250,003 shares of Cougar Common Stock
      to certain accredited investors for aggregate consideration of
      $4,250,000.
In
      June
      2004, Cougar issued a consultant an option to purchase 5,000 shares of Cougar
      Common Stock at an exercise price of $5.00 per share, such options vesting
      in
      equal amounts annually over three years.
In
      August
      2004, Cougar issued a director an option to purchase 100,000 shares of Cougar
      Common Stock at an exercise price of $0.15 per share, such options vesting
      in
      equal amounts annually over four years, subject to acceleration upon certain
      change in control events.
In
      August
      2004, Cougar issued an officer an option to purchase 100,000 shares of Cougar
      Common Stock at an exercise price of $1.50 per share, such options vesting
      in
      equal amounts annually over two years.
In
      November 2004, Cougar issued an officer an option to purchase 200,000 shares
      of
      Cougar Common Stock at an exercise price of $1.50 per share, such options
      vesting in equal amounts annually over two years.
On
      October 31, 2005, Cougar issued to a director a warrant to purchase an aggregate
      of 82,613 shares of Cougar Common Stock at an exercise price of $3.18 per share
      in consideration of such director providing a guaranty of Cougar's obligations
      under a $1,000,000 line of credit facility with Bank of America.
37
In
      June
      2005, Cougar issued warrants to purchase an aggregate of 137,689 shares of
      Cougar Common Stock at an exercise price of $3.18 per share to five individuals
      in consideration of loans from such individuals to Cougar in the aggregate
      amount of $1,000,000.
In
      two
      closings on November 23, 2005 and January 24, 2006, Cougar sold an aggregate
      of
      $6,145,120 in aggregate principal amount of senior convertible notes (the
"Bridge Notes") to certain institutional and individual accredited investors in
      a private placement transaction (the "Bridge Offering"). Additionally, Cougar
      issued warrants to purchase an aggregate of 193,243 shares of Cougar Common
      Stock at an exercise price per share of $3.18 to our placement agents.
In
      February 2006, Cougar issued options to purchase an aggregate of 472,000 shares
      of Cougar Common Stock, at an exercise price of $1.85 per share, to two
      directors, one of which is also an officer of the Company. These options vested
      contemporaneously with the Merger.
In
      March
      2006, Cougar issued options to purchase an aggregate of 840,000 shares of Cougar
      Common Stock, at an exercise price of $1.73 per share, to two directors, one
      of
      which is also an officer of the Company. These options vested contemporaneously
      with the Merger.
On
      April
      3, 2006, Cougar completed a private placement offering to accredited investors
      (as that term is defined in Regulation D under the Securities Act of 1933,
      as
      amended (the "Securities Act") of 22,919,075 Units, each Unit consisting of 0.9
      shares of Preferred Stock and 0.1 shares of Common Stock, at a price per Unit
      of
      $1.73.
Additionally,
      Cougar converted the aggregate principal balance of $6,145,120, together with
      accrued and unpaid interest of $89,053 thereon, of the Bridge Notes into
      3,603,568 Units under the same terms as provided in the Offering. Accordingly,
      we issued an additional 360,357 shares of Cougar Common Stock and 3,243,211
      shares of Cougar Preferred Stock pursuant to the conversion of the Bridge Notes.
      The conversion of the Bridge Notes into Units was exempt from the registration
      requirements of the Securities Act pursuant to Section 3(a)(9) thereof, as
      the
      securities were exchanged for other securities of the issuer and no commission
      or other remuneration was paid in relation to such exchange.
Cougar
      also issued Units, under the same terms as provided in the Offering, to a trust
      established for the benefit of the family of one of the directors of the Company
      for approximately $600,000 (the amount such director provided as a guaranty
      of a
      Cougar credit facility referenced above) and converted an aggregate of $950,000
      of notes, together with interest thereon, issued to five individuals, one of
      which was a director. Pursuant to the approximately $600,000 and the conversion
      of notes, Cougar issued an additional 919,898 Units, consisting of 91,989 shares
      of Cougar Common Stock and 827,909 shares of Cougar Preferred Stock.
Except
      as
      noted above, the sales of the securities identified above were made pursuant
      to
      privately negotiated transactions that did not involve a public offering of
      securities and, accordingly, Cougar believes that these transactions were exempt
      from the registration requirements of the Securities Act pursuant to Section
      4(2) thereof and rules promulgated thereunder. Each of the above-referenced
      investors in Cougar's stock represented to Cougar in connection with their
      investment that they were "accredited investors" (as defined by Rule 501 under
      the Securities Act) and were acquiring the shares for investment and not
      distribution, that they could bear the risks of the investment and could hold
      the securities for an indefinite period of time. The investors received written
      disclosures that the securities had not been registered under the Securities
      Act
      and that any resale must be made pursuant to a registration or an available
      exemption from such registration. All of the foregoing securities are deemed
      restricted securities for purposes of the Securities Act.
38
Indemnification
      of Directors and Officers
Pursuant
      to our certificate of incorporation and bylaws, we may indemnify an officer
      or
      director who is made a party to any proceeding, because of his position as
      such,
      to the fullest extent authorized by Delaware General Corporation Law, as the
      same exists or may hereafter be amended. In certain cases, we may advance
      expenses incurred in defending any such proceeding.
To
      the
      extent that indemnification for liabilities arising under the Securities Act
      may
      be permitted to directors, officers or persons controlling our company pursuant
      to the foregoing provisions, we have been informed that, in the opinion of
      the
      SEC, such indemnification is against public policy as expressed in the
      Securities Act and is therefore unenforceable. If a claim for indemnification
      against such liabilities (other than the payment by us of expenses incurred
      or
      paid by a director, officer or controlling person of our company in the
      successful defense of any action, suit or proceeding) is asserted by any of
      our
      directors, officers or controlling persons in connection with the securities
      being registered, we will, unless in the opinion of our counsel the matter
      has
      been settled by controlling precedent, submit to a court of appropriate
      jurisdiction the question whether such indemnification by us is against public
      policy as expressed in the Securities Act and will be governed by the final
      adjudication of that issue.
Item
      3.02. Unregistered Sales of Equity Securities.
As
      disclosed under Item 2.01 above, in connection with the Merger, the Company
      issued an aggregate of 4,607,105 shares of its Common Stock and 9,486,752 shares
      of its newly-designated Series A Preferred Stock to the former holders of Cougar
      capital stock, and other securities having the right to purchase approximately
      an additional 2,327,288 shares of our Common Stock, all of which were
      unregistered. For these issuances, the Company relied on the exemptions from
      the
      registration requirements of the Securities Act provided by Section 4(2) and
      Rule 506, as the securities were sold to 28 individuals, each of which the
      Company reasonably believes is either an "accredited investor," as defined under
      Rule 502 of the Securities Act of 1933, as amended (the "Securities Act"), or
      such investor, either alone or through a purchaser representative, had knowledge
      and experience in financial and business matters such that each was capable
      of
      evaluating the risks of the investment, and had access to information regarding
      Cougar, the Company and the Merger transaction.
Item
      5.01. Changes in Control of Registrant.
The
      disclosures set forth in Item 2.01 above are hereby incorporated by reference
      into this Item 5.01.
Item
      5.02. Departure of Directors or Principal Officers; Election of Directors;
      Appointment of Principal Officers.
At
      the
      effective time of the Merger, the Company's board of directors was reconstituted
      by the appointment of Arie S. Belldegrun, M.D., Alan H. Auerbach, Lindsay A.
      Rosenwald, M.D., David M. Tanen and Harold J. Meyers as directors (all of whom
      were directors of Cougar immediately prior to and after the Merger), and the
      resignations of Richard A. Rappaport and Anthony C. Pintsopoulos from their
      roles as directors of the Company. Additionally, pursuant to an agreement with
      a
      certain investor in Cougar's private placement offering of 22,919,075 Units of
      its securities as referenced in Item 2.01 above, the Company will increase
      the
      number of directors to serve on the Company's Board by two members, and to elect
      to such Board two additional directors selected by the Company from candidates
      named by such investors.
39
At
      the
      effective time of the Merger, the Company's executive management team was also
      reconstituted and Richard A. Rappaport resigned from his position as the
      Company's President and Anthony C. Pintsopoulos resigned from his positions as
      the Chief Financial Officer and Secretary. Upon the effective time of the
      Merger, the following individuals (all of whom were officers of Cougar prior
      to
      the Merger) took the positions set after their names: Alan H. Auerbach
      (President and Chief Executive Officer); Dr. Gloria T. Y. Lee (Vice President,
      Clinical Research and Development); and Charles R. Eyler (Treasurer and Vice
      President, Finance). Biographical and other information regarding these
      individuals is provided under the caption "Management" in Item 2.01 above, which
      is incorporated by reference into this Item 5.02.
Item
      5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
      Year.
On
      April
      6, 2006, the Company filed a Certificate of Ownership with the Secretary of
      State of the State of Delaware pursuant to which Cougar Biotechnology, Inc.,
      the
      Company's wholly-owned subsidiary pursuant to the Merger, merged with and into
      the Company with the Company remaining as the surviving corporation to the
      merger (the "Short-Form Merger"). In connection with the Short-Form Merger, and
      as set forth in the Certificate of Ownership, the Company changed its corporate
      name to "Cougar Biotechnology, Inc." The Certificate of Ownership is filed as
      Exhibit 3.2 to this current report.
Item
      5.06. Change in Shell Company Status.
As
      described in Item 2.01 above, which is incorporated by reference into this
      Item
      5.06, the Company ceased being a shell company (as defined in Rule 12b-2 under
      the Exchange Act of 1934, as amended) upon completion of the
      Merger.
Item
      9.01. Financial Statements and Exhibits.
(a)
As
      a
      result of its acquisition of Cougar as described in Item 2.01, the registrant
      is
      filing Cougar's audited financial information as Exhibit 99.1 to this current
      report.
(b)
Pro
      forma
      financial information has not been included, as it would not be materially
      different from the financial information of Cougar as referenced in Item 9.01(a)
      above.
(c)
Exhibits.
Exhibit
Description
2.1
Agreement
                and Plan of Merger dated February 27, 2006, by and among the Company,
                SRKP
                Acquisition Corp., a Delaware corporation and wholly owned subsidiary
                of
                the Company, and Cougar Biotechnology, Inc., a Delaware corporation
                (incorporated by reference to exhibit 10.1 to the Company's current report
                on Form 8-K filed on March 2, 2006).
3.1
Certificate
                of Merger relating to the merger of SRKP Acquisition Corp. with and
                into
                Cougar Biotechnology, Inc.
3.2
Certificate
                of Ownership relating to the merger of Cougar Biotechnology, Inc.
                with and
                into SRKP 4, Inc.
10.1
Redemption
                Agreement (incorporated by reference to Exhibit 10.2 to the Company's
                current report on Form 8-K filed on March 2, 2006).
10.2
Indemnity
                Agreement dated as of April 3, 2006, between SRKP 4, Inc., Cougar
                Biotechnology, Inc., Anthony C. Pintsopoulos and Richard
                Rappaport.
99.1
Audited
                financial statements of Cougar Biotechnology, Inc. (pro forma financials
                are not included, as pro-forma would not be materially different
                from
                Cougar's audited financial
                statements).
40
SIGNATURE
Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.
COUGAR
              BIOTECHNOLOGY, INC.
Date: April
              7, 2006
By:
/s/ Alan
              H.
              Auerbach
Alan
              H. Auerbach
Chief
              Executive Officer and President
41
EXHIBIT
      INDEX
3.1
Certificate
                    of Merger relating to the merger of SRKP Acquisition Corp. with
                    and into
                    Cougar Biotechnology, Inc.
3.2
Certificate
                    of Ownership relating to the merger of Cougar Biotechnology,
                    Inc. with and
                    into SRKP 4, Inc.
10.2
Indemnity
                  Agreement dated as of April 3, 2006, between SRKP 4, Inc., Cougar
                  Biotechnology, Inc., Anthony C. Pintsopoulos and Richard Rappaport.
99.1
Audited
                    financial statements of Cougar Biotechnology, Inc. (pro forma
                    financials
                    are not included, as pro-forma would not be materially different
                    from
                    Cougar's audited financial
                    statements).
42