DESCRIPTION OF BUSINESS

6 Months Ended

Jun. 30, 2012

DESCRIPTION OF BUSINESS

NOTE 1 — DESCRIPTION OF BUSINESS

Medivation, Inc. (the “Company” or “Medivation”) is a biopharmaceutical company focused on the rapid development of novel small molecule drugs to treat serious diseases for which there are limited treatment options. Together with its collaboration partner, Astellas Pharma, Inc., or Astellas, the Company is developing enzalutamide (formerly MDV3100) for multiple stages of prostate cancer and for breast cancer. The Company has successfully completed the Phase 3 AFFIRM trial in the latest stage prostate cancer population that it is studying – men with castration-resistant prostate cancer who have already received docetaxel-based chemotherapy – and has submitted marketing applications for this indication in both the United States and Europe. The U.S. Food and Drug Administration, or FDA, has accepted for filing the Company’s U.S. marketing application. The Company is also conducting multiple trials of enzalutamide in earlier prostate cancer disease states, including the Phase 3 PREVAIL trial in men with castration-resistant prostate cancer who have not received chemotherapy, and a Phase 1 trial of enzalutamide in breast cancer.

The Company has not generated any revenue from product sales to date. The Company has funded its operations primarily through public offerings of its common stock, the issuance of convertible debt and from the up-front, development milestone and cost-sharing payments under the collaboration agreement with Astellas, or the Astellas Collaboration Agreement, and the collaboration agreement with its former corporate partner, Pfizer, Inc., or Pfizer. The Company incurred cumulative net losses of $255.4 million through June 30, 2012 and it expects to incur substantial additional losses for the foreseeable future as it pursues regulatory approval for, and, if approved, commercial launch of enzalutamide and continues to finance clinical and preclinical studies of its existing and potential future product candidates and its corporate overhead costs.

The Company reported a net loss of $5.5 million and $5.1 million for the three and six months ended June 30, 2012, respectively. The Company reported negative cash flows from operations of $55.8 million during the six months ended June 30, 2012, and expects to incur continued negative cash flows from operations for the foreseeable future.

At June 30, 2012, the Company had $344.5 million of cash, cash equivalents and short-term investments to fund its operations. On March 19, 2012, the Company completed the sale of $258.8 million aggregate principal amount of 2.625% convertible senior notes due April 1, 2017, or the Convertible Notes. The Company received cash proceeds from the sale of the Convertible Notes totaling $251.0 million, net of $7.8 million of underwriters’ discounts. Additional information regarding the Convertible Notes is included in Note 5, “Convertible Senior Notes Due 2017.”

(a) Astellas Collaboration Agreement

The Company entered into a collaboration agreement with Astellas in October 2009, pursuant to which it received a non-refundable, up-front cash payment of $110.0 million. As of June 30, 2012, the Company has received $13.0 million of development milestone payments from Astellas. The Company recorded aggregate cost-sharing payments from Astellas totaling $14.2 million and $27.5 million during the three and six months ended June 30, 2012, respectively, and $11.8 million and $21.6 million during the three and six months ended June 30, 2011, respectively.

In May and June 2012, the Company and Astellas submitted marketing applications for enzalutamide in post-chemotherapy castration-resistant prostate cancer in the United States and Europe, respectively. These applications were based on positive overall survival data from the Phase 3 AFFIRM trial first reported in November 2011. The Company has exercised its option to co-promote enzalutamide in the United States, and will provide 50% of the sales and medical affairs field forces supporting enzalutamide in the U.S. market should the FDA grant marketing approval.

(b) Former Collaboration Agreement with Pfizer

The Company entered into a collaboration agreement with Pfizer in October 2008, pursuant to which it received a non-refundable, up-front cash payment of $225.0 million. The Company recorded aggregate cost-sharing payments from Pfizer totaling $0.4 million and $1.7 million during the three and six months ended June 30, 2012, respectively, and $3.0 million and $7.9 million during the three and six months ended June 30, 2011, respectively, pursuant to the terms of the collaboration agreement.

In January 2012, Pfizer exercised its right to terminate the collaboration agreement with the Company based on negative clinical trial results, and the Company and Pfizer discontinued development of dimebon for all indications. The Company refers to its collaboration agreement with Pfizer as the former collaboration agreement with Pfizer.